Naked Trust Law and Legal Definition
Naked trusts are trusts in which the trustee has no duty other than to transfer the property to the beneficiary. It is a straightforward type of trust into which a trustor transfers assets in order to pass them on to beneficiaries. Once the properties are placed in the trust, the trustor loses control over them. The trustee has only nominal control of the assets in the trust. This estate-planning tool is commonly used by parents or grandparents to transfer assets to children or grandchildren.
Naked trusts are also called dry trusts or passive trusts.