What is the purpose of a blind trust?
Blind trusts create a layer of separation between the grantor’s assets and professional or political activities that helps to eliminate real or perceived conflicts of interest and accusations of wrongdoing. Individuals who receive a windfall can also use them to maintain financial privacy.
Does a blind trust pay taxes?
An OGE-qualified blind trust may not reveal its assets either to the grantor or to the public. The trust pays out income from the trust without revealing the source, and the owner must then declare that income and pay the appropriate taxes on it.
Can you withdraw money from a blind trust?
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. 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.
Are Blind trusts legal?
The US federal government recognizes the “qualified blind trust” (QBT), as defined by the Ethics in Government Act and related regulations.
Who has control of a trust?
Trust property refers to the assets placed into a trust, which are controlled by the trustee on behalf of the trustor’s beneficiaries. Trust property removes tax liability on the assets from the trustor to the trust itself, in some cases.
How many people can control a trust?
In some circumstances, two or more people may decide to create a trust and are collectively referred to as grantors. Generally, both people must agree to amend, alter or revoke the trust. The person in charge of managing the trust, who is often the same person who created the trust, is called a trustee.
Are family trusts worth it?
Most importantly, a family trust can help to minimize estate taxes once the trust grantor passes away. Estate and gift taxes could take a significant bite out of your wealth but trusts can be helpful for minimizing the tax burden for wealthier investors.
Do family trusts pay tax?
A family trust typically pays zero tax on income from within the trust. Instead, the income is distributed to the beneficiaries, who are taxed at their personal tax rates. The only instance in which a family trust does pay tax is if the income isn’t distributed to its beneficiaries.