Investments

Bare trusts: A simple, tax-efficient way to share wealth with the next generation

Standard Life’s Senior Pension Technical Consultant, Janice Nevin, talks about how bare trusts are a simple, tax-efficient way to share wealth with the next generation.

Janice Nevin

November 18, 2025

5 minutes

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The recent announcement in Budget 2026 that exit tax on life investment policies will reduce from 41% to 38% marks a welcome shift for personal investors and is hopefully the first step toward wider tax reform and simplification. This move enhances the attractiveness of life investment policies but also opens up new opportunities for more tax-efficient financial planning.

Helping clients pass on wealth in a way that’s both straightforward and tax-smart is a common challenge for financial advisers. One solution that’s often overlooked — but highly effective — is a Bare trust, which when paired with a life investment policy, can be a powerful estate planning tool.

What is a Bare Trust?

A Bare Trust (also known as an absolute trust) is the simplest form of trust. Assets are held by Trustees, but the beneficiary owns them outright from the start. Standard Life’s Bare trust is designed to hold assets in a life investment policy — specifically the Synergy Regular Invest or Synergy Investment Bond.

Trustees manage the policy until the beneficiary reaches age 18, at which point the beneficiary can take over full control of their investment.

Why recommend a Bare Trust?

1. Simplicity and control

Terms of the trust are clear which makes it easy for clients to understand.
No ambiguity: the beneficiary owns the assets from the moment the trust is set up.
The Settlor (typically a parent or grandparent) chooses the beneficiary and can act as Trustee if they wish and/or appoint additional trustees.
Trustees retain control over the investment until the beneficiary turns 18.

Example

Mary and John gift €50,000 to their granddaughter Emma via a Bare Trust. They decide to act as Trustees so they can manage the investment until Emma turns 18, giving her full ownership at that point.

2. Capital Acquisitions Tax (CAT) efficiency

The gift is treated as an immediate transfer for CAT purposes as a ‘gift’ is defined as the receipt of an asset by an individual from another person
This allows clients to use the beneficiary’s CAT threshold now, locking in today’s limits:
- Group A (e.g. children): €400,000
- Group B (e.g. grandchildren): €40,000
- Group C (others): €20,000

(Any amount above the threshold is taxed at 33%)

Example

Tom gifts €40,000 to his grandson via a Bare Trust. It falls within the Group B threshold, so no CAT is due — and any future investment growth won’t affect this.

3. 'Small gifts' add up over time

The Small Gift Exemption, allows anyone to gift up to €3,000 per year to another person without affecting their CAT threshold.
Two parents can gift €6,000 annually to a child — a tax-efficient way to build wealth gradually.

Example

Sarah and Liam gift €3,000 each to their daughter every year into a Bare Trust. Over 10 years, they’ve transferred €60,000 tax-free and this amount doesn’t count towards their daughters’ CAT thresholds.

4. Tax on growth

Investment growth belongs to the beneficiary and is not subject to CAT.
CAT is based on the original gift amount, not the future value of the investment.

Example

A €30,000 gift placed in a Bare Trust grows to €50,000 by age 18. For CAT purposes, only the original €30,000 is considered — the €20,000 growth is exempt from CAT.

Why use a Life investment policy?

Investing through a gross roll-up life policy like Synergy Regular Invest or Synergy Investment Bond offers several benefits:

Tax-efficient growth: Returns are reinvested gross, compounding faster.

Even though the investment is treated as sold every 8 years for tax purposes (known as a deemed disposal), any growth during each 8-year period is reinvested without annual tax deductions.
Exit tax handled by Standard Life: No need for clients to manage it themselves, the net payment is the beneficiary’s final tax liability.
Wide fund choice: Access to Standard Life’s diverse investment range.

For financial advisers, a Bare Trust is a key piece of the estate planning puzzle—offering a tax-smart way for clients to transfer assets while retaining control and safeguard the future of their loved ones. With the government’s commitment to modernising the tax system, there’s never been a better time to combine a Bare Trust with a life investment policy.

For more information or support regarding your clients’ estate planning, contact your Business Manager or the Retirement Solutions team, retirementsolutions@standardlife.ie.

The information on this site is for qualified financial advisers and must not be relied on by anyone else. If you are not an adviser please go to our customer website for more information about our products and services.