A bare trust is the simplest form of trust recognised by English and Welsh law. When a will creates one, it adds extra steps to the probate process, changing who signs paperwork, when tax must be declared, and how quickly assets reach the beneficiary.
This article explains what a bare trust is, how it affects probate, and what it means for tax. It focuses on estates in England and Wales.
What is a bare trust?
A bare trust arises when one person (the trustee) holds an asset for another person (the beneficiary), who has an absolute right to receive it. The trustee’s only job is to look after the asset until the beneficiary is ready to claim it, usually on turning 18.
Bare trusts appear in two main situations. Parents or grandparents sometimes create one during their lifetime to hold savings or investments for a child. More commonly, a will contains a clause instructing the executors to hold a legacy on bare trust until the beneficiary reaches 18.
The age in the clause matters more than it looks, and this is where many guides go wrong. A bare trust requires the beneficiary to be absolutely entitled. A gift “to X at 18”, where the interest vests immediately and only the payment is postponed, is a bare trust: if X died at 19 the fund would pass to X’s estate. A gift “to such of my children as attain 21” is different. Nothing vests until the condition is met, so it is a contingent interest and not a bare trust at all. If that child died at 19, the gift would fail.
That distinction changes the tax treatment entirely. A trust contingent on reaching an age above 18 under a parent’s will is normally an 18-to-25 trust under section 71D of the Inheritance Tax Act 1984, which sits outside the relevant property regime but carries an exit charge under section 71E, calculated from the beneficiary’s eighteenth birthday. Where the settlor is not a parent, a grandparent’s will trust for a grandchild at 21 for instance, it is usually relevant property instead, with ten-year and exit charges. If the will in front of you sets an age above 18, take advice before assuming you are dealing with a bare trust.
Where it genuinely is a bare trust, a few points define how the arrangement works in practice:
- The beneficiary can demand the asset at 18.
- The trustee has no discretion to delay or redirect it.
- Income and gains belong to the beneficiary for tax purposes.
- Most bare trusts must be registered with HMRC.
How does a bare trust affect probate?
Probate itself does not stop because a bare trust exists. The difference lies in what happens once the Grant of Probate is in hand.
The executors must first identify any clause in the will that creates a bare trust. If the beneficiary is already 18 or over, the executors can transfer the asset directly and the trust ends almost immediately. If the beneficiary is still a minor, the executors must transfer the asset into the trustee’s name and record that transfer clearly in the estate accounts.
From that point, the trustee takes over responsibility. In practice, one person often acts as both executor and trustee, but the legal duties are separate. As trustee, that person must:
- Open a dedicated bank or investment account to keep the trust funds separate from personal money.
- Register the trust with HMRC’s Trust Registration Service (TRS), unless a specific exemption applies.
- Ensure all relevant taxes are paid from the trust on the beneficiary’s behalf.
- Keep clear, accurate records throughout.
If deadlines are missed or money is mishandled, the trustee can be held personally liable. For that reason alone, taking professional advice at the outset is strongly advisable.
Registering a bare trust with HMRC
Bare trusts must be registered with the TRS unless they fall within one of the listed exclusions. Most bare trusts must be registered even if the trust has no tax liability, as there is no blanket exclusion for bare trusts.
An investment portfolio held in the name of a parent for a minor child is a bare trust and must be registered on the TRS, though a bank account held by a parent for a minor child is specifically exempt from registration. Trusts used solely to open a cash deposit account for a minor are also excluded, though that exclusion covers cash accounts only and does not stretch to investments. Child Trust Funds and Junior ISAs sit outside the regime for a different reason: HMRC does not treat them as trusts at all.
The TRS rules were updated by the Money Laundering and Terrorist Financing (Amendment) Regulations 2026, made on 9 June 2026 and in force from 30 June 2026, with changes bringing certain additional trusts within scope while reducing compliance obligations for lower-risk trusts through new exclusions. One new exclusion is a de minimis rule for very small non-taxable trusts, and its conditions are more specific than most summaries suggest. To qualify, the trust must hold no interest in UK land; hold no “assets of appreciable worth” exceeding £2,000 in total, which HMRC defines as non-financial assets capable of rising in value such as works of art, antiques, collectibles and jewellery; never have held property with a cumulative value exceeding £10,000 since it was created; have income of no more than £5,000 a year; and have no UK tax liability. Note that the £2,000 is not a test of the trust’s total value, so a trust holding £3,000 in cash can still qualify. An anti-fragmentation rule also applies: a settlor may only have one trust excluded under this provision.
All trusts required to register must do so within 90 days of creation or becoming registrable, and any subsequent change must be reported within 90 days too. There is an important exception for a bare trust created by a will: while it holds only property from the estate, it is excluded from registration for two years from the date of death, and the 90 days then runs from the two-year anniversary of the death rather than from the trust coming into existence. Adding property from outside the estate, or a UK tax liability arising in the meantime, ends that grace period early.
The penalty for failing to register is £5,000 per trust under Part 9 of the Money Laundering Regulations 2017. It is discretionary rather than automatic: HMRC normally issues a warning letter first and charges only where the trustees then fail to register or to explain why registration is not required. There are no daily or automatic penalties.
What are the tax implications of a bare trust?
Many families hope that a bare trust clause in a will will reduce the estate’s tax bill. In practice, it does not work quite like that.
Inheritance Tax
Inheritance Tax (IHT) is calculated on the estate before anything passes to the trustees. Assets destined for a bare trust under a will are treated as passing directly to the named beneficiary, so they count in the total estate value. The nil-rate band stands at £325,000 per person in 2026, with estates above this paying 40% on the excess. Both the nil-rate band of £325,000 and the residence nil-rate band of £175,000 remain frozen until 5 April 2031.
In short, putting assets into a bare trust through a will does not reduce IHT. The tax position on death is the same as if the assets passed outright.
Income Tax and Capital Gains Tax
Once probate is complete and assets sit in the bare trust, tax is dealt with on a look-through basis. This means that any interest or dividends are treated as the beneficiary’s own income, taxed using their personal allowances and rates. The beneficiary in a bare trust pays income tax, not the trustee.
The same look-through approach applies to Capital Gains Tax (CGT). If the trustee sells shares or other assets at a profit, that gain is assessed on the beneficiary. The individual CGT annual exempt amount (the tax-free allowance on gains) has remained at £3,000 since 2024/25 and continues unchanged for 2026/27. The beneficiary can use that exemption against any gain arising in the trust. That is worth contrasting with an ordinary trust, where the trustees have an annual exempt amount of just £1,500, half the individual figure, divided further where the same settlor has created several trusts. In a bare trust the beneficiary’s full £3,000 applies, precisely because of the look-through.
One exception catches parent-funded bare trusts in particular. Where the settlor is a parent and the trust produces £100 or more of income a year for their own unmarried minor child, that income is taxed on the parent rather than the child under the settlements rules. It is a common trap with exactly the arrangement described earlier, where a parent sets aside savings or investments for a child.
It is the trustee, however, who must handle the administration: registering the trust with HMRC, completing any tax returns, and paying any tax due from the trust until the beneficiary turns 18 and takes over.
Why professional help matters with a bare trust
Handling a bare trust during probate combines succession law, tax law and ongoing compliance obligations. A solicitor can confirm whether a bare trust genuinely exists, identify who the trustees are, and set out exactly what must be done before probate can close.
Trying to untangle errors after assets have already been transferred is far harder and far more expensive than getting the right advice at the start. Trust law is a specialist field, and one conversation with an expert can prevent costly mistakes later.
Need help with probate or a bare trust?
The Probate Network connects you with regulated professionals who deal with probate and trusts every day. Whether you are an executor handling a bare trust or a trustee unsure about your tax obligations, we connect you with probate specialists who provide clear probate quotes for the support you need.
You may also wish to read:
What is a Property Protection Trust
When Property is Left in a Trust in a Will
Frequently asked questions
What is the difference between a bare trust and a discretionary trust?
In a bare trust, the beneficiary has an absolute right to the assets and can claim them at 18. The trustee has no discretion over who receives what or when. Note that a gift contingent on reaching an age above 18 is not a bare trust at all, because nothing vests until the condition is met. A discretionary trust gives the trustees the power to decide how and when to distribute assets among a class of potential beneficiaries. That flexibility makes discretionary trusts more complex, both legally and for tax purposes.
Does a bare trust in a will reduce Inheritance Tax?
No. Assets passing into a bare trust under a will are treated as belonging to the named beneficiary for IHT purposes. They count in the estate total in the normal way. If the estate exceeds the available nil-rate band (£325,000 per person in 2026/27, frozen until April 2031), IHT is payable at 40% on the excess, regardless of the trust.
Does a bare trust need to be registered with HMRC?
In most cases, yes. There is no blanket exemption for bare trusts, and most must be registered with HMRC’s Trust Registration Service even where the trust has no tax liability. A bare trust created by a will gets two years from the date of death first, while it holds only estate property, with 90 days to register from that two-year anniversary. Other bare trusts register within 90 days of becoming registrable. Some arrangements are excluded, such as a trust used solely to hold a cash deposit account for a child. If you are unsure, take advice from a solicitor or tax professional.
Can the same person act as both executor and trustee of a bare trust?
Yes. One person may act as both executor and trustee. However, the two roles carry distinct legal duties. As executor, the person’s job is to administer and close the estate. As trustee, the ongoing duty is to manage and protect the trust assets until the beneficiary turns 18. Keeping clear records for each role separately is essential.
This article is for general guidance only and does not constitute legal, tax or financial advice. Rules and thresholds can change and every estate is different. For advice on your own circumstances, speak to a qualified professional. You can book a free legal consultation through The Probate Network.
