DEFINITION of 'Voluntary Trust'

A type of living trust that is created during the lifetime of the trustor, and is also known as an inter vivos trust. In a voluntary trust, the trustor retains legal title of the gift transferred to the beneficiary, even though the beneficiary has actual title and possession.

A voluntary trust is also defined as an obligation arising out of a personal confidence reposed in, and voluntarily accepted by, one individual for the benefit of another. This is in contrast to an involuntary trust, which is created by law.

BREAKING DOWN 'Voluntary Trust'

No consideration is made in a voluntary trust. In a voluntary trust, the recipient of the trust gives nothing in exchange for the trust but receives it as a pure gift. This distinguishes voluntary trusts from trusts for value, which are trusts made in favor of purchasers and mortgagees.

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