Bare or Holding Trust
Key to SMSF Property Freedom: Unlocking Limited Recourse Borrowing with Bare Trusts
At autoSMSF, we understand the importance of a seamless Bare Trust setup for Limited Recourse Borrowing within SMSFs. Our cost structure for establishing a Bare Trust is transparent, fixed price and designed to provide value for our clients:
Ready to setup a Bare Trust?
Call us if you have questions. Our streamlined process and competitive pricing make us a trusted partner in facilitating the establishment of Bare Trusts for Limited Recourse Borrowing within SMSFs. Invest with confidence, knowing that your assets are held securely within a legally sound and compliant framework.
Bare Trust Deed: $550
Including comprehensive legal documents that outline the specific terms and conditions of the Bare Trust, ensuring clarity and compliance with all relevant legal requirements.
Bare Trust with Corporate Trustee: $1,320
Comprehensive setup, including the Bare Trust Deed with the added advantage of a corporate trustee, enhancing asset protection and flexibility.
Unlocking Limited Recourse Borrowing to buy property in Self-Managed Superannuation Funds (SMSFs) through Bare Trusts.
What is a Bare Trust?
A Bare Trust, also known as a bare trust deed or a holding trust, is a legal structure designed to hold assets on behalf of a beneficiary, who has an absolute and indefeasible right to the trust property. In the context of Self-Managed Superannuation Funds (SMSFs), a Bare Trust is often utilized to facilitate Limited Recourse Borrowing Arrangements (LRBAs). This trust structure ensures that the legal ownership of the asset is separate from the beneficial ownership, providing a level of protection for the SMSF.
Importance of Bare Trust in Limited Recourse Borrowing:
Limited Recourse Borrowing allows SMSFs to borrow funds for the acquisition of certain assets, such as real estate, without exposing the entire SMSF balance to the lender. By establishing a Bare Trust, the legal ownership of the acquired asset is held by the trustee of the trust, safeguarding it from other SMSF assets. In the event of default or financial difficulties, only the asset held in the Bare Trust can be used to satisfy any outstanding liabilities.
Setting Up a Bare Trust:
Setting up a Bare Trust involves below steps:
- Engage a Legal Professional: Seek the assistance of a professional firm like autoSMSF to draft the Bare Trust Deed. This legal document outlines the terms and conditions governing the trust.
- Selection of Trustee: Decide on the trustee of the Bare Trust. This could be an individual or a corporate entity. Many choose a corporate trustee due to the added protection and flexibility it offers.
- Asset Acquisition: Once the Bare Trust is established, the SMSF can use it to acquire the desired asset through Limited Recourse Borrowing.
- Compliance: Ensure that all transactions and activities related to the Bare Trust comply with the relevant superannuation and legal regulations.