What is a bare trust?
A bare trust is the simplest form of trust, where the beneficiary has an absolute, immediate right to both the trust’s assets and income.
Bare trusts are often chosen because they let you place assets in someone else’s name while keeping full legal entitlement with the beneficiary. This structure offers clarity and ease, especially suited for straightforward arrangements.
Bare trusts commonly serve specific practical purposes:
How are bare trusts used?
Holding assets for children
Many families use bare trusts to safeguard savings or investments for children. The child is the beneficiary and gains full control at the age of 18, ensuring the assets are managed appropriately until then.
Holding property between married couples
Bare trusts can hold property jointly, facilitating clear legal ownership. This can be in relation to the family home so each person can control where their interest in the property will pass in the event of them passing away. It can also be useful for tax planning directing income to a spouse to make full use of their tax allowances and tax rate.
Nominee arrangements
When someone holds assets on behalf of another, a bare trust clarifies the beneficial ownership, often used in commercial or financial contexts
Tax Treatment
In a bare trust arrangement, the beneficiary is treated as the owner of the assets for tax purposes. This means they are responsible for income tax and capital gains tax on any income or gains generated. This feature can offer advantages, especially if one owner has a lower tax rate than another owner.
Advantages of a bare trust
Simple and low cost
Setting up and managing a bare trust is straightforward, usually requiring less legal complexity and lower fees compared to other trust types.
Minimal administration
The trust does not require extensive paperwork or ongoing management, making it easier for families and individuals to maintain.
Disadvantages of a bare trust
No control after entitlement
Once the beneficiary reaches legal adulthood (usually 18 years old), they have an automatic and absolute right to the assets. This means the settlor or trustee cannot step in to manage or restrict access beyond that age.
No asset protection
Because the beneficiary owns the assets outright for tax and legal purposes, the trust offers no protection against creditors or other claims.
Tailored guidance throughout every step
We understand that every client’s situation is unique. We listen carefully to your goals and explain clearly how a bare trust can work for you, ensuring you make well-informed decisions.
Experience in family and business contexts
Whether holding assets for young family members or arranging nominee agreements, our team brings deep experience to guide you confidently.
Clarity on tax implications
Tax matters can feel daunting, but we break down the implications transparently, helping you understand your responsibilities and opportunities.
Pragmatic solutions with long-term view
We focus on solutions that serve not just today’s needs but anticipate future changes, always protecting your interests over the years.
Responsive and personal service
We pride ourselves on being approachable and available. You can rely on us for clear answers when you need them.
Responsive and personal service
We pride ourselves on being approachable and available. You can rely on us for clear answers when you need them.
Legal 500 recommended firm
Our standing as a Legal 500 recommended firm underlines our commitment to excellence and trusted advice.
Comprehensive support beyond trust setup
We don’t just create trusts; we’re here for the ongoing questions and support as your family or business evolves.
Why choose bare trusts?
Bare trusts give beneficiaries absolute rights to the assets, making ownership clear and simple. This direct approach benefits those who want minimal complexity. From safeguarding children’s financial future to managing joint property interests, bare trusts fit neatly into many everyday scenarios.
We are proud to be recognised by Legal 500 for our specialist trusts and estates expertise. This independent validation reflects the consistent quality, care, and insight we bring to every client relationship. Choosing Pinney Talfourd means more than legal advice; it means a partnership built on trust that endures.
Bare trusts FAQs
We understand you might be looking for answers, so we’ve compiled a list of frequently asked questions to help get you started.
The Trustee must then act in accordance with the beneficiary’s instructions. If the beneficiary wants to have the trust fund transferred from the trustee to the beneficiary, then the trustee must comply with the beneficiary’s instructions.
In certain situations, the trustees may decide that it is more appropriate for the funds to be paid to the parent/guardian of the beneficiary to hold for the benefit of the beneficiary until they are 18.
Beneficiaries are responsible for taxes on trust income and gains, which can be beneficial if they have lower tax rates. However, advice tailored to your situation is vital to avoid unexpected liabilities.
No. Since the beneficiary is deemed the absolute owner, assets are potentially liable for the beneficiary’s debts or claims.
Absolutely. Although bare trusts are simple, expert advice ensures they fit your personal and financial circumstances and comply with legal and tax requirements.
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Your key contact
You can contact us now to book an initial consultation. Or for more information please contact Kristian Croad on the details below.
Kristian Croad
Partner