Voluntary Trust

What Is a Voluntary Trust?

A voluntary trust is 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 the legal title of the gift transferred to the beneficiary, even though the beneficiary has actual title and possession and ability to carry out actions of the trust. 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.

Understanding Voluntary Trusts

Voluntary trusts are often used in estate planning. In the situations of real estate, the person who controls the real estate property is known as the trustee, while the individual who will receive the property after it is being held is known as the trustor. The property itself is referred to as the res.

In a voluntary trust, no consideration is made. In a voluntary trust, the recipient of the trust gives nothing in exchange for the trust but receives it as a pure gift. By avoiding receiving something in return, voluntary trusts are distinguished from trusts for value, which are trusts made in favor of purchasers and mortgagees. The opposite of a voluntary trust is an involuntary trust, which can be further broken down into constructive or resulting trusts.

In some cases, a voluntary trust can also simply refer to the interpersonal confidence between two individuals regarding an obligation for the benefit of each other, or one individual in the relationship. However, in legal terms, a voluntary trust is a formal structural setup that can oversee an organization’s activities and, in some cases, its financial operations.

Example of a Voluntary Trust

Many types of charitable and service organizations operate voluntary funds in order to maintain operations. As an example of how a voluntary trust can work, one can look at the Trust Fund of the United Nations Alliance of Civilizations. Through a Special Report made by the organization’s High-Level Group, it was recommended the Alliance establish a voluntary trust fund. As the organization explains via its website, the primary objectives of the Trust Fund are to support the projects and activities of the Alliance of Civilizations, the activities and outreach initiatives undertaken by the High Representative in his official capacity and assist with core operational and human resources needs.

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.