A blind trust is a financial arrangement in which someone's investments are managed without the person knowing where the money is invested. Blind trusts are used especially by people in public office, so that they cannot be accused of using their position to make money unfairly.
How does a blind trust work?
A blind trust is a trust established by the owner (or trustor) giving another party (the trustee) full control of the trust. ... The trustor can terminate the trust, but otherwise exercises no control over the actions taken within the trust and receives no reports from the trustees while the blind trust is in force.
What's the difference between a trust and a blind trust?
The key difference between a blind trust and other types of living trusts is that neither the trustor nor his or her beneficiaries have the authority to manage any aspect of the trust or the assets held in it after the blind trust has been finalized.
How do you form a blind trust?
- Gather the documentation for the assets that you want put into the blind trust. ...
- Appoint a trustee. ...
- Create the trust agreement. ...
- Sign the trust and have it notarized, taking care to follow any recording laws that your state has.
- Officially transfer the relevant assets into the trust.
What are the advantages of a blind trust?
A blind trust enables an insider to give a trustee the sole responsibility to decide on the timing of sales of company stock, without participation by, or knowledge of, the insider. It allows insiders to achieve investment diversification and reduce risk without running afoul of securities regulations.
What is the main purpose of a trust?
Trusts are established to provide legal protection for the trustor's assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.
What is the point of a blind trust?
Blind trusts are generally used when a trust creator (sometimes called a settlor, trustor, grantor, or donor) wishes for the beneficiary to be unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments.
Can you put a house in a blind trust?
Gather the documentation for the assets that you want put into the blind trust. This could mean certificates of stock ownership, bonds or real estate deeds. If you want to put an asset in the trust, you'll need to have documentation proving ownership. Appoint a trustee.Feb 13, 2019
What is the difference between a revocable trust and a blind trust?
A revocable trust has only one advantage for the grantor and beneficiaries: the trust does not have to go through probate court, an often time-consuming and expensive process. ... A blind trust is revocable; the grantor can cancel the trust at any time, and transfer responsibility to a different trustee.
Are Blind trusts legal?
The US federal government recognizes the "qualified blind trust" (QBT), as defined by the Ethics in Government Act and related regulations. In order for a blind trust to be a QBT, the trustee must not be affiliated with, associated with, related to, or subject to the control or influence of the government official.
What is a qualified blind trust?
A qualified blind trust is defined as "any trust in which a reporting individual, his spouse, or any minor or dependent child has a beneficial interest in the principal or income" and meets these requirements: Independent Trustee - Not subject to influence by, affiliated with, nor related to the government official.Dec 20, 2016