Holding / Bare Trust FAQs

Below are frequently asked questions relating to holding /bare trusts.

Can a holding / bare trust be re-used? 

Our partnered legal provider does not recommend amending a holding/bare trust deed for another property and instead suggests establishing a new holding trust, unless the circumstances warrant an amendment. 

Can I have more than one property in a holding / bare trust?

No. The SIS Act provides that there must be a single asset per borrowing. As mentioned above, this means a single "acquirable asset" or a collection of assets which are identical and hold the same market value. The in-house asset exemption for Limited Recourse Borrowing Arrangements (LRBAs) is dependent upon the asset being the only property of the holding / bare trust. 

How do I vest a holding / bare trust? 

Given that a holding/bare trust is still a trust under state laws, you can utilise our "'Vesting of a Discretionary Trust" service on the platform to prepare the relevant documents for vesting a holding / bare trust.

Can the corporate holding / bare trust trustee be a trustee for other entities?

Yes. As long as you are meeting all of the relevant legislative requirements, a corporate trustee can be the holding / bare trust trustee for another holding trust, or multiple holding trusts at the same time. 

When might someone opt for purchasing a holding / bare trust on its own without the LRBA? 

Some professionals might look to purchasing just the NowInfinity Holding / Bare Trust Deed as a stand-alone product because they are able to draft the loan documents themselves, in accordance with the relevant rules and legislation, but not the related Deed. However, for most of our clients, the LRBA suite generally tends to be more appropriate or convenient as it includes the Holding Trust Deed and LRBA documents, such as the loan agreement, minutes and a checklist.

Outside of this "LRBA" context, some clients may prefer the relatively simple holding/bare trust structure as a means to achieving a certain objective. For example, a bare trust could be used to hold property for the benefit of another when a specified condition is met, like when a child beneficiary reaches a certain age. 

"Holding" versus "Bare" trust?

Our service 'SMSF Holding Trust' is in name only, and is only called differently to a bare trust to align with the naming convention applied by the ATO

This does not, however, divert its character from the actual deed template (which has been reviewed by our partnered legal provider) as a bare trust arrangement in line with the LRBA rules under the SIS Act. If you need a sample copy of our documents, please reach out!

 

Further information

Limited Recourse Borrowing Arrangement (LRBA) and Holding/ Bare Trusts 

How to Access the Limited Recourse Borrowing Arrangement (LRBA) Suite on NowInfinity

Holding/Bare Trust

 

Disclaimer: You acknowledge and agree that our Services and Materials do not constitute or contain personal or general advice for the purpose of the Corporations Act 2001 (Cth) and that we, our employees and advisers do not offer any legal, accounting, tax or other professional advice or services in connection with the provision of our Services and any Materials.

 

 

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