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What is a Blind Trust?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 22 September 2014
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A blind trust is a particular type of trust in which the executor or other kind of responsible fiduciary third party is empowered to administer the business of the trust without any input from the beneficiary. Along with granting full management discretion, the trust also prevents the administrator from providing any information about the day to day operations of the trust to the beneficiary.

Blind trusts can be very helpful when an individual wishes to avoid any conflict of interest as a result of business assets. By transferring the assets in question into a blind trust and granting control of the assets to the executor or an administrator through a power of attorney, it is possible to draw a clear line between current holdings and efforts to acquire additional business interests. Since the administrator is not at liberty to discuss the management of any assets within the blind trust with the owner, there is no chance of being able to make use of the assets in order to secure additional properties or other profits.

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A blind trust is also helpful when a trustor wishes to establish a trust for a beneficiary, but wishes the beneficiary to not have access to the holdings contained within the trust. This can also be helpful, since the beneficiary would not be hampered by a conflict of interest, and would be free to pursue other forms of financial investment, with no question about his or her integrity. The trustor retains the ability to regain control of the assets and dissolve the blind trust, with the exact procedure usually articulated in the documents that establish the trust.

Politicians often find a blind trust is an excellent means of managing personal assets. This is especially the case when running for an office or accepting an appointment to responsibilities that involve the administration of government funds to the private sector. The arrangement ensures that the politician will not be able to engage in acquiring personal gain as a result of his or her position, and eliminates speculation about any conflicts of interest.

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Discuss this Article

anon288478
Post 20

Can a blind trust eliminate the need for an LLC?

anon130196
Post 19

who pays the income taxes on the profits made while a company is in a blind trust? the original owner or the trustee?

anon124723
Post 18

After the lawyer sets up the blind trust, can't you, the lottery winner, be named the executor of the trust?

anon72526
Post 14

Can a blind trust be established without the beneficiary being aware that it even exists?

anon61971
Post 13

I always wonder, once the blind trust is established by an attorney in order for the winner to stay anonymous, who deals with the lottery office the bank of the trust account or the attorney? And, what will happen if the ticket is lost between the attorney and the bank?

"LLC"? Investment company will turn in the ticket and the winner can be anonymous.

anon56084
Post 12

I want to know how much is a blind trust fee? Is it based on a percentage or a flat rate?

anon47496
Post 11

So the executor controls the trust, yes?

anon35128
Post 10

Why don't the person who won the lottery get an "LLC"? Investment company will turn in the ticket and the winner can be anonymous.

anon29898
Post 9

If one wins the lottery and claims the money via a blind trust threw an attorney this does not necessarily mean that the winner will be anonymous. Some states have exemptions from the Public Records act that will ensure that the winners name is not disclosed. However, in most states the winners name can be disclosed if somebody investigates the public records. So anonymity should not be taken to seriously in most states.

Wahelo
Post 8

Is it possible to establish a Blind Trust for the sole purpose of claiming a large lottery prize anonymously and then shortly thereafter dissolve the Blind Trust?

anon20417
Post 6

I was told there was a benefit to lottery winners in setting up a blind trust. What, specifically, are those benefits?

anon19383
Post 5

can a blind trust have anonymous trustee?

anon16632
Post 4

How does a blind trust benefit a lottery winning married couple? Who is the executor? Is the only benefit to the blind trust for lottery winnings no name on a public record in protection against predators?

anon15990
Post 3

can 401k monies be put into a blind trust, without paying taxes on the 401k first?

mdt
Post 2

You could set up a blind trust with lottery winnings, but keep in mind that the executor would have control of the trust, not you.

If you have in mind using the lottery winnings to establish a blind trust for the benefit of a minor child, then the trust would be in the name of the child with an executor named to oversee the trust. A good attorney and financial manager can help you determine if this type of trust would work well in your situation.

anon8806
Post 1

How does a blind trust work for lottery winners?

If one was to establish a blind trust - who's name would it be in ?

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