How to Create a Blind Trust: Steps, Costs, and Mistakes

To create a blind trust, you select an independent trustee, draft a trust agreement that bars the trustee from telling you what the trust holds or trades, transfer your assets in, and then stop managing them. If you’re a federal official, add one non-negotiable step at the front: the U.S. Office of Government Ethics (OGE) has to certify the trust before you sign it. Everything else follows from that basic idea. Once your assets are inside, you genuinely don’t know what the trustee is doing with them, and that ignorance is what removes the conflict of interest.

Decide Which Kind of Blind Trust You Actually Need

Not every trust called “blind” carries legal weight. A qualified blind trust meets the requirements of federal ethics law and has been certified by the OGE. Only a qualified blind trust shields a federal official from conflict-of-interest obligations on assets the trustee acquires after funding. Set up an informal arrangement with your financial advisor and label it “blind,” and federal ethics rules will not recognize it. You’ll remain legally responsible for conflicts tied to every asset inside.

Private blind trusts do exist. Business executives, litigants, and individuals who simply want hands-off management sometimes use them, and the parties can structure them however they like. But they carry no special protection under ethics statutes. If your reason for creating a trust is a federal appointment or any role governed by federal conflict rules, you need the qualified version, and the rest of the steps below assume that path.

One boundary worth naming up front: a blind trust is not always the right tool. During the initial consultation with the OGE, the office may point out that divestiture or recusal would be simpler and cheaper for your situation.

Who Can Serve as Trustee

The trustee is where the standards are strictest, and it’s where most of the early work goes. For a qualified blind trust, federal regulations require that the trustee entity be either a bank or a registered investment advisor, and it cannot be more than 10 percent owned or controlled by any single individual.¹ The entity, along with every officer and employee who will touch the trust, must clear three independence tests:

No association: the entity cannot be controlled or influenced by the grantor or any interested party (spouse, dependent children, or their representatives).
No affiliation: the entity cannot have been affiliated with, employed by, or a business partner of any interested party.
No family connection: no director, officer, or employee involved in managing the trust can be a relative of any interested party.

OGE reviews the proposed trustee’s past and current contacts with the grantor, including any banking or client relationship, before granting written approval.² Any prior connection that could allow the grantor to influence the trustee will get the candidate rejected. “Someone I don’t know personally” is not the standard; the standard is closer to “someone with no meaningful history with me, my family, or my representatives.”

The Steps, in Order

The process for a qualified blind trust follows a specific sequence set by federal regulation. Skipping or reordering steps can disqualify the trust.

Consult With the OGE First

Before doing anything else, you or your attorney contact the OGE. The office recommends starting as early as possible, because the process involves multiple rounds of review that take time.³ This is also where OGE explains the specialized requirements and helps you decide whether the trust is worth the effort in your situation.

Select and Vet the Trustee

You interview candidates that meet the institutional requirements above. Once you pick one, that entity contacts the OGE directly, submits a letter describing every past and current relationship with you and your family, and schedules an orientation on blind trust administration.² If OGE is satisfied with the independence review, it issues written approval. Anyone else who will have access to confidential trust information, such as an investment manager working under the trustee, must file a confidentiality agreement with the OGE.

Draft the Trust Agreement From OGE Model Language

Your attorney drafts the trust instrument using model documents provided by the OGE. This is not a build-from-scratch exercise, and it is not a place for online templates. OGE requires proposed drafts to follow the model language closely, and any deviation has to be approved by the OGE Director.³ The agreement addresses the trustee’s powers, the strict limits on communication, distributions, duration, and what happens when the trust terminates.

Submit the Unsigned Instrument for Certification

The unexecuted trust document goes to OGE for review. If the Director finds it conforms to the model and meets statutory requirements, OGE certifies the trust. Only then do you and the trustee sign it. A copy of the signed instrument must be filed with the OGE within 30 days.²

Fund the Trust

After signing, you transfer assets in by retitling investment accounts, real estate, and other holdings so the trust is the legal owner. You also file a list of all transferred assets with the OGE, categorized by value, within 30 days of certification.¹ The trustee then takes control and begins making independent decisions. The blind aspect activates at this point, but with an important limit covered below.

What You Can and Cannot Say to the Trustee Afterward

Once the trust is running, federal law permits only a narrow set of written communications between you and the trustee:

Cash distribution requests. You can ask for cash or unspecified assets, but you cannot name which holdings to sell.
General financial guidance. You can express broad preferences, such as favoring income over long-term growth, without pointing at any specific investment.
Legal prohibitions. If a new law or rule bars you from holding a type of asset, you can notify the trustee to divest it.
Conflict-driven divestiture. You can direct the trustee to sell an asset you originally placed in the trust if new duties create a conflict.

The trustee sends a quarterly report showing only the total cash value of your interest and the trust’s net income or loss for the quarter. It cannot identify any specific holding.⁴ The trustee also handles the trust’s tax return and gives you only the summary income categories you need to file your personal return.

The Assets You Put In Are Not Immediately Blind

This surprises most people. Transferring assets into a blind trust does not immediately eliminate your conflict-of-interest obligations for those assets. You know what you put in. If you transferred 10,000 shares of a pharmaceutical company, you still know those shares are there until the trustee sells them and tells you. Federal ethics rules reflect that. Conflict-of-interest laws continue to apply to each original asset until the trustee notifies you that it has been sold or its value has fallen below $1,000.⁵

The trust becomes genuinely blind over time, as the trustee sells original holdings and replaces them with positions you know nothing about. Certain assets make this hard. Real estate, closely held businesses, and other illiquid holdings are difficult to sell quickly and nearly impossible to render anonymous, because you will always know they were there. OGE may require restrictions on transferring such assets, or require you to divest them outright as a condition of approval.

What It Costs

Blind trusts are not cheap. Attorney fees vary with the complexity of your portfolio and how many revisions the OGE review requires, but drafting a qualified blind trust typically runs into the thousands of dollars because of the specialized work involved. Ongoing trustee management fees generally fall around 1 percent of trust assets per year, though the exact rate depends on the institution and portfolio size. Larger trusts often pay a lower percentage; smaller ones may face a higher rate or a minimum annual fee.

Budget separately for periodic legal consultations (especially if your official duties shift and raise new conflict questions), tax preparation for the trust return, and transaction costs the trustee incurs when restructuring the portfolio. These are the ongoing price of real separation between your official decisions and your financial interests.

Mistakes That Undo the Whole Arrangement

The most common failure is treating the trust as paperwork instead of a genuine barrier. Informal contact with the trustee, investment tips passed through mutual acquaintances, or a trust structured so that only one outcome is realistic (funding it with a single concentrated stock position and restricting sale, for instance) leaves you with a trust that is blind in name only. Ethics offices look for substance.

Starting late is the other big one. OGE review runs through multiple stages of approval, with back-and-forth between your attorney, the proposed trustee, and the ethics office. If you begin after you’ve already taken the position that requires the trust, you spend that gap holding known assets and carrying full conflict responsibility, which is the exact situation the trust exists to prevent.

And do not assume the trust ends your ethics obligations. You still file financial disclosure reports. You remain subject to conflict rules on the assets you initially transferred until they’re sold. You’re responsible for telling the trustee if new laws prohibit you from holding certain asset types. If the trust becomes defective at any point by failing to meet regulatory requirements, you’re immediately exposed to conflict-of-interest liability for everything inside. A blind trust reduces your exposure; it doesn’t make you immune.

1
eCFR. 5 CFR Part 2634 Subpart D – Qualified Trusts
2
eCFR. 5 CFR 2634.404 – Summary of Procedures for Creation of a Qualified Trust
3
U.S. Office of Government Ethics. Model Qualified Blind Trust Provisions
4
U.S. Senate Select Committee on Ethics. Qualified Blind Trusts Guide
5
eCFR. 5 CFR 2634.403 – General Description of Trusts