A blind trust is a trust in which the

beneficiaries A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the person who receives the payment of the amount of ...

have no knowledge of the holdings of the trust, and no right to intervene in their handling. In a blind trust, the

trustee Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, refers to anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility for the ...

s ( fiduciaries, or those who have been given

power of attorney A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another's behalf in private affairs (which may be financial or regarding health and welfare), business, or some other legal matter. The person auth ...

) have full discretion over the assets. Blind trusts are generally used when a trust creator (sometimes called a

settlor In trust law, a settlor is a person who settles (i.e. gives into trust) their property for the benefit of the beneficiary. In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor. Where the trust is ...

, trustor, grantor, or donor) wishes for the beneficiary to be unaware of the specific assets in the trust, such as to avoid

conflict of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple wikt:interest#Noun, interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates t ...

between the beneficiary and the investments.

Politician A politician is a person who participates in Public policy, policy-making processes, usually holding an elective position in government. Politicians represent the people, make decisions, and influence the formulation of public policy. The roles ...

s, or others in sensitive positions (such as journalists and religious leaders) often place their personal assets (including investment income) into blind trusts, to avoid public scrutiny and accusations of

conflicts of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations in whi ...

when they direct government funds to the private sector.

Use by US government officials to avoid conflicts of interest

The US federal government recognizes the "qualified blind trust" (QBT), as defined by the

Ethics in Government Act The Ethics in Government Act of 1978 is a United States federal law that was passed in the wake of the Nixon Watergate scandal and the Saturday Night Massacre. It was intended to fight corruption in government. Summary The Ethics in Governmen ...

and related regulations. 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. 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.

British party funding

In the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...

, while the Labour Party was in opposition in 1992–1997, its

front bench In many parliaments and other similar assemblies, seating is typically arranged in banks or rows, with each political party or caucus grouped together. The spokespeople for each group will often sit at the front of their group, and are then kno ...

received funding from blind trusts. One set up to fund its campaign in the 1997 general election received donations from wealthy supporters, some of whose names leaked out, and some of whom received

life peerage In the United Kingdom, life peers are appointed members of the peerage whose titles cannot be inherited, in contrast to hereditary peers. Life peers are appointed by the monarch on the advice of the prime minister. With the exception of the D ...

s into the

House of Lords The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...

after Labour won the election. The Neill Committee's report in 1998 found the use of blind trusts to be "inconsistent with the principles of

openness Openness is an overarching concept that is characterized by an emphasis on transparency and collaboration. That is, openness refers to "accessibility of knowledge, technology and other resources; the transparency of action; the permeability of or ...

and

accountability In ethics and governance, accountability is equated with answerability, culpability, liability, and the expectation of account-giving. As in an aspect of governance, it has been central to discussions related to problems in the public secto ...

" 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" This was incorporated into the

Political Parties, Elections and Referendums Act 2000 The Political Parties, Elections and Referendums Act 2000 (c. 41) is an Act of Parliament of the United Kingdom that sets out how political parties, elections and referendums are to be regulated in the United Kingdom. It formed an important par ...

as section 57 "Return of donations where donor unidentifiable".

References

Wills and trusts {{law-term-stub