Fredreka Schouten

USA TODAY

WASHINGTON — Federal laws that bar government employees from having conflicts of interest between their financial holdings and government duties generally don’t apply to the president or vice president.

For decades, however, presidents have organized their finances to avoid even the appearance of a conflict of interest. In most cases, they have established blind trusts run by independent trustees to oversee parts or all of their holdings.

In President-elect Donald Trump’s case, he's made it clear that he does not plan to relinquish ownership of his vast real-estate and branding empire, as recommended by ethics watchdogs.

Instead, he will transfer management responsibilities to two of his adult children, Donald Trump Jr. and Eric Trump, along with corporate executives. He says "no new deals will be done" during his tenure in office.

"Even though I am not mandated by law to do so, I will be leaving my businesses before January 20th so that I can focus full time on the presidency," Trump said in a series of tweets Monday night.

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Do presidents have to sell their holdings?

No. Presidents have to disclose many of their assets and debts in broad ranges to the Office of Government Ethics, but there’s no requirement that they sell off their assets before taking office.

What about members of his Cabinet?

Other executive branch officials — from cancer researchers to Cabinet secretaries — must recuse themselves from deciding matters in which they have conflicts, set up blind trusts or divest holdings that clash with their official duties.

For instance, Henry Paulson, the former chief executive of Goldman Sachs, sold nearly $500 million in stock to comply with conflict-of-interest rules when he was named Treasury secretary in 2006. In 2013, President Obama’s billionaire Commerce Secretary Penny Pritzker agreed to sell her shares in more than 120 companies, public records show.

Trump's Cabinet picks, which range from billionaire investor Wilbur Ross for Commerce to ExxonMobil CEO Rex Tillerson at State, will face a thicket of ethics rules that could require them to jettison parts of their holdings.

(Incoming executive branch officials who sell off their assets to avoid conflicts are allowed to invest the proceeds in government securities and diversified mutual funds. By doing so, they defer paying capital gains taxes on the assets they sold off. But the tax bill comes due once they sell those replacement assets.)

Who has Trump picked for his Cabinet so far?

What’s a blind trust?

It is a legal vehicle that gives an independent trustee the power to control the assets of an individual, such as an elected official. The trustee is empowered to make all decisions, rendering the official “blind” to the trustee’s choices.

Some ethics experts have argued that it's impossible for Trump to wall off his presidency from his business enterprises as long as he retains an ownership stake in the Trump Organization. They maintain that the best way for Trump to avoid conflicts would be to sell off his companies and turn over the proceeds to an independent manager to invest in a blind trust.

“The problem is that he has a personal financial interest in the Trump Organization, not whether he’s running it or not,” said Paul Ryan, the vice president of policy and litigation at Common Cause.

Other lawyers agree with Trump’s contention that it’s unrealistic for him to divest his complex and far-flung web of companies. “When you sell real estate, that’s not like going out and selling a stock,” Trump said over the weekend on Fox News. “That takes a long time.”

A quick fire sale of the entire Trump Organization also “likely would result in a huge financial loss to his family,” said Robert Kelner, a Washington lawyer and expert on government ethics. “I think most Americans would think that’s unfair.”

“Voters certainly realize he has business dealing all around the world,” he said, “and I don’t think anyone expected him to sell those off when they voted for him. They accepted that in the bargain.”

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What have previous presidents done?

The first president to establish a blind trust, Lyndon Johnson, did so to allow his wife, Lady Bird, to retain ownership of a television station in Austin, Texas, but remain free of conflicts. The president shared in the station’s profits.

Most recent presidents — Jimmy Carter, Ronald Reagan, George H.W. Bush, George W. Bush and Bill Clinton — have followed suit, stashing their personal assets in a blind trust.

Obama, whose wealth derives largely from book royalties, does not have a blind trust, but his assets are in mutual funds and Treasury bonds.

Can a president’s business dealings ever get him into trouble?

There’s a constitutional ban on accepting gifts or “emoluments” from foreign governments, along with criminal anti-bribery and fraud laws, that could apply to the president.

Most experts say enforcement of any violations would fall to Congress, which has the power to impeach the president. That’s an unlikely scenario, given that Trump’s party also controls the House and the Senate.

Presidents, however, have no protection from civil lawsuits that stem from their actions before they took office, thanks to a Supreme Court ruling that paved the way for an Arkansas state employee Paula Jones to sue President Clinton in a sexual harassment case related to his tenure as Arkansas governor.

That could provide an opening for Trump’s political opponents or business rivals to tie him up in court. They could, for instance, challenge his right as president to continue holding the lease to operate the Trump International Hotel in the federally owned Old Post Office Building near the White House.

Trump will enter the White House already facing dozens of lawsuits tied to businesses, and he's scheduled to testify in a deposition next month.

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