| Wills,trusts andestates |
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| Part of thecommon law series |
| Wills |
Sections Property disposition |
| Trusts |
Common types Other types
Governing doctrines |
| Estate administration |
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| Othercommon law areas |
Ablind trust is atrust in which thetrust beneficiaries have no knowledge of the holdings of the trust, and no right to intervene in their handling. In a blind trust, thetrustees (fiduciaries, or those who have been givenpower of attorney) have full discretion over the assets. Blind trusts are generally used when a trust creator (sometimes called asettlor,trustor, grantor, or donor) wishes for the beneficiary to be unaware of the specific assets in the trust, such as to avoidconflict of interest between the beneficiary and the investments.
Politicians, or others in sensitive positions (such asjournalists and religious leaders) often place their personal assets (including investment income) into blind trusts, to avoid public scrutiny and accusations ofconflicts of interest when they direct government funds to the private sector.
The US federal government recognizes the "qualified blind trust" (QBT), as defined by theEthics in Government Act and related regulations.[1] In order for a blind trust to be a QBT, the trustee must not be affiliated with, associated with, related to, or subject to the control or influence of the government official.[2]
Because the assets initially placed in the QBT are known to the government official (who is both creator and beneficiary of the trust), these assets continue to pose a potential conflict of interest until they have been sold (or reduced to a value less than $1,000). New assets purchased by the trustee will not be disclosed to the government official, so they will not pose a conflict.[2]
In theUnited Kingdom, while theLabour Party was inopposition in 1992–1997, itsfront bench received funding from blind trusts. One set up to fund its campaign in the1997 general election received donations from wealthy supporters, some of whose names leaked out, and some of whom receivedlife peerages into theHouse of Lords after Labour won the election.[3] The Neill Committee's report in 1998 found the use of blind trusts to be "inconsistent with the principles ofopenness andaccountability" and recommended that such trusts be "prohibited as a mechanism for funding political parties, party leaders or their offices,Members of Parliament or parliamentary candidates"[4] This was incorporated into thePolitical Parties, Elections and Referendums Act 2000 as section 57 "Return of donations where donor unidentifiable".[5]
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