TL;DR: A bare trust is the simplest form of trust recognized in Canadian law: the trustee holds legal title to property but has no independent powers, discretion, or duties beyond following the beneficial owner’s instructions.
Definition
A bare trust is the simplest form of trust recognized in Canadian law. It arises when one person — the trustee — holds legal title to property with no independent powers, discretions, or responsibilities of their own. The trustee’s only obligation is to follow the instructions of the beneficiary and, when directed, to convey the property to them. Beneficial ownership — the real, substantive ownership — remains entirely with the beneficiary at all times.
A bare trust is sometimes called a “naked trust” or “simple trust.” Those terms all describe the same arrangement: a trustee who holds title on paper, but exercises no meaningful authority over the property itself.
How a Bare Trust Differs from Other Trusts
In a typical express trust, the trustee has active duties: investing assets prudently, exercising discretion over distributions, managing the trust for the long-term benefit of beneficiaries. A bare trustee has none of that. As the Ontario Court of Appeal put it in the leading case Trident Holdings Ltd. v. Danand Investments Ltd. (1988), 64 O.R. (2d) 65 (Ont. C.A.), the distinguishing characteristic of a bare trust is that the trustee has no independent powers, discretions, or responsibilities. The agency relationship between a bare trustee and beneficiary predominates over the trust relationship itself: the bare trustee owes a duty of obedience to the beneficiary, acting as a mere conduit for the principal’s instructions. If the trustee has any significant independent authority, the arrangement is no longer a bare trust.
This passive role means a bare trust also functions much like an agency relationship: the bare trustee acts as agent for the beneficiary, who is the true principal. Because of this, Canadian tax law generally “looks through” the bare trust and treats the beneficiary as having dealt directly with the property — an important feature in both income tax and property transfer tax contexts.
The Legal Requirements for a Valid Bare Trust
A bare trust is a form of express trust. For one to be valid, four requirements must be satisfied:
Capacity. All parties to the trust must have legal capacity to enter into it.
The three certainties. There must be certainty of intention (the parties genuinely intended to create a trust), certainty of subject matter (the property held in trust is clearly identifiable), and certainty of objects (the beneficiaries are sufficiently described that the trust can actually be carried out): Rubner v. Bistricer, 2019 ONCA 733 (CanLII). Notably, no particular form of words is required — the trust need not use the word “trust” at all, provided the words or conduct of the parties convey the requisite intention.
Constitution. The trustee must actually hold legal title to the trust property.
Formalities. The formality requirements depend on the type of property involved. For bare trusts over personal property — such as bank accounts or investments — there is no legal requirement that the trust be evidenced in writing. A bare trust can be established through conduct alone, provided the three certainties are met. However, where the trust involves real property in BC, the Law and Equity Act, RSBC 1996, c 253 requires that any disposition of an interest in land be evidenced in writing. In practice, this makes a written Declaration of Bare Trust essential for any BC real estate arrangement. Even where writing is not strictly required, it is strongly recommended in all cases to provide clear evidence of the parties’ intention.
A Real-Life Example
Margaret is 78 and owns her home in Kelowna outright. She wants to avoid the cost and delay of probate when she dies, so she adds her daughter Claire to the title on the property. Margaret signs a Declaration of Bare Trust confirming that Claire holds her interest on the title as bare trustee only — that Margaret is and remains the sole beneficial owner, and that Claire has no independent authority over the property. Margaret continues to live in the home, pay the property taxes, and make all decisions about it.
When Margaret dies, Claire, as the surviving registered owner, can complete the transfer of the property without going through the probate process. The Declaration of Bare Trust establishes that no gift was made to Claire during Margaret’s lifetime — Claire was simply the nominee holding title for Margaret’s benefit.
Without the written Declaration, a dispute could arise over whether the transfer to Claire was a gift or a trust arrangement. That question would be governed by the presumption of resulting trust established by the Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17: where an asset is transferred to an adult child for no consideration, it is presumed to be held on resulting trust for the transferor’s estate unless the child can prove a gift was intended. A properly drafted bare trust declaration removes that uncertainty entirely.
Where Bare Trusts Commonly Arise in BC
Real estate and probate planning. As in the example above, a parent may add an adult child to title as a bare trustee to facilitate the transfer of property after death without probate. The Declaration of Bare Trust protects the parent’s beneficial ownership during their lifetime and preserves the principal residence exemption for capital gains tax purposes.
Helping a child qualify for a mortgage. A parent may be added to a child’s property title to satisfy a lender’s requirements. The parent does not intend to become a beneficial co-owner — they are simply lending their creditworthiness. A Declaration of Bare Trust records that the parent holds their interest as bare trustee for the child, preventing unintended tax consequences and estate complications.
Commercial joint ventures and nominee corporations. In commercial real estate, a corporation is commonly used as a “nominee” to hold legal title to property on behalf of investors or co-owners. That corporation is a bare trustee; the investors retain all beneficial ownership and exercise all meaningful control. The Trident Holdings case arose from exactly this kind of arrangement. More recently, the BC Supreme Court addressed a similar structure in 108 Holdings Ltd. v. British Columbia (Minister of Finance), 2022 BCSC 1941, where a company held title as bare trustee for its principal’s common-law spouse. The court confirmed the agency principles from Trident Holdings apply in BC, and that a properly structured bare trust arrangement could rebut the presumption that the registered owner is also the beneficial owner.
Estate planning through joint tenancy. Adding a person to title as a joint tenant rather than documenting a bare trust arrangement carries significant risk, as illustrated by Zeligs v. Janes, 2016 BCCA 280 (CanLII). In that case, a mother had added her daughter to title as a joint tenant. The daughter subsequently sold the property and transferred the proceeds to her own exclusive use. The BC Court of Appeal held that by doing so she had severed the joint tenancy — destroying the unity of possession — and converted the arrangement into a tenancy in common, extinguishing the right of survivorship entirely. The estate was therefore entitled to a share of the proceeds, contrary to what the mother had likely intended. A properly executed Declaration of Bare Trust, by contrast, makes the beneficial ownership clear from the outset and avoids the fragility inherent in a joint tenancy arrangement.
BC’s Land Owner Transparency Requirements
Since 2020, BC’s Land Owner Transparency Act, SBC 2019, c 23 (LOTA) has imposed disclosure obligations on bare trustees holding interests in BC land. A bare trust is explicitly defined as a “relevant trust” under LOTA, meaning the bare trustee registered on title is generally a reporting body who must file a Transparency Report with the Land Owner Transparency Registry (LOTR), disclosing the identity of the beneficial owner.
There is, however, an important exception under section 13(6) of the Act: a trustee of a relevant trust is not required to file a transparency report if the interest in land is registered in the names of all the beneficial owners. In the common estate planning scenario where both a parent (as bare trustee) and an adult child (as beneficial owner) are registered on title together, no transparency report is required. If the bare trustee is the only name on title and the true beneficial owner is not registered, the filing obligation applies.
Failure to file when required, or filing inaccurate information, can result in significant penalties. This is one of the most important compliance considerations for anyone using a bare trust arrangement to hold BC real estate.
Frequently Asked Questions
For bare trusts over personal property such as bank accounts or investments, there is no strict legal requirement that the trust be in writing — it can be established through conduct alone, provided the three certainties are met. However, where real property is involved in BC, the Law and Equity Act requires a written instrument. In all cases, a written Declaration of Bare Trust is strongly recommended to provide clear evidence of the parties’ intention and avoid costly disputes.
Yes, but they are passive rather than active. The bare trustee owes a duty of obedience to the beneficiary and must not deal with the property in a way that is contrary to the beneficiary’s interests. They may not personally profit from their position. Their core obligation, however, is simply to hold title and convey the property when directed: Rubner v. Bistricer, 2019 ONCA 733; Trident Holdings Ltd. v. Danand Investments Ltd. (1988), 64 O.R. (2d) 65 (Ont. C.A.).
No. A bare trust is an intentionally created express trust — the parties deliberately set it up. A resulting trust arises by operation of law when a court infers that a transfer was not intended to be a gift: Pecore v. Pecore, 2007 SCC 17. A well-drafted Declaration of Bare Trust is one of the best ways to prevent a resulting trust dispute from arising.
CRA has historically required bare trusts to file a T3 trust income tax return, though it waived this requirement for the 2023 tax year and has been clarifying its position on 2024 and beyond. Because CRA’s approach continues to evolve, it is important to obtain up-to-date tax advice if you are involved in a bare trust arrangement.
Yes. A BC Notary Public is authorized to prepare Declarations of Bare Trust in connection with real property transactions and estate planning matters. If your arrangement involves a bare trust over real estate — whether for probate planning, mortgage qualification, or another purpose — a BC Notary can help you document it properly.
Related Terms
A note on the cases cited in this article: The cases referenced include Trident Holdings Ltd. v. Danand Investments Ltd. (Ont. C.A., 1988), the leading Canadian authority on the bare trust and the agency relationship that underlies it; Rubner v. Bistricer, 2019 ONCA 733, which sets out the hallmarks and requirements of a valid bare trust; Pecore v. Pecore, 2007 SCC 17, the Supreme Court of Canada’s authoritative statement on the presumption of resulting trust as it applies to gratuitous transfers; and Zeligs v. Janes, 2016 BCCA 280, a BC Court of Appeal decision illustrating the fragility of joint tenancy arrangements and the importance of documenting beneficial ownership clearly.