Qualified Trust

Before discussing qualified trusts, we want to give an important word of caution: If you are a Nominee or New Entrant, do not attempt to establish a federal executive branch qualified trust without first consulting OGE.

The Ethics in Government Act of 1978 established a uniform system of qualifying trusts that emphasizes independent trustees and limited communication with the employee involved.

There are two different types of qualified trusts:

•  A qualified blind trust requires you to relinquish control of your assets to an independent trustee, who manages the assets in the trust without your knowledge. Any asset initially placed in the trust continues to pose a potential conflict of interest until it has been sold or reduced to a value less than $1,000. The new assets purchased by the trustee will not be disclosed to you, so they will not pose a conflict.

•  A qualified diversified trust holds a portfolio of marketable securities that is so diversified that it does not pose a conflict of interest because no specific action can significantly impact the overall value of the portfolio. No single asset in the trust may be more than 5% of the total portfolio, and no more than 20% of the portfolio may be concentrated in any particular economic, geographic or industrial sector. An asset that poses a significant conflict with your duties also cannot be put in the initial trust portfolio.

A “qualified trust” must be certified as such by the Director of OGE. Therefore, do not mark “qualified trust” for any pre-existing trust in which you, your spouse, or your dependent children have a beneficial interest. Rather, interested parties should contact OGE or an ethics official to coordinate efforts to create an appropriate type of trust. OGE has several model qualified trusts available on our website. 

 

This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.

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