ARTICLE · 18 JULY 2022

What's The Difference Between A Discretionary Trust, Unit Trust And Bare Trust?

Kalus Kenny Intelex

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There are many types of trusts commonly used for commercial dealings, asset protection, privacy, tax efficiency or for succession planning

AustraliaFamily and Matrimonial

There are many types of trusts commonly used for commercial dealings, asset protection, privacy, tax efficiency or for succession planning. The type of trust appropriate for you will depend on the type of transaction or asset you are dealing with. We explore three different types of trusts: a bare trust, a unit trust and a discretionary trust.

What is a Bare Trust?

A bare trust is the simplest type of trust structure. In a bare trust, a trustee holds an asset on trust for one or more beneficiaries in defined portions.

The trustee has no discretion and no active duties other than to distribute the asset to the named beneficiaries when instructed by them to do so.

A bare trust is a popular structure where the ultimate beneficiary seeks to keep the asset in the name of a different entity for privacy or for asset protection reasons.

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