Blind trust services

Your decision to make a positive impact in your community and country comes with many responsibilities. This includes taking steps to separate your private financial interests from your public duties, which can be achieved through the establishment of a blind trust.

What is a blind trust?

A blind trust is a legal arrangement in which a person transfers control of their assets to an independent trustee to be administered on their behalf. The trustee, who can be a qualified individual or company, manages the trust and is prohibited from sharing information about its assets and administration with the beneficiary.

In Canada, blind trusts are typically established by public office holders, such as elected officials and government office appointees, to separate themselves from their financial interests and ensure decisions are made without personal bias.

Blind trusts are one of the two ways beneficiaries can divest themselves of any assets they cannot continue to own or control while they occupy public office. The other method is to sell the assets in an arm’s-length transaction. This divestment is required by Canadian federal and provincial conflicts of interest legislation.

How blind trusts work in Canada

The public office holder initiates the blind trust process, which includes the following steps:

1. Selection of a trustee
The public office holder engages a qualified arm’s-length individual or company to be the trustee of the blind trust.

2. Trust setup
If the public office holder holds both registered assets (like investments in an RSP or TFSA) and non-registered assets (such as investments in a non-registered investment account) that they are required to divest, they may need to establish two separate blind trusts: one for registered assets and another for non-registered assets.

3. Blind trust approval
The relevant federal or provincial oversight authority (e.g. the Ethics Commissioner of Canada) will review and approve the trust terms before each trust is set up and assets are transferred into it.

4. Ongoing management
The trustee will hold and administer the trust assets until the public office holder is no longer required to be divested of them. To maintain confidentiality, additional documentation is usually required from all professionals engaged by the public office holder, such as their investment advisor and accountant, which provides parameters for the ongoing investment of the trust assets while in the blind trust.

5. Reporting and returns
Although the public office holder may receive income generated by the trust, such as dividends, they will not receive detailed reports about the trust’s holdings or operations. All income in the trust is taxed as if the public office holder is still the direct owner of the assets held in the blind trust.

6. Trust termination
Public office holder may terminate a blind trust when they leave public office or retire. When the trust terminates, the trustee will transfer all assets back to the public office holder.

Why work with RBC Royal Trust

Our dedicated team of trust professionals has extensive experience administering blind trusts for public office holders, which includes providing all necessary annual reporting to the relevant government oversight authority.

Know that we understand the complexities and restrictions involved at every stage.

The RBC Royal Trust team will work with your trusted professionals, such as your investment manager or accountant to provide the support and necessary information to them while ensuring the blind trust is administered according to the legislated restrictions.