What Is A Blind Trust? President-Elect Donald Trump Plans To Leave Company With His Three Adult Children

With President-elect Donald Trump entering office in just over two months, it remains unclear what he will do with his conglomerate of hotels, golf clubs, casinos, wine, real estate properties, steaks and other products, known as the Trump Organization, of which he is chairman and president.

He has previously announced plans to pass control of the enterprise to his adult children in the form of a blind trust, and such an arrangement could be possible—as long as he doesn’t tell Eric, Ivanka and Donald Jr. what to do with any part of the company that bears his name for the next four years, something that would be difficult to publicly monitor.

During the sixth GOP primary debate in Charleston, South Carolina, in January, when moderator Maria Bartiromo asked whether Trump would place the company’s assets into a blind trust to avoid significant conflicts of interest, he responded that he would indeed place the company into a blind trust, then defined the complete opposite.

After referring to his three oldest children, who each serve as executive vice president of development and acquisitions, Trump added, “Well, I don’t know if it’s a blind trust if Ivanka, Don and Eric run it. If that’s a blind trust, I don’t know. But I would probably have my children run it with my executives and I wouldn’t ever be involved because I wouldn’t care about anything but our country, anything.”

In a 2015 guidance update, the Securities and Exchange Commission (SEC) specifies that a blind trust is an arrangement in which a “trustee” manages funds for the benefit of someone “who has no knowledge of the specific management actions taken by the trustee and no right to intervene in the trustee’s management.” But while the person detaching him or herself from the entity is barred from even “suggesting purchases or sales of investments,” the SEC says that “discussions in which a trustee simply summarizes, describes or explains account activity” to someone in Trump’s position, “without receiving directions or suggestions from the access person,” such talks don’t constitute any interference.

In other words, Eric, Ivanka and Donald Jr. could provide their father with updates on the goings-on of Trump Organization, as long as the president-elect gives no directive feedback.

There is no federal law barring federal officials like the incoming president from maintaining corporate entities with potential conflicts of interest while in office, according to a report from the Congressional Research Service. The blind trust mechanism is more of a suggestion, the CRS report says, in the form of “one of several methods of conflict of interest avoidance under federal law and regulation.”

But Trump may be breaking the law if he decides to employ his three oldest children in another, newer area of his professional life: the presidency.

Title 5, Section 3110 of the U.S. Code states that public officials “may not appoint, employ, promote, advance, or advocate for appointment, employment, promotion, or advancement ” a family member. Trump’s two sons, his daughter and his son-in-law have all been listed as members of his transition team.

Still, Donald Trump Jr., taking questions from ABC's George Stephanopoulos in September, defended the blind trust arrangement and promised that he and his siblings, who have been heavily involved in their father's campaign, wouldn't hold positions in his administration.

"We're not going to be involved in government. We wouldn't be involved in government," he said, disputing Stephanopoulos' argument that Trump Organization couldn't be characterized as a blind trust if it were run by the president-elect's children.

In a sign that Eric, Ivanka and Donald Jr. will opt for the more legal, though still controversial job choice, vocal Trump supporter and former New York City mayor Rudy Giuliani told CNN’s Jake Tapper that forcing the Trump kids out of the corporation would not be ideal, as it would leave them unemployed.

“[Trump] would basically put his children out of work if—and they’d have to start a whole new business,” Giuliani said, “and that would set up the whole—set up new problems.”