Naked Trust

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Naked Trust

A trust in which the grantor leaves assets to the care of a trustee, whose only duty is to transfer those assets to a stated beneficiary. This contrasts with most other trusts, in which the trustee invests or otherwise safeguards the assets and gives the income they generate to the beneficiary.
References in periodicals archive ?
There is no restriction on how much you can put into a bare trust every year, and the money or investments within it are regarded as the child's from a tax perspective.
For example, a popular arrangement where investments are bought in the name of an adult but with a designation to a particular child is an Implied Bare Trust
While it was set up under a will it could be a bare trust, for example for minors yet to come of age, or for the benefit of someone with a life interest or a form of discretionary trust.
These have the advantage of being taxfree and can be held in what is known as a bare trust for the benefit of the child when he or she reaches 18.
Any income from a Bare Trust is taxable at a child's rate, and a child has a tax-free personal allowance of up to pounds 6,475 in the present tax year.
The change to the rate of Capital Gains tax will however affect all trusts, other than bare trusts.
Bare trusts often used by grandparents are not caught as the child is automatically entitled to the benefits at age 18.
All future and existing bare trusts ( a simple type of trust often used for an insurance policy to pay off a mortgage ( will not be affected.