What is a bare trust?

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Multiple Choice

What is a bare trust?

A bare trust is where the settlor transfers property to a trustee to hold on behalf of a beneficiary, with no active duties or discretionary powers given to the trustee. The key point is that the trustee’s role is purely to hold the asset and transfer it to the beneficiary on demand; there’s no ongoing management or decision-making by the trustee. This aligns with the description that a bare trust is created when the settlor does not impose active duties on the trustee. In such a setup, the beneficiary has an immediate, unconditional entitlement to both the income and the capital of the trust property. The trustee isn’t exercising discretion or accumulating income for someone else; they simply hold for the beneficiary’s benefit. The other statements don’t fit as neatly: one implies the trustee has active duties, which would be more than a bare trust; another limits entitlement to income only, whereas a bare trust also gives entitlement to capital; and the last describes joint ownership rather than a trust structure.

A bare trust is where the settlor transfers property to a trustee to hold on behalf of a beneficiary, with no active duties or discretionary powers given to the trustee. The key point is that the trustee’s role is purely to hold the asset and transfer it to the beneficiary on demand; there’s no ongoing management or decision-making by the trustee.

This aligns with the description that a bare trust is created when the settlor does not impose active duties on the trustee. In such a setup, the beneficiary has an immediate, unconditional entitlement to both the income and the capital of the trust property. The trustee isn’t exercising discretion or accumulating income for someone else; they simply hold for the beneficiary’s benefit.

The other statements don’t fit as neatly: one implies the trustee has active duties, which would be more than a bare trust; another limits entitlement to income only, whereas a bare trust also gives entitlement to capital; and the last describes joint ownership rather than a trust structure.

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