Bare Trust - easy question?!

Mr_Cautious

My wife has a life policy and I want to set up a Bare Trust to ensure that, on payout, the money goes directly to our children.

My question is :- Can our children be named as Trustees of the Bare Trust as well as them being the beneficiaries?

I have scoured the web and cannot find an answer to this!

Thanks in advance.

Malthusian

The policy should be written in trust with the children named as beneficiaries. This is not a "bare trust", that's a different kind of trust.

The children can be trustees of the trust if they are over 18 at the time it takes effect. Otherwise minors cannot be trustees.

There is no rule that a beneficiary can't also be a trustee. If there's a reasonable possibility they might be over 18 if/when the policy pays out, it would be sensible to name them as trustees as well. If they're going to get the money, they can do the paperwork.

Another way to achieve what you want is for the life policy to be assigned to the children as policy owners.

Mr_Cautious

Thanks Malthusian for the speedy reply.

The only forms that the Life company sent when I explained what I wanted to do were a Discretionary Trust form and a Bare Trust form. I read the guidance notes and since we don't want Trustees to have the ability to determine who gets the proceeds it seems that the Bare Trust forms are the ones we should use. It sounds like you don't think a 'Bare Trust' is right?

The kids are already over 18.

thanks.

Keep_pedalling

Malthusian wrote: »

The policy should be written in trust with the children named as beneficiaries. This is not a "bare trust", that's a different kind of trust.

The children can be trustees of the trust if they are over 18 at the time it takes effect. Otherwise minors cannot be trustees.

There is no rule that a beneficiary can't also be a trustee. If there's a reasonable possibility they might be over 18 if/when the policy pays out, it would be sensible to name them as trustees as well. If they're going to get the money, they can do the paperwork.

Another way to achieve what you want is for the life policy to be assigned to the children as policy owners.

We have term life insurance in place to cover PETs against IHT in case of an early death and the policy is definitely written into a bare trust, and there was an option for a discretionary trust. I can see the purpose of both, but in reality the bare trust is going to be wound up immediately the money is paid out, as it is simply done to prevent the payout going into your estate.

Provided the children are adults they can be trustees.

Malthusian

Mr_Cautious wrote: »

Thanks Malthusian for the speedy reply.

The only forms that the Life company sent when I explained what I wanted to do were a Discretionary Trust form and a Bare Trust form. I read the guidance notes and since we don't want Trustees to have the ability to determine who gets the proceeds it seems that the Bare Trust forms are the ones we should use. It sounds like you don't think a 'Bare Trust' is right?

In that case the bare trust form is right (providing that the money is still outside the estate). I hadn't come across the term "Bare trust" being used in this way. As the insurer will be paying the proceeds directly to adult beneficiaries the term "bare trust" is a bit confusing. The usual context of "bare trust" is for money wholly owned by children under 18.

The answer to your question is that the kids can be trustees and there's no obvious reason why anyone else should be involved.

The question we haven't asked is why they need insurance on their mother's life. There could be plenty of reasons (Keep pedalling has mentioned one). But it is important because adult children do not automatically have an insurable interest on their parent, unlike spouses.