What is a blind trust?

The latest concerns about the President’s possible entanglements overseas through his businesses has revived the debate over blind trusts. There are many types of trusts; some are designed to accomplish discrete goals, for example, caring for family members or to invest a university endowment. Others are designed to relieve people of conflicts of interest, the blind trust. This post will go over blind trusts and how they operate.

Blind trusts are primarily utilized by people elected to public office. Blind trusts collect a person’s assets, places them in a trust, which is administered by someone who is not under the control of the grantor, and invests in assets in which the grantor has no knowledge. Essentially, the blind trust takes all of the person’s assets, sells them, and reinvests them in other assets. The purpose is to ensure that the grantor cannot make decisions while in public office to enrich himself.

Blind trusts are a common tool for people elected to political office, judges, and other top public officials. They are typically set up and implemented after a person ascends to the office but before they assume the majority of their duties. The complication with the President is that his business assets are so vast that he would have to (1) liquidate his companies and (2) reinvest them in other assets. The concern is that even if he sold everything in a blind trust, his wealth is so big, there is no way that he couldn’t deduce his assets in the blind trust.

If you are engaged in litigation over the validity of a trust, you may want to speak to an attorney. Piercing through a trust is a complex endeavor. There are several avenues you could pursue, from arguing the trust was defectively created, the grantor wasn’t of the right mind to create it, and finally the trustee is abusing her fiduciary duties. A lawyer can walk you through the merits of each option and help you determine the best way to pursue compensation.