A Bare Trust can be used by a client if they wish to gift money to children under the age of 18, who lack legal capacity to manage such assets.

The trustee(s) manage and control the funds until they are released to the beneficiary(s) at a future date.

Unlike some other trusts, a Bare Trust can’t be revoked. Once monies are paid into the trust, the beneficiary(s) becomes absolutely entitled to the assets. A transfer of money into the trust can’t therefore be reversed.

Why set up a Savings / Investment plan under a bare trust?

By setting up a savings plan under a bare trust, the client (known as the settlor) can gift money to a child under the age of 18 years (known as the beneficiary) each year by making payments into the policy and the beneficiary can avail of the Small Gift Exemption that currently applies.

Under current Revenue rules, if the total value of all gifts made by one person to another in any one year is less than or equal to €3,000, then gift tax would not apply to those gifts.

The settlor can decide who is to benefit from the amounts invested at the time of establishing the trust. It is important to remember that once a Bare Trust is established, the trust can’t be revoked and the beneficiary(s) named at the outset can’t be changed.

Investment Choices

Investing does, of course, carry its own risks. However, a well-structured and well-diversified portfolio, can be tailored to an individual’s requirements. Managed correctly, it can offer growth potential over deposits, protect capital from inflation and the decline in purchasing power over time.

On that basis we would typically recommend a portfolio based around solid global companies with a proven track record of positive returns above any other asset classes. You do have a choice of how and where funds are invested. Diversifying your investment portfolio is one of the best ways to reduce risk, and thus promote growth.

Glossary

Asset: This could be anything you own that could be worth something – for example your house, your car, the cash you have in your bank account.

Settlor: is the person who sets up the trust and supplies the money for the trustees to invest.

Beneficiary: is the person who benefits from the trust. There may be more than one beneficiary.

Trustees: are the administrators of the trust. They manage any assets of the trust for the benefit of another person.