The draft statement considers whether a bare trust can exist where the property held is subject to a mortgage. Under a bare trust, the trustee’s duties are generally limited to transferring the trust property as directed by the beneficiary and, in the meantime, taking reasonable care of the property. The draft concludes that the existence of a mortgage does not prevent a bare trust from arising.

CA ANZ agrees with the analysis and makes several recommendations, including providing further detail on reimbursement arrangements, clarifying the item dealing with the RWT position, and including two additional examples.