This special type of trust has numerous meanings.
In the UK and other parts of the world, a blind trust operates like any other trust but the beneficiary of the trust has no knowledge of what assets are kept within the trust.
In Australia, a blind trust is the term given to a trust in which it is not apparent who are the real beneficiaries. That is, most (if not all) of the beneficiaries are not named in the trust deed. Alternatively, it can also refer to a situation where the beneficiaries are not able to inspect the trust instruments, not aware of the decision of, and transactions undertaken by the trustee in managing the trust.
Blind trusts are commonly used in international tax planning where a trust which will derive significant income is established in a tax haven – an Australian resident taxpayer who is not specially named in the trust deed may be able to say he or she does not have any interest in the trust. They are also sometimes used by individuals to hide assets from their creditors, relatives or spouses.
A blind trust can be used by decision makers of the public (eg. parliamentary officials, departmental heads or any high-ranking officials) to distance themselves from any possible conflict of interest against their personal buying and investment in business or security. This arrangement of placing investments in a blind trust by public officials is sometimes referred as an option to divestment in the hope that it will meet the public perception that improper influence has not been used to accumulate wealth.
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