WHO IS A GRANTOR/ SETTLORS OF TRUST?

In general, a grantor or a settlor is someone responsible for managing the trust. He decides the terms of the living trust and stipulates the way the assets will be distributed. Words like trust-maker and trustor are also widely used in place of the settlor.

The following article will find a detailed description of the meaning of settlor and how the roles are different from that of a beneficiary and successor-trustee, also known as the trustee. 

Meaning of a settlor or grantor

Before we discuss a settlor's definition, it is essential to understand what is a Trust. For proper distribution of one’s assets after his death to the beneficiaries, a Trust is formed. A trust contains the exact manner and amount that each beneficiary will get if the trust creator dies or is not mentally sound anymore.

The creator of the trust is known as a settlor. The grantor transmits his estate through the trust, which the trustee or executor manages. The settlor can be anyone who is above the age of eighteen and is capable of handling the trust.

The person should not be mentally incompetent or under the influence of intoxicants. The grantor can make himself the trustee of a revocable living trust. However, for an irrevocable living trust, the trust-maker has to appoint someone else to act as a trustee.

In the case of a revocable living trust, the grantor can also be one of the beneficiaries. Since you are transferring your own estates and property to the trust, it is evident that you can benefit from these assets as long as you are alive. It is only after the death of the trust-maker when the responsibility transfers to the appointed trustee. The estate is then distributed among the decided beneficiaries.

Consequently, the basic role of a settlor or trust-maker can be summed up in the following points.

• Handing over the entire estate to trust.
• Establishing a dependable trustee from the beneficiaries.
• Make any changes or terminate the trust.

Beneficiaries and successor-trustees

The trust creator is different from beneficiaries and successor-trustees so that the former is the primary handler of the trust. In contrast, a beneficiary is someone who gets the profits of the assets.

The successor-trustee is the one who handles the property after the death or incapacitation of the trust-maker.

A trust is a legal agreement between these three parties. The absence of any one of the parties will make the contract incomplete. As mentioned before, the trustor or settlor can play the trustee's role or one of the beneficiaries.

Conclusion

Several words convey the same meaning as the grantor. People often find it confusing as they are unfamiliar with the words used in place of settlor or grantor. We hope that after reading this article, you now have a clear idea about the settlor concept. Also, how the work of a settlor is distinct from that of a trustee or beneficiaries.

Author: Shweta Singh