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Bare Trusts

A Bare Trust is probably the simplest trust of all. The Trustees hold the assets for the beneficiary appearing as the legal owner of the asset to third parties, whilst the beneficiary is treated as the ‘real’ owner of the trust assets for the purposes of tax.

This is particularly useful to hold assets for children or if you have multiple owners of an asset – for example multiple owners of a property but only two ‘Trustees’ holding the property on trust for all of the beneficiaries. This means that the assets within the trust are taxed as if they belong to the beneficiary – almost as if the trust does not exist at all - except that the Trustees are in control of the assets.

A common use of a Bare Trust is whereby grandparents or other family members hold assets such as shares or a bank account ‘on trust’ for children. The Trustees hold the asset for the child beneficiary until the child reaches the age of 18 years. The beneficiary is treated as owning the asset within the Bare Trust for the purposes of income tax, capital gains tax and inheritance tax.  Some assets within a Bare Trust need to be managed rather than just ‘held’ so the simple Bare Trust needs some additional powers to assist the Trustees for the benefit of the beneficiary.

HM Revenue & Customs will treat any income belonging to a parent if this derives from an asset held on bare trust for their child under the age of 18 years.  

If you are a trustee, a beneficiary or thinking of setting up a trust, please contact Trudy Rogers on 01635 569670 or