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, according to Annuity.org. The trustee might 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 them up 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.
Irrevocable or Revocable Trust?
Your first step will be to find out if the trust is revocable or irrevocable. You can do this if you're the trustee, but you may not have the right to see the trust's formation documents if you're a beneficiary. The trust is revocable under state law if the trust deed states this. It might be revocable if it's silent on the question of revocability, depending on the state.
The grantor can make changes to it or unilaterally revoke it by written notice to the trustee if the trust is revocable. 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.
It's unlikely that you'll be able to reach trust assets until they're distributed to the beneficiary that owes the debt in question if you're a creditor of one of the trust beneficiaries and the trust is irrevocable.
Review the Trust's Terms
Examining the terms of the trust agreement or formation documents will allow you to see the revocation procedures. Follow those procedures if the agreement specifies how the trust can be revoked by the trustee or the beneficiaries. Your best, easiest, least expensive option might be to simply wait if the trust automatically expires on a particular date.
Get Everyone's Approval
Contact each trust beneficiary and obtain his or her written consent to revoke the trust if you determine that you can legally access the assets of the trust. This may be insufficient, however, if any of the beneficiaries are minors. A blind trust attorney will be able to advise you, which will be helpful if you have a family trust.
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. An unborn beneficiary can't consent to revocation.
Go to Court
You might have to go to court to access the assets of a blind trust and you'll most likely need a specialist or blind trust lawyer to help you. 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 that it will defeat no important purpose of the trust. Each beneficiary should sign the petition.
Distribute the Assets
After you've received the go-ahead to access the assets of your blind trust, take the steps necessary to legally distribute its cash and personal property to the beneficiaries as stipulated by the court order if you're 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.
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.