What is a Grantor Trust?
A Grantor is the person who creates a trust or transfers property to a trust. A Grantor Trust is a trust in which the “grantor” or another person retains substantial control over the trust, and as such, is treated as the owner of the portion of the trust that is attributable to property contributed by him over which he has control. The beneficial owner of the assets or income for a Grantor trust is each Grantor.
A grantor trust is a revocable living trust that an individual (the “grantor”) sets up for his or her own primary benefit. He or she is usually either the only trustee or a co-trustee with another person. A grantor trust does not save taxes. It is created to facilitate administration of assets during life and smooth the transfer of property at death. For this reason a grantor trust is sometimes called a “housekeeping trust”.
“Grantor trust” is a term used in the Internal Revenue Code to describe any trust over which the grantor or other owner retains the power to control or direct the trust’s income or assets. If a grantor retains certain powers over or benefits in a trust, the income of the trust will be taxed to the grantor, rather than to the trust. (Examples, the power to decide who receives income, the power to vote or to direct the vote of the stock held by the trust or to control the investment of the trust funds, the power to revoke the trust, etc.) All “revocable trusts” are by definition grantor trusts. An “irrevocable trust” can be treated as a grantor trust if any of the grantor trust definitions contained in Internal Code ยงยง 671, 673, 674, 675, 676, or 677 are met. If a trust is a grantor trust, then the grantor is treated as the owner of the assets, the trust is disregarded as a separate tax entity, and all income is taxed to the grantor. Q: What are irrevocable/revocable trusts? A: An irrevo
A grantor trust is generally used when planning a person’s will and distribution of an estate. A grantor trust is a specific type of trust that allows the person who creates the trust (grantor) to control the assets in the trust and recognize income generated by the trust. (This type of trust google_ad_client = ‘pub-2905054723170537’; // substitute your client_id (pub-number) google_ad_channel = ‘6331884817’; google_ad_output = ‘js’; google_max_num_ads = ‘3’; google_ad_type = ‘text’; google_feedback = ‘on’; is also referred to as a revocable, living, or inter vivos trust.) To understand the advantages of a grantor trust, you must first understand how it is created and how it differs from other trusts. Creating a grantor trust A grantor trust is so called because it is created during the grantor’s lifetime. It is a revocable trust, which means that the trust can be terminated or changed during the grantor’s lifetime, as long as he or she is mentally capable. when the grantor dies, the t
