Duhaime's Law Dictionary


Bare Trustee Definition:

The trustee of a bare trust; a trust that has been reduced to holding the trust property at the absolute disposal and benefit of the beneficiaries.

Related Terms: Bare Trust

A trust often created for reasons of convenience convenient to the concealment of the true nature of an entity or its beneficiaries or controlling interests such as a bare trust holding shares for a discreet shareholder (eg. a holding company) or title to property as bare trustee for a discreet third-party.

Sometimes referred to as a naked trustee or even a mere trutee.

The duties of the bare trustee(s) are usually stipulated in the trust constitution.

In De Mond v R, Canadian Tax Court judge Lamarre adopted these words:

"(A) bare trustee is a person who holds property in trust at the absolute disposal and for the absolute benefit of the beneficiaries...."

Justice Moen of the Court of Queen’s Bench of Alberta wrote, in Lemoine v Smashnuk:

"A bare trust is a trust where the trustee holds property without any duty to perform except to convey it to the beneficiary or beneficiaries upon demand. The definition of a bare, naked or simple trust assumes two things: (1) that the beneficiary is able to call for the property on demand; and (2) either that no active duties were ever required by the settlor or that the active duties have been performed."

University of Saskatchewan trust law professor Rob Flannigan wrote, in his 2007 article, in reaction to a obiter dictum comment of the Albertan Court of Appeal at ¶19 of Financial Management ("while a trustee may owe fiduciary duties to its beneficiary, a bare trustee does not"):

"The term bare trustee has been used to refer to both nominal title holders and to active trustees who are controlled by settlors or beneficiaries. In neither case can it be said that the arrangement necessarily implies ruling out the possibility of fiduciary accountability. Quite the contrary. The function of fiduciary regulation is to check opportunism in limited access arrangements. The opportunism mischief is clearly possible, and clearly a concern, with nominal title holders. Their formal title gives them the means to exploit the subject assets to serve their own ends."

See, also, bare trust and blind trust.

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