What is a grantor of a trust?

Setting up a trust can feel overwhelming: there are many decisions to make, roles to fill, and logistics to understand. Where do you even begin?

It all starts with a single person called the grantor.

What is a grantor?

A grantor is the person who creates and funds a trust. A trust is a legal arrangement used in estate planning to distribute property and money after the grantor’s death. Trusts can also be used to manage your assets during your lifetime. A key benefit of a trust is that assets held in a trust don’t have to go through probate, which is the court-supervised legal process of distributing your property to your beneficiaries.

When creating a trust, the grantor usually appoints themselves, another person, or an organization to manage the trust and the assets in it. This person or organization is known as the "trustee."

A grantor may also be called a “trustor” or “settlor.”

The grantor’s role and responsibilities

As a grantor, you’ll make all the important decisions regarding the setup and management of your trust. Your duties can include:

• Choosing the type of trust: There are many different types of trusts to choose from, and each has unique benefits. Before you can create a trust, you’ll need to decide what type will best suit your needs.
• Filling the trust with assets: As the grantor, it’s your responsibility to fill — or “fund” — the trust with assets. You do this by transferring legal ownership of your property to the trust. Depending on the types of property being transferred, you may have to fill out a change of ownership form for your assets, retitle them, or prepare a new deed. Based on the type of trust you have, you can fund it with personal property, real estate, a life insurance policy, stocks, cryptocurrency, or other assets.
• Appointing a trustee: The grantor must select a trustee to manage the trust. This can be a person, an organization, or — depending on the type of trust — even the grantor themselves. If you choose to serve as trustee yourself, you’ll need to name a successor trustee to take over if you become unable to manage the trust or when you pass away.
• Naming beneficiaries: In trust documents used for estate planning, you’ll name who should benefit from the trust during your lifetime and who should get each of the assets in the trust after you die. These people or organizations are known as beneficiaries. They can be friends, family members, or even one or more of your favorite charities.
• Making decisions on how the trust will be managed: It’s up to you (as the grantor) to provide instructions on how the trust is administered. This can include restrictions on how or when assets are distributed to beneficiaries (such as at a specific age or pending a certain action, like attending college). The trustee will then manage the trust according to these instructions.  
  

Grantor vs. grantee: What’s the difference?

Grantors and grantees each play important — but very different — roles in the lifecycle of a trust.

While a grantor creates and fills the trust, a grantee (commonly known as a “beneficiary”) is the one who benefits from it.

Grantor vs. trustee: What’s the difference?

When establishing a trust, a grantor must appoint a trustee. A trustee is the person or organization assigned to manage or administer the trust.

A trustee’s powers — which are the actions they are and aren’t allowed to take on behalf of the trust — are determined by the grantor and written into the trust documents. These powers are generally put into place for the benefit of the trust’s beneficiaries.

Depending on the type of trust they create, a grantor may choose to be their own trustee and manage the trust while they’re alive and capable. In this case, they must nominate a successor trustee to take over the role after they pass away or if they become incapacitated.

Grantor vs. settlor: What’s the difference?

In estate planning, “grantor” and “settlor” mean the same thing. The settlor of a trust is the person who creates a trust. This includes funding the trust and making important decisions, like who should manage or benefit from the trust.

This person is also sometimes referred to as a “trustor.”

Why create a trust?

A trust can be an important part of your estate plan. There are many benefits to having a trust — especially a revocable living trust, which not only lets you maintain control over your assets during your lifetime, but also offers flexibility to make changes and provides a way for your assets to avoid probate after you die.

If you have a large or complex estate, speaking with an estate planning attorney is a great first step in deciding if a trust can help you achieve your planning goals. They can work with you to determine the best type of trust for your needs and guide you through setting one up.  

You can also choose to create a trust on your own. FreeWill's revocable living trust tool allow you to make your trust simply and securely for a fraction of the cost of an attorney. Get started today.