A bare trust is also referred to as a simple trust.
Income generated from trust assets in the form of interest, dividends or rent is taxed in the hands of the beneficiary, making it a tax-efficient way of transferring assets to descendants.
There is no tax implication for the settlor (himself, as settlor) who sets up a bare trust. This is because he is giving up legal title to the assets when they are transferred to the trust.
A major disadvantage with a bare trust is that the beneficiaries cannot be altered once the trust has been set up.
Another negative aspect is that there may be potential capital gains tax and IHT implications in some jurisdictions.
