Legal Definitions - contingency reserve

A contingency reserve is a fund set aside for unexpected expenses or events that may occur in the future. It is a type of contingency plan that helps individuals or organizations prepare for unforeseen circumstances.

For example, a business may create a contingency reserve to cover unexpected expenses such as equipment repairs or legal fees. A municipality may also establish a contingency reserve to pay for expenses that cannot be classified under any specific purpose for which taxes are collected.

Another example is an executor fund, which is a contingency reserve established for an executor to pay an estate's final expenses.

Overall, a contingency reserve is a financial safety net that provides peace of mind and helps individuals and organizations manage unexpected expenses or events.