Grantor

Home

Financial Terms and Glossary

Grantor

A grantor is an individual or entity that creates a trust or transfers assets to another party, often as part of estate planning or charitable giving. The grantor sets the terms of the trust, appoints trustees, and determines how the assets will be managed and distributed. In financial and legal contexts, the grantor plays a crucial role in shaping the purpose and function of the trust, whether for personal, tax, or charitable reasons.

Example

A wealthy individual establishes a trust as the grantor, transferring assets into it to benefit their heirs while minimizing estate taxes and retaining control over asset distribution.

Key points

• Creates a trust or transfers assets to another party.

• Sets the terms of the trust and appoints trustees.

• Plays a key role in estate planning, charitable giving, and asset management.

Quick Answers to Curious Questions

What is the role of a grantor in a trust?

The grantor establishes the trust, transfers assets, and defines the terms, including how the assets are to be managed and distributed.

Why do individuals use grantor trusts in estate planning?

Grantor trusts help manage and distribute assets efficiently, reduce estate taxes, and provide control over how beneficiaries receive their inheritance.

How can a grantor influence the operation of a trust?

The grantor sets the trust’s terms, selects trustees, and can often retain certain powers, such as the ability to modify the trust or change beneficiaries.