Trusts are legal contracts used to protect assets and transfer property ownership from one individual to another. They can help family members avoid probate in some situations and also grant control of assets to a beneficiary while a grantor is still alive. It is crucial to learn about who the grantor of a trust is and what their responsibilities are. 

Who the Grantor of a Trust Is

The grantor of a trust, sometimes called a trustor or settlor, is someone who establishes a trust to transfer and protect personal assets. The trustor usually transfers control of those assets to a trustee of their choosing. However, the grantor may also decide to retain control over the funds until death.  

The Role of a Grantor in a Trust

There is some variability in the role of a grantor depending on the type of trust and how it is structured. In general, the grantor is responsible for:

• Creating the trust by drafting and signing legal documents that contain the trust terms and provisions, a named trustee, and beneficiaries. 
• Transferring assets into the trust's control. These may include money, investment accounts, or personal or real property. 
• Handling tax implications, including reporting and paying any taxes on trust-generated income.  

You should fully understand the meaning and responsibilities of the grantor of a trust before entering into this type of legal contract. Doing so will help you and your beneficiaries avoid legal frustration later on. 

Role of a Grantor in Grantor and Non-Grantor Trusts

These two types of trust differ in who retains control over the assets. In a grantor trust, this responsibility falls onto the trustor or grantor—the person setting up the trust. This type of trust is often used for its tax advantages.

However, in a non-grantor trust, the grantor gives full financial control to the appointed trustee.

Who Can Be a Grantor of a Trust

Virtually anyone can establish a trust. It is not a process reserved for those with large estates or extensive investments. Instead, it is a way for individuals to protect their interests, ensure their wishes are carried out, and ease the legal burden on family members after their death. 

It is a good idea to explore legal trust options if you have physical assets, including:

• A home
• Collectibles
• Investment accounts
• Land or other property
• Savings 

You must meet certain conditions to enter into a trust because it is a legally binding contract. The most crucial requirement is that a grantor is an adult of sound mind.  

How To Become a Grantor of a Trust

To become a grantor, you must establish a trust. This can be done with the help of an estate lawyer or on your own. Services such as those provided by the legal professionals at AmeriEstate make it easy and affordable to create valid legal contracts establishing control over your assets. 

Other Parties to a Trust

Now that you understand who a grantor of a trust is, you should also take time to explore other involved parties. The most obvious is the trustee. This is the person or organization who controls the assets placed into trust. 

The Role of a Trustee

The grantor may manage the trust until their death, but at that point, the trustee takes over. A trustee has a fiduciary duty to manage the trust’s assets responsibly and for the benefit of its beneficiaries. Specific responsibilities may vary depending on how a trust is written, but they typically include:

• Administering the trust according to the grantor's wishes
• Communicating with beneficiaries
• Ensuring the safety of trust assets
• Distributing assets
• Filing required state and federal reports
• Keeping records of trust transactions
• Making investment decisions in alignment with the grantor's wishes

Grantors may select one or more individuals or a trusted financial professional as trustees. The complexity of the contract and depth of responsibilities may affect the choice.

Beneficiaries and Their Role

When setting up their trust, grantors must list their beneficiaries, who are the individuals who receive possession of the trust assets after the grantor’s death. They typically do not take action until the distribution of a grantor’s estate. At that time, the beneficiaries can claim their share of trust assets.  

Learn More About Who the Grantor of a Trust Is

AmeriEstate understands that the process of establishing a trust can feel intimidating. If you have questions that go beyond who the grantor of a trust is, or would like to set up a trust, our legal experts can help. Contact us to get personalized assistance.