Also known as:parol trusts · oral trust · verbal trust
Written by attorneys · grounded in primary & secondary sources — see below
A trust created by oral declaration of the settlor rather than by a written instrument. The existence of the trust and its material terms must be established by clear and convincing evidence unless another statute requires a writing.
Sources & Authorities
How it applies
Common Examples
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Oral Declaration of Business Profits
Pavel Petrov told his niece Nora during several casual conversations that profits from one production line would be held by her to fund college scholarships for employees' children. The profits remained in the general business account and no document mentioned any trust. After Pavel died, the employees' children sued Nora. The court required the children to prove by clear and convincing evidence that Pavel intended to create a trust, that Nora accepted the role of trustee, and that the scholarship terms were definite.
Boundary Dispute and Family Land
Patrick Phan conveyed land to his brother-in-law without consideration after a family discussion in which the brother-in-law agreed to hold title for the benefit of Patrick's children. Years later a boundary dispute arose and the children claimed the land was subject to an oral trust. The brother-in-law denied any trust. The court examined whether the children's evidence of the oral understanding met the clear and convincing standard required to establish the trust and its terms.
Put it into practice
Test Yourself
8
Practice Questions5
· 1 primary source
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Casebooks
Dictionaries
Ellis v. Vespoint403 S.E.2d 542 (N.C. Ct. App. 1991)
Common questions
Frequently Asked
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What standard of proof applies when a party claims an oral trust was created?+
The creation of an oral trust and its terms must be established by clear and convincing evidence. This standard is higher than a preponderance of the evidence and requires proof that produces a firm belief or conviction in the mind of the factfinder.
Supporting sources
Does the absence of a written trust instrument automatically defeat a claim that a trust exists?+
No. A trust of personal property need not be evidenced by a written instrument unless another statute requires a writing. The focus is whether the proponent can meet the clear and convincing evidence standard for the trust's creation and terms.
Supporting sources
What factors help determine whether an oral statement created a trust?+
Courts examine the precision of the settlor's words, the context of the conversation, any corroborating evidence such as emails or conduct, and whether the settlor later denied the arrangement. Subsequent retraction or lack of follow-through can prevent the evidence from reaching the clear and convincing level.
Supporting sources
Can an oral trust be created over real property?+
Most states require trusts of real property to be evidenced by a signed writing under the statute of frauds. An oral trust of land is generally unenforceable even if the parties intended to create one.
Supporting sources
Trusts and Estates Trusts and Future InterestsTrusts · CreationUBEFoundational