Albuquerque Blind Trust Lawyer

A blind trust is an asset-holding vehicle that allows an individual (usually a politician) to separate themselves from potential conflicts of interest. These trusts may be formed as a response to possible enforcement of ethics laws in certain U.S. jurisdictions.

However, because enforcement of ethics regulations is frequently lax, using a blind trust is more commonly seen as a voluntary exercise to inspire faith from the public. Albuquerque blind trust lawyers also use these to demonstrate ethical intentions to professional colleagues and others.

Otherwise, they may be concerned about the person’s potential to make decisions that benefit them rather than the people they are expected to serve.

When a blind trust is created, the person forming the trust (called a grantor, settlor, or trustor) removes their ability to see what is going on inside the trust. Unlike other trusts, they have no right to receive reports from the trustee, so in theory, they wouldn’t even know whether the assets in the trust are performing well.

Creating a blind trust is not required by any state laws, but if your goal is to eliminate the appearance of a conflict of interest, it can still be a wise course of action. Doing so allows you to simply remove assets from your line of sight rather than divest from them.

New Mexico Financial & Family Law can help you set up a blind trust that makes your assets feel relatively safe, even when your control over and visibility of them has been taken away. Call (505) 503-1637 or contact us online to schedule a no-obligation consultation with an Albuquerque blind trust lawyer at our firm today.

How Can an Albuquerque Blind Trust Attorney Help Me?

Setting up any trust can be complicated — a blind trust, much more so. Because of the need for the trust to be maintained without the oversight or monitoring of the grantor, they have to take special care to appoint a reliable trustee.

They should also provide the trustee with detailed instructions, so there is a reduced risk that the trustee would make decisions that significantly depart from what they would have wanted. In addition, the grantor will want to think carefully about the assets they place into their blind trust in Albuquerque.

Would they want to put most of their entire investment portfolio into the trust? Or would they rather be precise, removing only certain holdings from view because they represent their closest ties to possible conflicts of interest?

At New Mexico Financial & Family Law, we strive to provide you with the highest level of service and the best possible recommendations. Our Albuquerque blind trust attorneys draw from decades of legal experience in trust formation and estate planning.

They can help you consider all of your available options, in light of your unique goals and financial situation.

Reach out to our Albuquerque trust law firm to decide on key factors regarding your blind trust, such as:

• What assets to place into the blind trust
• Who to appoint as your trustee, including whether the best choice would be to select an individual or a dedicated service provider company, based on your requirements
• How to structure distributions from the trust, providing you (or others) with income from the trust without compromising your ability to remain unaware of its overall performance
• What instructions to provide to your trustee, such as income generation goals, or how to respond to a financial crisis
• Whether to make the trust revocable or irrevocable
• The length of time you want the trust to last, and whether you want the trust to remain effective as long as you are in a position of authority
• Instructions for handling the trust in the event that you pass on unexpectedly
• Procedures for removing the trustee, including what circumstances might trigger such an event to happen
• Guidelines that ensure compliance with tax filing requirements and applicable regulations

As you can see, there are many possibilities to consider with the help of your Albuquerque blind trust lawyer. Reach out to our offices today to book a no-risk consultation and start the conversation on how to form the best blind trust possible.

How Does a Blind Trust Work?

A blind trust is formed the same way as other trusts:

• A grantor (the trust creator) transfers a select portfolio of assets into the trust’s ownership
• A trustee assumes control of the trust, tasking them with day-to-day management of the trust’s portfolio as well as with making distributions according to the trust’s guidelines
• Beneficiaries receive distributions from the trust, according to the rules set by the grantor

What makes a blind trust unique is that, once the trust is created, the grantor is barred from receiving reports on or any other information regarding the trust. Beneficiaries may also be unable to receive information about the blind trust, depending on how it is set up.

In a typical trust, a grantor will be informed when certain holdings in a trust change value drastically, are sold or are otherwise altered. For example, if the value of a certain security plummets, or if a piece of real property has a competitive offer for its purchase, then the grantor would usually be informed.

Not so in a blind trust.

Typical trusts also require that the trustee files regular reports to the grantor and beneficiaries, often with the expectation that they will receive at least one report annually. Blind trusts intentionally do away with this requirement.

That way, the grantor will be unable to react to the information they receive while serving in their position of power.

For example, if the grantor receives a notice that a certain energy security has greatly increased in value, they might be inclined to pass legislation to further encourage the growth of that company’s industry sector. With a blind trust, the expectation is that they will maintain their focus on their duties and their promises to the people (or industries) they serve.

Trustee Control and Discretionary Powers

Another common feature of a blind trust is that the grantor removes all ability to influence the way the trust is managed. Often, the grantor retains the power to remove the trustee under specific situations, but they must otherwise take a “hands-off” approach to the trust’s management.

The trustee may also be given broad discretionary powers, allowing them to make the decision as to when distributions are made from the trust. This arrangement further reduces the risk that the grantor might take certain actions in order to encourage a payout from the trust. Instead, the trustee retains authority over every aspect of the trust’s operation.

When Does It Make Sense to Create an Albuquerque Blind Trust?

There are a few common scenarios where someone might be interested in forming a blind trust. These include a situation where:

• The grantor is an elected official or someone appointed to a position of trust, where their actions could potentially influence the performance of their financial portfolio
• The grantor holds a position of substantial power, such as being:
  • The head of a major corporation
  • A board member of an industry’s internal regulatory body
  • Someone who possesses privileged information about a company or an industry and who does not want to be accused of insider trading
  • An officer of a charitable organization with a mission that appears to run contrary to factors that would increase the grantor’s financial wealth, such as someone with stock in an oil company who takes up a position with an environmental conservation non-profit
• The grantor wishes to conceal the internal workings of the trust from beneficiaries, which is common when there is the risk that a beneficiary may pressure them or another party in order to create conditions favorable to their own interests in the trust

The Usage of Blind Trusts in Politics

The most common situation where someone would decide to form a blind trust is one where they were elected to a political office or appointed in a position of power within a public-facing organization. Since politicians have substantial power to affect policy and regulations, their actions could be seen as self-dealing (i.e., directly benefiting them financially).

For example, an elected official may advocate for the deregulation of an industry in which they have significant investments. Or, conversely, they may enact extremely strict regulations in a way that effectively shutters competitors to companies in which they are heavily invested.

The usage of blind trusts in politics first arose in response to the Ethics in Government Act of 1978. This act required all government officials to disclose all of their holdings in their financial portfolio, including companies and ventures in which they had invested.

Investments can include public trading or a private business arrangement, which typically promises them equity or debt in return for their support.

To avoid making public disclosures, individuals could instead place assets in a blind trust. With the assets safely out of view, the presumption is that the politician (or any other individual vested with substantial power by the public) would no longer be tempted to take certain actions with the intention to personally benefit.

After all, the trustee has sole control and discretion over the trust, so they may very well sell all of the grantor’s prior assets. Because of this possibility, there is theoretically little reason to manipulate markets or industries in their own favor.

Are Elected Officials or Political Appointees in Albuquerque Required to Place Assets Into a Blind Trust?

New Mexico’s Financial Disclosure Act was passed in 1978 as a means to relay the effects of the federal Ethics in Government Act of 1978 into state law. The Act requires elected officials to disclose all of the following (see NMSA §§ 10-16A-1 to -9):

1. The identity of each person disclosing information, along with information about where they reside and whether they have a current employer
2. Any gross income in excess of $5,000, with disclosures as to the general industry or activity that led to the creation of that income
3. Any property owned in the state, other than their personal residence
4. Any business interests greater than $10,000 in New Mexico companies, ventures, organizations, or other activities
5. Any positions on boards of in-state for-profit businesses held by themself or their spouse
6. Any professional licenses they hold from state licensing boards
7. The name of any state agency or entity that they or their spouse has received payment from for goods or services if the transaction is in excess of $5,000
8. The name of any state agency or entity (other than a court) if a member of that entity was a client professionally represented by the individual (e.g., if the person making disclosures served as a lawyer to a client who worked at or for a specific state agency)

The law does not make reference to a blind trust in any capacity. Perhaps because the disclosures that are required are generalized, any official or employee covered by the act is expected to comply since doing so would be unlikely to pose a substantial burden to them or their private financial affairs.

Nevertheless, a separate New Mexico statute (N.M. Stat. Ann. § 13-1-32) defines a blind trust as follows:

“Blind trust” means a trust managed by a person other than the employee-beneficiary in which the employee-beneficiary is not given notice of alterations in the property of the trust.

This statute is very narrow, and only appears to apply to government employees tasked with decisions on how to spend government money.  The statutes seek to prevent government employees from spending government money in a way that could benefit the employee personally. Also applicable to government employees, NM Stat § 13-1-190 provides that someone whose holdings in a company are placed in a blind trust cannot be accused of having a financial interest in that company when they are making a procurement decision regarding the possible use of said company.

Even still, elected officials and others in a position of public trust in Albuquerque may wish to form a blind trust as a public gesture of ethical goodwill. Doing so demonstrates a willingness to put significant effort and expense into avoiding apparent conflicts of interest, placing the sanctity of duty above any possible self-enrichment motive.

Reduce Conflicts of Interest With the Help of Our Albuquerque Blind Trust Law Firm

Whether you intend to show the public that your ethics are beyond reproach or you have other motivations for obscuring the contents of a trust from yourself or beneficiaries, we can assist you with creating a blind trust capable of achieving your goals.

Schedule a confidential portfolio evaluation and consultation with an experienced Albuquerque blind trust lawyer today when you call our law firm at (505) 503-1637 or contact us online.