There’s nothing kinky about a bare trust.


When we signed the documents to purchase Littlel’arche (get it, the home is a Little L’Arche) my husband and I simply wrote our names on the offer of sale, and then added ‘in trust’ for our son. For us, that demonstrated that our child was the true owner of the home even though we were making the offer. Our son, after all, couldn’t speak, or sign the papers. Our names were only on the papers for financial reasons – namely that we thought a bank wasn’t about to give an incapable adult a mortgage,

It turns out we were wrong in lots of ways. Something tells me this is only the beginning, and that I am about to make a whole lot of mistakes as we embark on this journey. Two weeks ago, when we met with lawyers to take possession of the boys’ home, our lawyers informed us that homes are no longer owned ‘in trust’. And, as it turned out, a bank would give an incapable adult a mortgage should s/he have the money needed – but that’s another post.

It turns out what we needed was a bare trust. A bare trust establishes that a beneficial owner, our son in this case, has absolute right to all the capital and income generated from an asset. So while my partner and I legally own the boys’ home, Matthew is the sole beneficial owner. In essence he owns the home, even though legally he doesn’t. I know, it’s a paradox!

The most important part of a bare trust, at least for me as Matthew’s mother, is that if my spouse and I get hit by that Mack truck tomorrow, the house does not become part of our estate. Our heirs cannot liquidate the asset and render Matthew and Buddy homeless. Not that they ever would – I would rise from the grave and give them the biggest tongue lashing of their lives. The home is considered our son’s property even though we’re on title.

As Matthew’s trustee I am responsible for managing the home, but I can derive no financial advantage from it. I have also been led to believe that by structuring home ownership in this way we’ve ensured that Matthew avoids capital gains taxes, or other inheritance taxes, should we as the legal owners of the property, pass away before him.

In many ways our situation was fairly straight forward, because while the home was purchased with the intent of Matthew and Buddy living together in Littlel’arche, Matthew is the sole-(beneficial) owner of the property. It gets more complicated if multiple families purchase a home together for the purposes of their children – and expert legal advice is essential. Yes, you will need to pay those exorbitant legal fees. My husband is a lawyer and he had no idea how to structure this purchase.

For the moment the plan is that Buddy will pay rent to Matthew. And my guess is that once that happens it will open up all sorts of new financial learning for me since I will add ‘landlord’ to the many other roles I play in Matthew’s life. ‘Cuz I didn’t already have enough on my plate.

The upshot is that as of July 17, 2019, my 20-year old son, owns an adorable two-bedroom bungalow around the corner from his folks.




Published by extremecaregivingblog

Wife, mother, extreme caregiver, friend, knitter, soccer player.

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