Property Law Assignment: "Voluntary Trust"

PROPERTY LAW ASSIGNMENT
“VOLUNTARY TRUST”
DONE BY:
NAME: SRIMUGAN.R
ROLL.NO: 20191BAL0080
SUBJECT: PROPERTY LAW
COURSE: BA.LLB (SEC-4)
SUBMITTED TO: Prof. NEHA SINHA
SCHOOL OF LAW, PRESIDENCY UNIVERSITY

BANGALORE
KARNATAKA, INDIA
NOVEMBER-2021
INTRODUCTION:
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.
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.
VOLUNTARY TRUST:
In a voluntary trust one must note that no consideration is moving from the beneficiary to the
settlor or no detriment is suffered by the beneficiary. If the trust is executed it comes into
force at once and the beneficiaries can enforce the same at once. If the is executory, it cannot
be enforced at once, on the principle that "Equity will not aid a volunteer". In such a case the
settlor must do what is necessary for him to do bring into operation. But even here if the
agreement to create a trust was for consideration, the same can be enforced but in that case it
will be trust for value.
A voluntary trust is a fiduciary relationship between a trustor, trustee, and a beneficiary used
for estate planning over an individual’s lifetime. A voluntary trust is also known as a living
trust, and its lifetime is set at the time of creation to meet both parties’ needs as they see fit.
The trustor holds the legal title over the “gift” that will be transferred to the beneficiary.
However, the beneficiary owns the title, possession, and power to carry out the trust’s
actions. The trust can facilitate the transfer of assets to the beneficiary during or after their
lifetime.
The opposite of a voluntary trust is an involuntary trust. In an involuntary trust, the court
exercises control over the trust regardless of either party’s intent to amend and benefit a party
that was deprived of their rights.
USING VOLUNTARY TRUST:
A voluntary trust is often used in estate planning, which entails the management or
distribution of a person’s (trustor’s) property at any point in their life – alive or dead.
Common attributes of an estate include an individual’s legal rights, interest, property
entitlement, and all other assets minus the liabilities at that specific time.
In relation to common assets such as a house or car, the person controlling the asset is
referred to as the trustee, while the person receiving that asset in the future is known as the
beneficiary. In most situations, a trust is initiated to provide legal protection over the trustor’s
net worth and to oversee the best wishes of that person. Ultimately, the process saves time,
costs (through taxes), and paperwork hassle.
In a voluntary trust, the beneficiary receives the assets as a gift, of which they are not
required to provide anything in return. Conversely, a trust of value could be chosen, which
provides benefits to purchasers or mortgagees.
In some cases, voluntary trust can refer to the interpersonal trust between two or more
individuals regarding an obligation that upholds the benefits of one or all of the individuals.
This is not a formal contract, rather a man/woman’s word from one person to another. From
the legal perspective, voluntary trusts are a formal agreement that grants the power to oversee
and sometimes manage an individual’s assets.
UNDERSTANDING OF 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.
CASE LAWS:
 M/S R.B. Shreeram Relegious V. The Commissioner of Income Tax, 1998

 Board of Trustees, Visakhapatnam V. T.S.N Raju & another, 2006
CONCLUSION:
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. 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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PROPERTY LAW ASSIGNMENT

SCHOOL OF LAW, PRESIDENCY UNIVERSITY

UNDERSTANDING OF VOLUNTARY TRUSTS:

 M/S R.B. Shreeram Relegious V. The Commissioner of Income Tax, 1998

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