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A bare trust (sometimes referred to as a simple trust or mandatory trust) is a trust in which the beneficiary has a right to both income and capital and may call for both to be remitted into his own name.
A simple trust requires that any income it receives be distributed within the tax period it is earned. This is opposite to a complex trust where the funds are not required to be paid out right away, so it can keep gaining income without having to distribute the money or property.
A case that deals with the limited powers of a bare trustee to deal with trust assets is Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd  FCA 677 which considered the law relating to the duties, powers and rights of a bare trustee in a winding up. This case is an important reminder to practitioners of some of the difficulties that can arise where an insolvent company owns property as a corporate trustee. Care should be taken to carefully review the trust deed on appointment to ensure the trustee retains its powers to sell trust assets.
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