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.
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.
Read More: Blind Trust Vs. Revocable Trust
Gather the documentation for the assets you want to transfer to the trust after it is formed.
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.
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.
Sign and notarize the trust agreement. If your state has trust recording laws, follow them to report the trust to the state.
Transfer the assets to the blind trust so that the trustee can begin handling the trust.
- Jupiterimages/BananaStock/Getty Images