A blind trust is a trust with terms that deny the beneficiaries the right to know any details of the trustee's disposition of trust assets. The trustee may, for example, invest trust assets in a particular company's stock without telling the beneficiaries and distribute dividends to them without telling them where the money came from. Blind trusts are often used by politicians who set up the trust with their own assets and name themselves as beneficiaries to avoid charges of conflict of interest. Blind trusts are subject to the same revocation restrictions that bind other types of trusts.
Examine the trust deed to determine if the trust is revocable or irrevocable, if you are the trustee. If you are a trust beneficiary, you may not have the right to see the trust deed. The trust is revocable under state law if the trust deed states that it is. It might be revocable if it is silent on the question of revocability, depending on the state. If it is revocable, the grantor may unilaterally revoke it by written notice to the trustee. The trust assets will belong to him, and he may distribute them as he pleases. A revocable trust automatically becomes irrevocable when the grantor dies.
Review the terms of the trust deed for revocation procedures, if you are the trustee. If the deed specifies how the trust may be revoked by the trustee or the beneficiaries, follow those procedures. If the trust automatically expires on a particular date, your best option might be to simply wait for it to expire.
Contact each trust beneficiary and obtain their written consent to revoke the trust. This may be insufficient, however, if any of the beneficiaries are minors. Unanimous beneficiary consent might also be impossible under state law if the trust deed mentions an unnamed beneficiary, such as "John's first-born son" if John has no children, because an unborn beneficiary cannot consent to revocation.
Prepare a petition to the district court with jurisdiction over the trust assets. The petition should ask the court to issue an order terminating the trust and distributing its assets in a manner that satisfies your reasons for wanting to terminate it in the first place. Your petition should attempt to convince the court that terminating the trust and distributing its assets as you request is either the best way to effectuate the original intentions of the grantor or will defeat no important purpose of the trust. Each beneficiary should sign the petition.
Distribute cash and personal property to the beneficiaries as stipulated by the court order if you are the trustee. Use your authority as trustee to re-title assets such as real estate and automobiles in the names of the appropriate trustees or liquidate these assets and distribute the proceeds to beneficiaries as the court order directs.
When drafting the trust deed, clearly state the purpose of the trust. This will make it easier for beneficiaries to terminate the trust if the purpose ever becomes impossible to achieve.
If the trust is irrevocable and you are a creditor of one of the trust beneficiaries, it is unlikely that you will be able to reach trust assets until they are distributed to the beneficiary that owes the debt.
- When drafting the trust deed, clearly state the purpose of the trust. This will make it easier for beneficiaries to terminate the trust if the purpose ever becomes impossible to achieve.
- If the trust is irrevocable and you are a creditor of one of the trust beneficiaries, it is unlikely that you will be able to reach trust assets until they are distributed to the beneficiary that owes the debt.
David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.