I am advising a client on a suitable trust structure for grandchildren. All minors. The trust will hold shares in a private company. Intention is for the shares to be held on a bare trust with the father of said children acting as trustee. In addition the grandmother (settlor) would like the trustee to be able to exercise the voting power on the shares until the children reach the age of say 25. Is it possible to put in such a contingency without affecting the element of the bare trust or does the contingency create a normal settlement as opposed to a bare trust?
There is nothing wrong with bare trustees having investment and management powers but the beneficiaries must be able to terminate the trust and/or direct the trustee from age 18 otherwise you have a settlement.
It might be possible to supplement the arrangement with some kind of shareholders agreement that the minors sign when they reach 18 but entry into that agreement would also be voluntary.
Osborne Clarke LLP
Perhaps the arrangement could be for the father to hold the shares on trust as to a 99% share thereof for the grandchildren and as to a 1% share for himself.
Or the company could create a class of non-voting shares.
Clarke Willmott LLP