Trustor

A trustor, also known as a grantor, settlor, or creator, is the individual or entity that establishes a trust. The trustor legally transfers ownership of assets, such as property, investments, or cash, to a trustee, who then manages these assets for the benefit of the beneficiaries, according to the terms outlined in the trust document. The trustor's primary role is to define the purpose, terms, and beneficiaries of the trust, ensuring their wishes are carried out during their lifetime and/or after their death. Their decisions shape the trust's structure and function, and their selection of a competent and trustworthy trustee is crucial for successful asset management and distribution. Furthermore, a trustor may retain certain powers, such as the ability to revoke or amend the trust, depending on the type of trust established.

Trustor meaning with examples

• John, the trustor, created a living trust to manage his real estate holdings and investments. He appointed his son as the trustee and designated his grandchildren as the beneficiaries. This allowed him to maintain control over his assets during his lifetime while ensuring a smooth transition of wealth to his heirs, bypassing probate and minimizing estate taxes. He made changes throughout his life as circumstances changed.
• As a savvy estate planner, Sarah, the trustor, decided on an irrevocable trust to protect her assets from potential creditors. She chose a reputable financial institution to serve as the trustee to ensure professional management of her investments. This move secured her family’s financial future, even if unforeseen financial challenges arose. The document was legally prepared and filed.
• The wealthy philanthropist, acting as the trustor, established a charitable remainder trust to donate money to a local hospital. He designated that the hospital should receive funds to cover patient treatments. The trust provided him with a tax deduction and ensured the hospital's financial well-being. He had to work with an accountant and lawyer to establish the details of the trust.
• Following the divorce, the trustor, Michael, set up a special needs trust to provide for his disabled child. He appointed a professional trustee with experience in managing such trusts. The trust would fund care for the child's needs without jeopardizing their eligibility for government benefits. It had specific guidelines to ensure proper distribution.