How to Set Up a Blind Trust

By Michael Butler

People, including judges, politicians and business executives, use blind trusts to avoid conflicts of interest because in a blind trust the beneficiary does not know how the trustee handles the assets of the trust. Lottery winners sometimes use blind trust to preserve anonymity. In other aspects, blind trusts are the same as other types of trusts.

Step 1

Read the trust laws in your state or consult with a licensed attorney. Trusts are established as a matter of state law, so you need to follow the proper procedures for your state.

Step 2

Gather the documentation for the assets you want to transfer to the trust after it is formed.

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Step 3

Appoint a trustee. Remember that you will be blind as to how the funds in the trust are handled, so your trustee should be trustworthy and financially responsible. If you do not know someone personally that you want to name as the trustee, hire a bank, trust company or attorney to act as the trustee. You may also want to appoint a backup trustee should something happen to your first selection.

Step 4

Draw up the trust agreement. It is advisable to have an attorney draft the trust agreement for you to insure that it works as intended. Make sure the trust documents indicate how the trustee should disperse assets to you and include when the trust ends. Both depend on your reason for needing a blind trust. A blind trust can be either revocable or irrevocable.

Step 5

Sign and notarize the trust agreement. If your state has trust recording laws, follow them to report the trust to the state.

Step 6

Transfer the assets to the blind trust so that the trustee can begin handling the trust.

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References

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How to Create a Legal Trust

A trust is a legal instrument that is useful for tax and estate planning. Under a trust arrangement, a trustee manages assets you transfer to the trust for the benefit of beneficiaries you select. You retain only indirect control over trust assets – the trustee must dispose of the assets as you direct in the trust deed that creates the trust. A trust is fairly simple to create, although it is prudent to have a lawyer look over the trust deed before you sign it.

How to Create a Revocable Trust

A revocable living trust allows you to provide for the distribution of your property after your death. When you set up a trust, you help your heirs and family avoid the probate courts, which must review and authorize any will. “Revocable” means that you can change the trust at any time, or cancel it altogether. Creating a trust is a straightforward matter of preparing and signing a document, which contains certain provisions and conforms to the law.

How to Terminate a Living Trust

Any trust that you establish during your lifetime is a "living trust." Living trusts can be revocable, which means that the person creating the trust, known as the "grantor," can terminate it during her lifetime. However, living trusts can also be irrevocable, which means the grantor cannot terminate the trust. In this case, the trustee can terminate the trust, but only in the manner specified in the trust – for example, after all the assets have been distributed.

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