Why do settlors establish bare trusts rather than discretionary or other types of trusts?
Jelley: Gifts to bare trusts are treated as Pets. They are not chargeable lifetime transfers and so they avoid the entry, periodic and exit charges that are applied to gifts to discretionary trusts. Bare trusts are often used to give assets to minors because they cannot manage the assets themselves and the appointment of trustees enables the effective management of the assets and certainty that they will go to the stated beneficiary. Brown: Recent research commissioned by Revenue and Customs found that the main motivation behind the establishment of trusts was to have the ability to control assets, passing them on to children or grandchildren, providing for a beneficiary in a particular way, withholding assets until children reach a certain age and ensuring money stays within the “blood line” (for example, on divorce or remarriage). Tax tended to be a secondary motive for creating a trust. Settlors establish bare trusts because of the desire for certainty, even at the cost of flexibili
