A bare trust is a simple type of trust in which the trustees hold legal title to the trust property for the benefit of the beneficiary or beneficiaries. The trustees have no discretion to decide how the trust property is to be used or managed; they are simply required to hold the property for the benefit of the beneficiary or beneficiaries and to transfer it to them when requested.
The trustees have a fiduciary duty to act in the best interests of the beneficiaries and to manage the trust property in accordance with the terms of the trust. However, they do not have any discretion to make decisions about how the trust property is to be used or invested.
Bare trusts are often used as a way to hold property on behalf of a minor or someone who lacks the legal capacity to hold property in their own name. They can also be used for tax planning purposes, as the beneficiary of a bare trust is typically treated as the owner of the trust property for tax purposes.
Bare trusts are relatively simple and straightforward compared to other types of trusts, but it is still important to seek legal and financial advice when setting up or managing a bare trust.
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