Blind Trusts Have a Limited, But Beneficial Use
In the course of planning an estate, or perhaps in a probate case, you may have heard of the many types of trusts that there are. But one type of trust that you may not have heard of, is the blind trust. It made some news during the 2016 election cycle, because of Donald Trump’s business interests, but outside of that, it is an estate planning vehicle that isn’t used or discussed very often—but which could be a benefit to you.
Why and How are they Used?
Blind trusts are often used by politicians, or those in positions where there could be a conflict of interest or a perceived conflict. Blind trusts separate the settlor (the person making the trust) with the trust itself. Although on the surface this may seem a little unpleasant for the typical business owner, it can help avoid the appearance of a conflict.
Normal Trusts vs. Blind Trusts
Usually, when someone establishes any kind of trust, the settlor maintains some kind of control over the trust, even though a separate person is the trustee. At the very least, even if there is no control, the settlor knows about, and can get information about the trust—what is being distributed, or decisions the trustee is making about the property in the trust, for example.
Someone would not normally establish a trust, appoint a trustee, and then walk away from the whole thing, remaining blind to what is being paid from the trust or from knowing what the trustee is doing. But that is what a blind trust actually does.
The blind trust gives almost total control over the property in the trust, and decisions about that property, to the appointed trustee. Once created, the settlor (the person making the trust) is “blind” to what is going on with any matter in or about the trust. Obviously, because this gives the trustee an immense amount of power, the trustee must be someone trusted by the settlor—but it also can’t be someone that is too close to the settlor, like a relative, as that would jeopardize the otherwise blind nature of the trust.
The Benefits of Privacy
Because of this separation, someone who may have an apparent conflict of interest, can keep the property they put in the trust (which is usually some kind of continuing business interest), and still reap profits or money from it, without having to completely divest themselves of the interest. This may be especially helpful for people who take short term political positions, like city commissioners, who may only serve shorter terms.
Blind trusts are actually regulated by the government-and giving any information about the blind trust to the settlor after it is created, is actually a crime, so everybody can be safe in knowing that the blind trust is truly blind.
Let us help you with your probate and estate planning needs. Call the West Palm Beach estate planning lawyers at The Law Offices of Larry E. Bray today, for help.