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Disadvantages of a Blind Trust?

Topic closed. 1 reply. Last post 6 years ago by drhymes74.

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ttech10's avatar - blobdude
Texas
United States
Member #92330
June 5, 2010
887 Posts
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Posted: July 30, 2010, 12:48 am - IP Logged

So I was reading through some old stories earlier about lottery winners using Blind Trusts to claim their winnings anonymously. It got me thinking about all those that don't choose to accept this way and why they don't. For those that don't know, here's the major advantage of a Blind Trust.

 

A Blind Trust will hide your identity from "long lost relatives", actual relatives that are either untrustworthy or very greedy, keep your friends/coworkers unaware and thus preserving your relationship or keeping it secret from any other less than friendly people.

I've read of it being setup as either one Blind Trust or two. If you go with a single Blind Trust then you would not have control over the money, the person named on the trust would. The reason for having two trusts is so the Second Trust would collect the winnings anonymously and then distribute the winnings to the First Trust (which would name you on it). This way you are still anonymous and still have control over your money. 

 

As far as I know that's really the only advantage of creating a (or multiple) Blind Trust(s) to accept lottery winnings. What I want to know from people who may have looked into this more or those that oppose collecting this way, is there really any major disadvantage of using a Blind Trust? Would you create a Blind Trust?

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    United States
    Member #85338
    January 13, 2010
    143 Posts
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    Posted: July 30, 2010, 2:15 pm - IP Logged

    Some states don't allow blind trusts. Identity of those benefitting from the trust will be revealed in states that require this to be public information.

    The key to any trust is to take the ownership out of your hands so if you do get sued, it isn't part of the assets.  The trustee has a fiduciary responsibility to  ensure that the trust is taken care of.  It is like a retirement plan through work, while the account values can go up and down, the company sponsoring the plan can get sued and the $ in the plan is not subject to the general creditors.