Bare trust could benefit investors
Sophisticated or wholesale investors looking to invest in a small group through one legal entity should consider utilising a bare trust, according to the Fold Legal.
The Fold writer, Lydia Carstensen, said that using a single-investor model through a bare trust would be convenient for investments including shares, options, convertible notes, foreign investments and crypto and digital currencies.
In such a set-up, the assets would be held in the name of a trustee who then holds them legally and on trust for each beneficiary. The trustee would have no say in how the capital or income is distributed, as the beneficiary retains this control.
Carstensen said that costs associated with bare trusts were minimal, with the main outgoing costs being fees, should the trustee be an investment manager, and potentially a one-off stamp duty payment upon establishing the trust.
She warned that, unless the trustee and investment manager holds an Australian financial services licence to provide custodial services, a bare trust could not have more than 20 investors.
AUTHOR
Hannah Wootton
Recommended for you
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
