What is a Bare Trust?
The beneficiary of a Bare Trust has the absolute right to the trust’s assets and income. This type of trust is often used to hold assets for minors or to facilitate a specific purpose, such as holding property for someone else.
What is a Bare Trust?
1. Select a trustee
The trustee is the person/legal entity responsible for administering the trust in accordance with the terms of the trust deed. The trustee may be one or more individuals or a private (i.e. proprietary limited) company specifically setup to act as trustee.
It is generally recommended that a company act as trustee of a bare trust in order to minimise the risk of personal liability (which is generally greater for individual trustees than for directors of a corporate trustee). It also avoids unnecessary administration, as where the trustee is an individual (versus a company) there would need to be a change made in respect of the registered owner of each trust asset where there are changes in individual trustees.
2. Prepare a Trust Deed
eCompanies can prepare a customised bare trust deed for $150. Our questionnaire will guide you through all the required information, for more information of what is required please see our explanation of bare trust roles.
Email delivery of your deed is in pdf format, however you may also download the deed in docx, doc or rtf format from our client area at any time if you need the ability to edit the deed before it is signed.
3. Trustee and beneficiary sign the Trust Deed
Both the trustee and beneficiary must agree to the terms of the deed.
4. Register the bare trust with the relevant authorities.
Depending on the type and value of the asset held by the bare trust, you may need to pay stamp duty, capital gains tax, or land tax.
You may also need to obtain an Australian Business Number (ABN) or Tax File Number (TFN) for the bare trust if it receives income or makes capital gains.
5. The Trust is operational
The trust is now operational. Your need to manage the bare trust according to its terms and conditions.
Bare Trust Information
Need more info? Check out our what is a bare trust and our explanation of roles in a bare trust pages.