Bare Trust for a Minor Beneficiary in a Will

Why a bare trust arises

In English law, a minor lacks full legal capacity. They cannot hold legal title to land, and cannot give a valid receipt for capital sums above a certain amount. Accordingly, if a will leaves assets to a minor beneficiary, those assets must be held by an adult trustee until the child turns 18.

A bare trust is the simplest form of trust. Unlike a discretionary trust (where trustees can decide whether or not to pay beneficiaries), under a bare trust the beneficiary is the absolute beneficial owner of the assets. The trustees simply hold the assets as nominees until the beneficiary is old enough to receive them.

The trustees' obligations

Under a bare trust for a minor, the trustees must:

• Hold the assets safely — maintain and insure any property; keep cash and investments in appropriate accounts
• Invest prudently — under the Trustee Act 2000, trustees have broad investment powers but must take appropriate advice and diversify where reasonable
• Account for income — keep clear records of income received and how it was applied or accumulated
• Transfer the assets on the child's 18th birthday — or when demanded by the child once they turn 18
• Not benefit personally from the trust assets

Unlike discretionary trusts, bare trust trustees have no discretion. The child will receive their entitlement at 18 regardless of circumstances. If the testator wanted greater flexibility (e.g., to delay payment to 25), they should have used a discretionary trust or a trust with a specified age.

Income tax treatment

For income tax purposes, bare trust assets are treated as belonging to the beneficiary (the minor child). Income is reported on the child's personal tax return (if any) and is subject to the child's personal allowance.

However, the "parental settlement" rules mean that if the settlor (or in this context, the source of the gift) is the child's parent, income generated by the trust that exceeds £100 per year is taxed as the parent's income, not the child's. Gifts from grandparents, uncles, aunts, or other relatives do not trigger this rule.

This is important when the minor inherits from a parent who has died — the parental settlement rules apply to gifts, not inheritances on death. So income on an inheritance from a deceased parent is taxed as the child's income (or held until the child is old enough to file a return).

Capital gains in a bare trust

CGT on gains realised in a bare trust is computed using the beneficiary's own annual exempt amount and rates. For a minor with no other income or gains, this can be advantageous — the child's annual exempt amount (£3,000 in 2024–25) can shelter modest gains.

When assets are transferred to the child at 18 (rather than sold), no CGT arises at that point — the child simply takes over the assets at the base cost used for the trust.

Practical management of bare trust assets

For cash inheritances, the trustees should open a savings account in trust for the minor (most banks offer this). For investments, a nominee or custodian account is usually the most practical approach.

For property inherited by a minor, the trustees hold the legal title and must manage the property — insuring it, collecting rent if it is let, and maintaining it. Property in a bare trust for a minor cannot be sold without the approval of the court unless the will or trust deed grants appropriate powers.

When the child turns 18

Once the beneficiary turns 18, they are legally entitled to demand the full trust fund. The trustees must transfer it promptly. Any delay after a demand is made exposes the trustees to a claim for compensation for any loss caused by the delay.

The trustees should obtain a receipt from the beneficiary confirming that they have received the full trust fund and that the trust is discharged.

For the general estate administration context, see our estate administration checklist, complete UK probate guide 2026, and applying for probate. For IHT context, see our inheritance tax UK 2026–27 guide. Related trust structures are covered in our life interest trust (IPDI) guide and nil rate band discretionary trust guide. For distributing assets, see our distributing the residuary estate guide. For the executor's first steps, see our executor first steps guide. For estate accounts, see our estate accounts guide. For completing the SA900 trust return, see our SA900 guide. Farra can help with estate administration — get started here.