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Bare trusts ― IHT


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Bare trusts ― IHT


Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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This guidance note discusses the IHT treatment of bare trusts.

What is a bare trust?

The term 'bare trust' applies to an arrangement where the legal ownership of property is in a different name from that of the person beneficially entitled to it. The person entitled to it has absolute rights to both capital and income, but the legal owner will conduct the management of it. Some of the situations in which a bare trust might arise are described below.

Assets held for children

Minors do not have the legal capacity to enter into an enforceable contract or give a valid receipt. Property which, in equity, belongs to a child must be held in the name of a trustee. Whilst the child is under 18, the trustee, usually a parent or guardian, manages the property according to their own judgment, even though it belongs absolutely to the child. But if the child's rights to the property are not subject to a legal restriction, other than their incapacity as a minor, the child has the right

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  • 16 Oct 2024 08:00

Home/ Tolley Tax Guidance/ Trusts and Inheritance Tax / Advising on trusts — IHT

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