A voluntary trust is a type of living trust created during the lifetime of the trustor, also known as an inter vivos trust. In a voluntary trust, the trustor retains the legal title of the gift transferred to the beneficiary, even though the beneficiary has the actual title and possession and the ability to carry out actions of the trust. A voluntary trust is defined as an obligation arising out of personal confidence reposed in and voluntarily accepted by one individual for the benefit of another, distinguishing it from involuntary trusts, which are created by law.
Insights Into Voluntary Trusts
Voluntary trusts play a significant role in estate planning. When it comes to real estate, the individual controlling the property is known as the trustee, while the person who will receive the property is referred to as the trustor. The property in question is called the res.
In a voluntary trust, no consideration is made, meaning the recipient of the trust receives it as a pure gift without giving anything in return. This aspect differentiates voluntary trusts from trusts made in favor of purchasers and mortgagees. Opposite to voluntary trusts are involuntary trusts, which can further be categorized into constructive or resulting trusts.
Sometimes, a voluntary trust refers to the interpersonal confidence between two individuals regarding an obligation for the benefit of each other or one party in the relationship. Legally, however, a voluntary trust is a formal structure that can oversee organizational activities and, in some cases, its financial operations.
Example of a Voluntary Trust
Various charitable and service organizations use voluntary funds to maintain operations. For instance, the Trust Fund of the United Nations Alliance of Civilizations is a model example of a voluntary trust. Following a recommendation by the organization’s High-Level Group in a Special Report, the Alliance established a voluntary trust fund. The primary objectives of the Trust Fund are to support the projects and activities of the Alliance of Civilizations, facilitate outreach initiatives undertaken by the High Representative in his official capacity, and assist with core operational and human resources needs.
Related Terms: Living Trust, Inter Vivos Trust, Involuntary Trust, Trustor, Beneficiary.
