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Bare (Simple) Trusts-A Tax Efficient Way to Provide for Children - YouTube
Channel: Terry Gorry Solicitor
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if you're looking for a tax efficient
way to provide for a child then one
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thing that you could consider is the use
of a trust a bear trust or a simple
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trust in this video I want to take a
look at what is actually a trust is and
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what is the value or benefit to you
indeed to the donee to the child to the
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minor child of using a bear trust for
the purpose of a tax efficient way of
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perhaps providing further education or
giving them a property without without
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them gone bananas are too early an age
in other words you can put the thing
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into trust for the property or the asset
in the trust you can also give cash
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though or provide for education or fees
university fees and so on so it is
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actually quite a significant tax saving
to be garnered if you use a trusted
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facility a bare trust so let's take a
look so firstly as I say it's a very
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very tax efficient way to provide for a
miner and the bear trust means that the
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legal ownership and the beneficial
ownership is split so the legal owner
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will be a trustee whoever you appoint as
a trustee and that trustee will be
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registered as the legal owner of for
example a property and they will be
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holding that property for the benefit of
the beneficiary the miner and the miner
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then will be able to get his or her
hands on the property when he or she
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comes of age at the age of 18 so there's
basically three parties in a bare trust
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just the creator of the trust that's a
settler that could be you for example
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just a trustee you can have more than
one trustee so you could be a trustee
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along with somebody else perhaps the
parent of the child if you're a
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grandparent and then there's the
beneficiary and so legal ownership is
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transferred to the trustees they hold
the property for the benefit of the
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Bennett
who can then take the property when he
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or she comes of age at the age of 18 the
tax benefits though in relation to a
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bare trust are worth taking a look at
does a small gift exemption that you can
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have of 3000 euros per year her parent
to a child so a parent can give a child
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3 grand a year and there's a tax-free a
small gift exemption so for two parents
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that means it's 6,000 per child per year
and over 18 years then that amounts to a
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tax benefit a tax-free gift of 108
thousand so it's possible therefore they
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give a child a whole of net grand over
18 years through a bear trust and have
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no tax implications whatsoever not only
that but this exemption this small gift
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exemption does not affect the exemption
the group threshold for child receiving
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a gift or a bequest from a parent so
currently the grouped threshold for
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child in 2019 is 320,000 that means that
a parent can give a child a property up
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to the value of say 320,000 and that
will be tax-free both the small gift
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exemption is an additional break an
additional tax break and so that does
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not affect the group threshold for child
so in relation to a property real
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property a house for example or a field
or a farm or something the transfer is
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taken or taken out versus where the
property transferred to the trust for
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the child so if the house is worth for
example two hundred thousand into 2019
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then that is the benefit that is the
value that's part of the house for
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capital acquisitions tax purposes in
other words the days when the property
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is transferred into the trust so the
property could be transferred into the
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trust in 2019 a 200 grand doesn't be
completely covered by the tax
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the group's threshold for the child and
if the house then appreciates to the
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value of four hundred thousand by 2013
or 37 when the child is 18 I can take
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the property at that stage you don't
have to worry about or the child to have
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to worry about the four hundred thousand
value of the house because for capital
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acquisitions tax purposes the value of
the house is the value at the dais which
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at the date of transfer of the house
into the trust and that could be as I
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say 2019 so transfer the house into
trust
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the child is only you know zero or one
year of age or six months or whatever or
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you could do it later on but the bottom
line is from a tax perspective capital
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acquisitions tax will levy any tax at
the date that the property is
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transferred into trust so for an asset
that's got to appreciate in value it's a
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very very tax efficient way setting up a
bare trust to transfer a property or an
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asset to a child a minor child as I said
there on the screen
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the house is violent at a lower figure
for tax purposes if transferred into the
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trust for child settler must remember
couple of things however the settler is
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going to be you for example if you are
going to settle property on a minor
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child one that the asset was the asset
is transferred it cannot be taken back
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so it's into the trust and that's it
it's for the benefit of the child and he
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or she can ultimately then when he reach
this or she reaches the age of 18 can
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call the trustees to transfer the assets
to him or her so that's something that
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you just need to be clear about that
you're not going to change your mind and
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that you're not gonna need the property
back and you also need to consider who's
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going to act as a trustee though the
settler can also be one of the trustees
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it's recommended that you have at least
two trustees you can have only one but
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if you have two trustees then the
trustees can be yourself and somebody
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else and that is a bare trust or simple
trust as I say it's a tax efficient way
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to look after a minor hope you find this
video useful my contact details on the
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screen there if you do find it useful
and be
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preachers if he gave it a thumbs up down
below and you may be interested in
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subscribing to my youtube channel
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