If you are curious about the meaning of the term “Grantor,” then you are most likely starting to do some estate planning. Perhaps you are preparing estate planning documents yourself, perhaps you already have an attorney who has asked to you answer some questions to begin the estate planning journey, or perhaps you are just surfing the net to get a feel for what estate planning is all about.
No matter where you are in your estate planning, learning the vocabulary that is a part of the estate planning world is critical. And the term “Grantor” is one of the more important terms, and concepts, to understand. Accordingly, in this article, we will answer the question “What is a grantor?” and then discuss other labels associated with a “grantor.”
At Doane & Doane, PA, we are passionate about giving our clients the personalized legal counsel they need to appropriately take care of many major life and death decisions, such as estate planning. So, to answer your estate planning questions after you read this article, we welcome you to consider contacting us at Doane & Doane, PA for estate planning advice and services. You can contact us today at 561-656-0200 or fill out our online contact form.
What is a Grantor?
The term “grantor” is most commonly used in real estate transactions, and in estate planning. With regard to real estate transactions, the person selling a piece of property is normally referred to as the “grantor” or “seller.” Conversely, the person who is buying a piece of property is normally the “grantee” or “buyer.”
With regard to estate planning – which is what we expect you are most curious about in reading this article – the term “grantor” is associated with the estate planning financial instrument called a trust. When someone planning their estate creates a trust, then the grantor of the trust is the person who:
1. Creates trust;
2. Decides what property/assets to put into the trust;
3. Makes rules as to the distribution of the trust; and
4. Initiates the conveyance of the property/assets into the trust.
Note that depending on the jurisdiction, a grantor of a trust may also be referred to as a “trustor,” or “settlor.” Yet, you will most often come across the word “grantor” as the person who creates a trust.
Can There Be More than One Grantor of a Trust?
Yes. It is common for a married couple to create a trust as part of their estate planning. Thus, if there is more than one person creating a trust, and putting assets into the trust, then they are referred to as “co-grantors.”
Who Are the People Who Benefit from a Trust?
Similar to those who receive an inheritance from a last will and testament, a person who receives money from a trust – in accordance with the rules set by the grantor or co-grantors – is referred to as a “beneficiary.”
It is important to understand that every trust must have a grantor and a beneficiary. As already noted, a trust can have co-grantors, and, in the same way, a trust can have (and normally has) multiple beneficiaries.
Are There Any Other People Necessary for a Trust?
Yes. In addition to having a necessary grantor and beneficiary, every trust must have a “trustee.” The trustee is the person who manages, or administers, a trust. The trustee is ultimately responsible for paying out distributions to the trust’s beneficiaries in accordance with the instructions in the trust.
Depending upon the type of trust you are dealing with, the grantor and the trustee can be the same person, or they can be separate people. That variability is due to the fact that trusts can dissolve during the life of a grantor or may continue on once the grantor passes away.
In a situation with co-grantors, they may also serve as co-trustees or a joint living trust. If one of the grantors becomes disabled, resigns, or dies, the surviving co-grantor may continue on as a trustee. Of course, if both co-grantors no longer are able to serve as trustee, then a successor trustee (normally named when the trust is created) will take over management of the trust.
When Must You Have Co-Grantors?
If in your estate plan, you want to title marital property (that is, property owned by both you and your spouse) in the name of the trust, then you and your spouse must be co-grantors. That is because the property is owned by both of you.
In addition, with joint trusts, which provide married couples with significant benefits and simplify the administration of assets upon death, you will need to have the married couple be co-grantors.
In sum, now when someone asks you the question “What is a grantor?” You will be able to give a comprehensive response. When it comes to creating a trust, however, you would be wise to talk to a professional estate planning attorney.
Look to Doane & Doane for Help with Estate Planning Options
Founded in 2003 by husband and wife legal team, Randell C. Doane and Rebecca G. Doane, Doane & Doane provides legal and financial services to families, individuals, and businesses throughout Southeast Florida.
Estate planning is about much more than just giving away property. It is an act of love and kindness, with the ultimate goal of providing for the future financial security of your loved one. At Doane & Doane, our Wills and Trusts Attorneys West Palm Beach help people plan for retirement, make provisions for loved ones, figure out future child support, and minimize tax liability. Experienced wills and trusts attorneys know which tools to use to get the best results for their clients. Our lawyers can help you determine which tools are best suited to your specific circumstances.
When it comes to probate matters, such as the formal administration of an estate, Florida fiduciaries seek the assistance of the attorneys at Doane & Doane, P.A. to administer and manage their trusts and estates. Notably, the founding partners of Doane & Doane are board-certified West Palm Beach Probate Attorneys. With the additional advantage of certified public accountancy in their backgrounds, they present a unique combination of skills and experience which enables them to effectively settle, administer, and manage clients’ trust and estates.