Legal Question in Business Law in California

Re: blind trust

I suspect that 'blind trust' is not the correct name for what is being proposed. Perhaps the proposal is for a voting trust, giving the trustee power to vote your shares.

In a blind trust, you as beneficiary are not allowed access to information about how trust assets are invested or managed. These are suitable for politicians, etc. to avoid conflicts of interest. I see little legitimate reason for a small business owner to give a trustee such broad powers to manage (i.e., sell) your stock.

You should question the purpose of the proposed trust vigorously -- and understand and consent -- before placing your shares in a blind trust. A voting trust is perhaps less problematic, but you would still be giving up significant rights and you should also question the purpose and the motives of the persons suggesting or demanding such a trust.

There are legitimate uses for trusts, but you also may be being manipulated here. Have an attorney review the trust documents, the purpose, and the selection of the trustee who would have all that power over your assets.