Christian Porter’s Blind Trust

An individual who enters politics and wants to avoid any appearance of conflict between their role in government policy and their personal interests may place their assets into a “Blind Trust”. The trust operates according to a trust deed –which outlines the purposes of the trust, including how the assets shall be distributed when the blind trust expires.

Christian Porter

In March this year former Commonwealth Attorney-General Christian Porter commenced defamation proceedings against the ABC and reporter Louise Milligan. In May he decided to discontinue this action. Recently Mr Porter updated his register of members’ interests declaring that a “blind trust known as the Legal Services Trust” had made a “part contribution” to cover the costs of his lawyers and filing the lawsuit against the public broadcaster adding he had no access to information about its conduct or funding.

A Blind trust

The settlor and the beneficiary (who can be the same person) of the blind trust have no role in the day-to-day management of the trust. Once assets are transferred to a blind trust, the trustee can freely buy and sell assets as expressed in the trust deed. The beneficiaries are not informed of the assets held, bought or sold, or the performance of the trust.

Similarly, the trust deed limits the settlor or beneficiary from contacting the trustee regarding the holdings, principal, or returns, importantly they cannot direct the trustee about the management of the assets. The settlor and beneficiary are “Blind” to the day-to-day actions of the trustee.

Discretionary Trust

The “Legal Services Trust” resembles a discretionary trust whose beneficiaries do not have a fixed entitlement to the trust funds. It is usual for the trust deed of a discretionary trust to define potential beneficiaries very broadly, (this can include companies, trustees of other trusts, and children yet to be born) with the trustee having complete discretion to determine who receives a benefit from the trust and how much each of them can receive. Importantly, unless the objects of the trust are described with sufficient clarity the trust could be void for uncertainty.

Beneficiary or Object?

Until the trustee exercises their discretion in favour of a potential beneficiary, they are an “object” of the trust. Therefore, technically Mr. Porter is an object and not a beneficiary of the Legal Services Trust until the trustee has exercised its discretion to distribute the income of capital to him.

Additionally, an object of a discretionary trust does not have a proprietary interest in the property of the trust – they have a “mere expectancy” – being the right to compel the due administration of the trust estate and the right to be considered by the trustee.

Register of Members Interests

It has been reported that Mr. Porter was provided with an assurance from the trustees that the assets of the Legal Services Trust were not provided by lobbyists or prohibited foreign entities.

Assuming Mr. Porter knows the identity of the trustee who revealed this information it may assist in knowing who donated the money as the settlor and trustee maybe the same. However, the trust deed may have been drafted imposing a limitation on the trustee not to disclose the identity of the settlor to an object of the trust.

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