Saturday, January 11, 2020
Robert Flannigan recently published an Article entitled, Resolving the Status of the Bare Trust, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.
A number of diverse arrangements commonly are described as “bare trusts.” Trustees are said to be bare trustees where, for example, they have no active duties, they are controlled by settlors or beneficiaries, or their trustee status is imposed on them for arrangements they create, actions they take or wrongs they commit. The question that arises is whether the bare trust designation describes a distinct legal form. Do these arrangements constitute a class of trust that is regulated in ways that other trusts are not, or is the bare trust designation no more than a convenient descriptor for a functional difference that has no substantive legal significance? I shall explain that bare trusts do not differ in kind from other trusts. They simply are trusts that have a narrow function. The function of the trustee is, or becomes, merely to hold legal title to the trust assets, whatever other relations or obligations might be involved ex ante or concurrently. I shall explain that bare trustees, to the extent of their trustee capacity, are not subject to unique rules. I will illustrate that primarily by refuting the assertion that bare trustees are not status fiduciaries. I will coincidentally refute the assertion that a controlled bare trustee is a novel amalgamation of trust and agency status.