Moneyzine
Contents
/Personal Finance/Oral Trust (Parol Trust)

Oral Trust (Parol Trust)

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term oral trust refers to an agreement that is established based on the spoken words of the donor, or settlor. Oral trusts can be created for personal property, but most jurisdictions require a written document for real property such as land.

Explanation

Also referred to as a parol trust, an oral trust is created based on the spoken words of the donor or settlor. They can also be created as part of a legal remedy to correct the unjust enrichment of another party as is the case with constructive trusts. Typically, jurisdictions will honor oral trusts if the donor's assets include personal property. Trusts involving real property, such as land trusts, cannot be created orally unless a written document is then signed by the donor.

Oral trusts are not considered a formal estate planning tool, since the terms of the trust can be brought into dispute. For this reason, oral trusts involving personal property can only be established if there is "clear and convincing evidence." Unfortunately, the words of the donor alone may not be considered clear and convincing evidence by the donor's heirs and their attorneys.

Related Terms

Related Content

How to Make a Million Dollars in 10 Years
Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
March 26th, 2024
How to Apply Maslow’s Hierarchy to Your Money This Year
You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
March 27th, 2024
How to Tackle Multiple Savings Goals
When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
March 22nd, 2024
The Countdown to Early Retirement: 10 Expenses to Eliminate
Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
March 22nd, 2024
What’s Your One Page Financial Plan? Mapping out Your Future
“What’s your one page financial plan?” — This is the absolute best question that I’ve heard asked in a long time. Instead of talking about your hot stock pick or your fancy investment that shields you from paying taxes, I think it’s time for all of us to step back and ask ourselves the most intelligent question of all, “Why the heck do I care about money anyway??”
March 14th, 2024

Contributors

Moneyzine 2024. All Rights Reserved.