Bare Trust at 18: What Actually Happens When the Plan Matures
In the first article I said the catch with a bare trust is 18. This one is about what that actually looks like on the day.
Nothing happens. That is the honest answer. No letter arrives from the life company, nothing changes on their system and the policy still sits in the trustees' names. Your son or daughter turns 18, sits the Leaving Cert, goes to the Debs and not one piece of paper acknowledges that a fund with their name on it has just become legally theirs.
That gap between what the law says and what the paperwork shows is where every problem in this article starts.
The fear and what actually happens
Parents raise this one. Never the kids. Sixth year, CAO offers coming in August, a social life that costs money and a five figure sum sitting there with their name on it. Are they going to cash it in and blow the lot?
Rarely, in my experience. Most of them have no idea the money exists. The ones who do tend to know exactly what it is for and there is no app on their phone showing them the balance every time they pick it up.
But rarely is not never and I would not build a plan on the assumption that it cannot happen. The entire structure depends on the fact that it can.
You have to tell them and there is no way around it
This is the part parents do not want to hear.
The day the beneficiary turns 18, the trustee's powers are gone. You are holding money that belongs to another adult and that adult is entitled to know it exists and to decide what happens to it. Sitting on it quietly until you judge them ready is understandable. I have plenty of sympathy for it. It is still a breach of trust.
Whether anyone ever calls you on it is a separate question from whether it is right. You get to pick the moment. You do not get to pick never.
Three things you can do and what each one costs
| Option | What it means | Tax and admin |
|---|---|---|
| Transfer ownership to them | Legal title moves from the trustees to your now adult child. They become the policyholder in their own name. | Beneficial ownership does not change because the fund was always theirs. Get the provider to confirm their treatment in writing before you sign anything. The paperwork differs between life companies. |
| Cash it in | The plan is encashed and the proceeds are paid out. | A chargeable event. Exit tax at 38% on the gain, with credit for any deemed disposal tax already taken. Read the timing section below before you do this. |
| They ask you to keep running it | Legal ownership can stay where it is but you are acting on their instructions now rather than your own judgement. | Put it in writing and have them sign it. They are an adult with full rights over the money and any advice about it from here is advice to them, not to you. |
That third option is where most families land and it works perfectly well. Just be clear about what you are doing. You are asking an eighteen year old to sign a legal agreement with you which means the conversation is happening anyway. You may as well have it properly.
The tax position at maturity in 2026 terms
Start with the good news, because it is the first question every single time.
No Capital Acquisitions Tax arises at 18.
The gift was made years earlier inside the €3,000 annual small gift exemption and the money has belonged to the child ever since. Nothing is gifted on their eighteenth birthday, so there is nothing to tax, nothing to declare and no return to file.
After that it depends entirely on what the money is sitting in.
Life assurance savings plan, encashed. Exit tax at 38% on the gain, down from 41% for chargeable events on or after 1 January 2026 under Finance Act 2025. Any exit tax already deducted at the eight year deemed disposal is credited against it, and where more was taken at year eight than turns out to be due, a refund arises.
Life assurance savings plan, transferred. Moving legal title to a beneficiary who was always beneficially entitled is not the same thing as an assignment for value. Confirm the provider's treatment first.
Investments held directly under the trust. A transfer from a bare trustee to the beneficiary is not a disposal for CGT purposes. Revenue's own manual confirms it. Your child picks up the original base cost and CGT only arises when they eventually sell.
Here is the one that catches people. An 18-year-old with no income, no job and no other gains still pays exit tax at 38%. No lower rate, no annual exemption, no allowance for being a student with nothing coming in. It is a blunt tax, and it is a fair part of the reason I push people towards holding investments directly once the amounts justify the extra paperwork.
The timing point almost nobody mentions
If there is any chance of a SUSI grant, do not cash anything in before you have looked at the calendar.
SUSI works off gross income from all sources for the previous calendar year, and the application form asks directly about gains from the disposal of assets. Encash a plan in 2026 and it sits inside the assessment for the 2027/28 academic year; at exactly the point the family is trying to demonstrate a modest household income.
Transfer the ownership instead and the problem usually disappears, with the added benefit that your child ends up holding an invested asset rather than a bank balance they can watch. If the grant matters at all, have that conversation first. Not afterwards.
If the grandparents funded it
The trust runs between the trustees and the grandchild, so the duty to make contact belongs to whoever is trustee, not to whoever wrote the cheques. And if a grandparent acted as sole trustee and has since died, the trusteeship has to be untangled before anybody can move a cent.
That is the practical reason I suggest appointing the child's parents as trustees from the outset, even where the grandparents are funding the whole thing. They will be around, and they are the ones who will end up dealing with it.
So what should they do with the money?
Whatever it was always for, which is a less glib answer than it sounds.
Most of these plans were started for a house deposit, and leaving the fund invested for another five or ten years is usually the right call. Some of it goes on college costs, which is a perfectly good use of it and often the reason a grandparent started the plan in the first place. If it stays invested, keep an eye on the eight year clock, because the next deemed disposal arrives whether anyone is watching for it or not.
And if they want to spend it, that was the deal. You gave the money away eighteen years ago and you knew the terms at the time. How you raised them was always the real control here, not the trust deed.
Frequently asked questions
What happens to a bare trust when the child turns 18 in Ireland?
The trust ends and the beneficiary becomes absolutely entitled to the fund. The trustee's powers cease, and the trustee must tell the beneficiary the money exists and act on their instructions from that point on.
Does my child pay tax when a bare trust ends at 18?
No Capital Acquisitions Tax arises, because the gift was made years earlier. If a life assurance plan is encashed, exit tax of 38% applies to the gain, with credit for any tax already taken at the eight-year deemed disposal.
Do I have to tell my child about the bare trust at 18?
Yes. They are absolutely entitled to the fund and to know that it exists. You can choose when the conversation happens. You cannot decide that it never does.
Can I keep managing the money after my child turns 18?
Only with their agreement and it should be in writing. Legal ownership can stay with the trustees but you are acting on the beneficiary's instructions from their eighteenth birthday onwards.
Should I transfer the policy or cash it in?
Transferring is usually cleaner. It avoids a chargeable event, keeps the money invested, and avoids creating a gain in a year that could affect a SUSI assessment. Cashing in makes sense where the money is needed now.
Talk to us
If you have a plan coming up to maturity, or you are just trying to work out how to open the conversation, we deal with this regularly and it is usually a short discussion rather than a long one. And if you are at the other end of it, wondering whether to start a plan at all, part one covers how the structure works and what it saves.
Book your consultation: https://calendly.com/daniel-fpms/education-planning-discovery-call
Or email advice@fpms.ie