Naked Trust

AAA

DEFINITION of 'Naked Trust'

A straightforward type of trust into which a trustor transfers assets (money or property) in order to pass them on to beneficiaries. The initial owner of the assets (the trustor) loses all control over them once they are placed in the trust. The trustee has only nominal control of the assets in the trust. The trust's beneficiary has absolute entitlement to the assets once he or she turns 18.

Also known as a "bare trust," "dry trust" or "passive trust."

INVESTOPEDIA EXPLAINS 'Naked Trust'

This estate-planning tool is commonly used by parents or grandparents to transfer assets to children or grandchildren. The college financial-aid implications of putting money into a naked trust for children should be considered before establishing the trust.

RELATED TERMS
  1. Naked Writer

    An options seller who does not own the underlying security for ...
  2. Named Beneficiary

    This term refers to any beneficiary named in a will, a trust, ...
  3. Designated Beneficiary

    The person who determines how long the retirement plan will survive ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  6. Trustor

    An individual or organization that gifts funds or assets to others ...
Related Articles
  1. Pick The Perfect Trust
    Retirement

    Pick The Perfect Trust

  2. Special Trusts For Special Needs
    Personal Finance

    Special Trusts For Special Needs

  3. Can You Trust Your Trustee?
    Home & Auto

    Can You Trust Your Trustee?

  4. Establishing A Revocable Living Trust
    Retirement

    Establishing A Revocable Living Trust

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center