We act for limited number of Trusts, however many of our clients may have existing bare trust arrangements for which they are ‘trustee’ - I’m thinking typical arrangements such as parents/grandparents holding bank accounts/investments for their children/grandchildren.
I understand that bare trusts do now need to be registered in the Trust register, by 1 September.
trsm23160 excludes the requirements to register bare trusts of cash deposits for children under the age of 16 or for people that lack mental capacity.
What is the view on registering bare trust arrangements, whereby the beneficiary is over 16 and does not lack mental capacity? Are people advising their clients to register these? Is there anything anyone has seen to indicate that this is not required?
Presumably, if this is required, there will be an ongoing obligation whereby the account is held for a child and they then turn 16?
Bare trusts are registrable unless excluded and the exclusion for under age 18 (not 16) beneficiaries is very narrow. Where a trust is excluded under para 6A Sch 3 it would seem to become registrable once the child attains 18 unless they become absolutely entitled and the trust “closes”. Once any trust is registered it has to be “maintained” for changes in its details and if it closes.
And, would you agree that a Bare Trust does not simply crease to exist because they have attained 18?
If the beneficiary did not call for the funds and the legal title remained in the name of the Trustees, would you agree that the Trust continues? merely because there is a difference between the legal and beneficial owners of that trust asset. My understanding is that, that has always been what a bare Trust is - a difference between legal ownership and absolute entitlement to income and capital
We must be dealing with an express bare trust because implied trusts are not registrable. So a key preliminary question of importance is what are the terms of the bare trust. Hopefully these are in writing and not part of a valid oral declaration of trust, so the terms (though not necessarily their interpretation) will be readily ascertainable. Presumably also a “trust” is actually declared. Not every right which A has to call for the transfer to him of an asset vested in B subsists under a trust, so failure to do so is not necessarily “breach of trust” where that designation is important e.g. in an exoneration clause. There has been discussion here that a Will that only disposes of all property outright need not create a trust but often will be drafted under existing precedents that direct the executors to hold the estate on trust to administer it. Though a superfluous direction HMRC will probably regard it as an express trust. So depending on its precise terms and their correct interpretation, if the declaration of trust uses the word “trust”, as it surely must to satisfy the certainty of intention and not be held merely precatory, it is almost certain that the trust does not cease to subsist just because a sole beneficiary has attained 18.