blind trust

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Blind trusts refers to trusts established so that neither trustor or the beneficiary knows what assets are inside the trust after its creation. The trustee manages the trust until the beneficiaries are supposed to receive the assets or until the trustor closes the trust for those that are revocable. Individuals normally put assets into the trust to avoid conflicts of interest or to hide assets from beneficiaries. Major public figures, corporate officers, and politicians may place their investments into a blind trust before taking on new ventures. Often, this method is criticized because, while they may not know what occurs after the trust’s creation, they know what assets they put into the trust. So, they may still have a conflict of interest by knowing what the trust likely contains. Blind trusts have another use for politicians; while they normally must disclose what assets they own when elected to office, politicians may avoid this by placing the assets into a blind trust which prevents them from disclosing its contents. 

[Last updated in November of 2021 by the Wex Definitions Team]