What is a "Blind" Trust?

A blind trust leaves investment control fully to an institutional trustee.

You would like to create a trust.

You believe it will make transfer of your assets simpler and provide greater protections.

The issue?

You are afraid of real or perceived conflicts of interest in the management of the trust and its investments.

How can you fix this?

According to a recent Investopedia article titled “How to Establish a Blind Trust,” a blind trust can help.

What is a blind trust?

Essentially it is a trust where you relinquish control over and knowledge of the assets placed within the trust.

Sound scary?

It does not have to be.

In fact, in some cases it makes perfect sense.

Are you a politician who needs to avoid appearances of favoritism or rumors of corruption?

A blind trust would be wise.

Are you a retiring or a retired business owner or executive?

If yes, do you keep large amounts of company stock?

You may consider a blind trust if you are also interested in charitable work.

This can protect your ability to act objectively.

Did you suddenly come into a large sum of money?

This could be through inheritance or luck, such as lottery winnings.

A blind trust can help you keep this windfall private, while removing the pressure of managing the wealth yourself.

How do you create a blind trust?

Not alone.

Work with an experienced estate planning attorney.

He or she will create the trust and draft the document assigning full power over trust assets to an independent, third-party trustee.

Does this mean you have no say in the asset management?

Not exactly.

When drafting the trust, you give most certainly may provide input regarding the investment objectives of the trust.

After this, however, your communication with the trustee stops.

How should you select your trustee?

As the word "trust" implies, the trustee should be trustworthy and savvy.

To make the separation from your assets simpler, you should not be close to any individual serving as trustee.

This sounds like a commitment.

Is a blind trust forever?

Not always.

You can make a blind trust revocable.

This means you, as the trustmaker, can change it later.

On the other hand, if you make the trust irrevocable, then it cannot be terminated or modified at a later date.

Blind trusts should not be entered blindly.

Keep both eyes open.

Make no moves without first discussing your options with an experienced estate planning attorney.

Reference: Investopedia (May 25, 2018) “How to Establish a Blind Trust”