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.
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.
