Bare legal title refers to the holding of property by a trustee for the benefit of another, with the trustee having no active duties or powers beyond conveying the property as instructed by the beneficiary. In this arrangement, the trustee holds the "legal" title, but the beneficiary has the "beneficial" ownership and can demand the trustee act on their instructions.
Key characteristics of bare legal title
Separation of ownership: The legal ownership (held by the trustee) is separate from the beneficial ownership (held by the beneficiary).
Trustee acts as an agent: The trustee essentially acts as an agent for the beneficiary, holding the property without independent power to manage or deal with it.
Beneficiary's control: The beneficiary has the right to direct the trustee to handle the property as they see fit, often on demand.
Minimal trustee duties: The trustee’s sole function is to hold legal title and follow the beneficiary’s instructions.
Examples: A common use case is when a parent adds their adult child to a property title for mortgage purposes, with the parent being the "bare trustee" and the child being the beneficiary.
How it works in practice
Legal title: The trustee's name appears on the official legal documents, such as a deed for real estate.
Beneficial interest: The beneficiary holds the true interest in the property, including the right to its income and the ability to eventually demand the legal title be transferred to them.
Trustee's obligations: The trustee must follow the instructions of the beneficiary and cannot act on their own accord without the beneficiary's direction.
This is an essential concept when interfacing lawful and legal property.