Define: Bare Trust

A bare trust is a legal arrangement where a trustee holds assets on behalf of a beneficiary, but has no discretion or control over the assets. The trustee’s role is limited to holding legal title to the assets and following the instructions of the beneficiary.

In a bare trust, the beneficiary has the absolute right to the assets and can demand their transfer at any time. The trustee has no power to make decisions regarding the assets and must act solely in accordance with the beneficiary’s instructions.

A wide range of assets can be held in a bare trust, including real estate, cash, stocks, and other investments. The specific assets that can be held will depend on the laws of the jurisdiction where the trust is established.

One advantage of a bare trust is its simplicity. It is a straightforward arrangement that allows for the transfer of assets to a beneficiary without the need for complex legal structures. Additionally, the beneficiary has full control over the assets, which can be beneficial in certain situations.

Tax implications will vary depending on the jurisdiction and the specific assets held in the trust. It is advisable to consult with a tax professional to understand the potential tax consequences of establishing a bare trust.

In most cases, a bare trust cannot be revoked or amended by the trustee. The beneficiary holds the ultimate control and can decide to transfer the assets or terminate the trust at any time.

Yes, a bare trust can be a useful tool for estate planning. It allows individuals to transfer assets to beneficiaries while maintaining control and flexibility over the distribution of those assets.

The legal requirements for establishing a bare trust will vary depending on the jurisdiction. Generally, it involves creating a written trust agreement and transferring legal title of the assets to the trustee.

Yes, a bare trust can be established for charitable purposes. It allows individuals to donate assets to a charitable organisation while still retaining some control over the use and distribution of those assets.

If a trustee breaches their duties in a bare trust, they may be held liable for any resulting damages. The beneficiary can take legal action to seek compensation or have the trust terminated. It is important to choose a trustworthy and reliable trustee to minimize the risk of breaches.