Bare trustee meaning

Re Wealthtek LLP (in special administration) [2024] EWHC 3050 (Ch) What are the practical implications of this case? This ruling emphasises the need to: distinguish an appointment as administrators of a trustee tasked with administering trust property from being appointed as administrators of an insolvent company to deal with the company’s own assets, and accurately identifying for the court the applicable regulatory regime The first question had to be assessed against the objectives of special administration set out in the Investment Bank Special Administration (England and Wales) Rules 2011 (IBSA) SI 2011/1301, in particular Objective 1: the return of client assets as soon as reasonably practicable. That statutory aim framed how the court approached the Administrators’ mandate. Because the Administrators’ function fell within category (i) above, and all clients were adults, the bank held the assets on bare trust; the right to pursue recovery was itself an asset to be restored to clients. Accordingly, control of claims rested with clients,...

In this issue: Key R&I law developments Corporate insolvency processes Personal Insolvency Restructuring Insolvency litigation Daily and weekly news alerts New content Key R&I law developments Home Office publishes guidance on Economic Crime and Corporate Transparency Act The Home Office has issued guidance covering the information-sharing powers under the Economic Crime and Corporate Transparency Act 2023. It explains the rules designed to secure business compliance and outlines practical points for firms, such as routes for cross-sector data sharing, obligations around reporting to law enforcement, adherence to the UK General Data Protection Regulation, and avenues for customer redress. See: LNB News 04/10/2024 39. Corporate insolvency processes Judgment alert: Re Wealthtek LLP (in special administration) [2024] EWHC 2520 (Ch) The court may sanction a distribution plan that departs from clients’ strict proprietary entitlements in client assets, so long as the scheme is fair and reasonable. A bare trust was found: WealthTek LLP held...

The Enterprise Investment Scheme (EIS) The Enterprise Investment Scheme (EIS) aims to stimulate investment in smaller, higher-risk trading businesses by providing a suite of tax reliefs to individuals acquiring newly issued shares in such companies. The EIS framework is prescriptive and stipulates a range of conditions that must be satisfied, covering: the individual investors (see Practice Note: EIS—conditions for relief: individual investor conditions) the issued shares (see Practice Note: EIS—conditions for relief: issued shares, the funds raised and the arrangements in general) the issuing company (see Practice Notes: EIS—conditions for relief: issuing company and EIS—conditions for relief: qualifying trades) Although the remaining Practice Notes in this subtopic proceed on the basis that an individual subscribes directly for shares in an EIS-qualifying company, investors can also secure EIS relief by subscribing through an EIS fund, so long as all other EIS conditions are met. Many EIS fund arrangements rely on the specific rule set out below that permits EIS shares to be...

This Practice Note outlines how trustees of bare trusts are treated for income tax and capital gains tax (CGT). Although, in equity, a bare trust is a form of trust, for both income tax and CGT its existence is disregarded. As a result, no liability to tax sits with the trustees for either income or chargeable gains. Instead, the two regimes look through to the beneficiary, who is assessed at their own rates of tax. Income tax The legislation in the Income Tax Act 2007 (ITA 2007), which sets out the settlements rules for income tax, excludes bare trusts from those provisions. Several provisions in ITA 2007 treat actions carried out by a bare trustee as though they were undertaken by the absolute beneficial owner...

Nature of powers A trustee’s authority can be grouped as follows: administrative, i.e. powers concerned with careful stewardship in fulfilling the trustee’s obligation to preserve the trust fund dispositive, i.e. powers designed to alter the benefits that beneficiaries are to receive (often called ‘distributive powers’) Powers might be wholly discretionary (such as bare powers of appointment seen in fixed or discretionary settlements), or they may take the form of a trust or duty (as with trust powers within discretionary trusts). A trustee is required to consider whether to invoke a purely discretionary power, yet cannot be forced to do so, even if leaving it unused advantages one beneficiary to the detriment of another. Where a power amounts to a trust or enforceable duty, its use can be compelled; however, the court will not substitute its judgment for the trustee’s regarding the timing and method of exercising it. Drawing the line is not always straightforward. Labels are not conclusive; the intention is derived...

This TRUST is executed on [ insert date ] Parties [ insert settlor ] of [ insert address ] (the Settlor); and [ original trustee ] of [ insert address ] and [ original trustee ] of [ insert address ] (the Original Trustees) Background The Settlor intends to establish this Trust for the benefit of [ insert beneficiary’s name ] (the Beneficiary) The Settlor has conveyed to the Trustees [ insert details of property transferred ] to be held on the bare...

This DECLARATION OF TRUST is duly executed and made on [ date ] by [ settlor ], of [ address ] (the Settlor). Background The Settlor intends to provide for [ insert beneficiary’s name ] (the Beneficiary) by appointing themself as trustee of the Trust Fund described in the Schedule herein...

The investment powers and duties of bare trustees It is sometimes unclear precisely where the investment powers and responsibilities of bare trustees begin and end. A bare trust arises when a trustee owns assets for a beneficiary who is of full age and has mental capacity. In strict terms, the trustee’s role is passive: to safeguard trust assets and pass them to the beneficiary as and when instructed. Yet, in reality, a trustee may agree to take on tasks beyond this remit, particularly if the trustee is a close relative of the beneficiary...