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A grantor trust is a legal entity created by an individual to hold and control their assets. The grantor can maintain control over the trust assets and appoint a trustee. The trust is typically revocable until the grantor’s death, at which point it becomes irrevocable. The successor trustee takes over management of the trust and distributes assets according to the grantor’s instructions. The grantor is usually responsible for taxes on the trust’s income while they are alive.
A grantor trust is a legal entity created by an individual to hold and control his assets. A grantor trust is different from a grantor of a trust. A grantor trust is the legal entity that a person creates, while the grantor of a trust is the person that creates it. The person who creates a trust is always called a grantor, whether they create a grantor trust or a different type of trust.
In a grantor trust, the grantor creates a trust and transfers assets into it. This type of trust is typically revocable. As long as the grantor is alive, he can make changes to the terms of the trust or even revoke it altogether. However, upon the death of the grantor, the trust becomes irrevocable. This means that it must be administered under terms that the grantor created while he was alive. No one can make changes once the grantor is dead.
The person creating a grantor trust can maintain control over the trust assets, making decisions about the assets just as they did before the trust was created. He can appoint himself as his trustee. The title of trustee is the official designation of a person who holds and manages assets in a trust. He works to manage the trust for the benefit of its beneficiaries. If the grantor does not wish to act as trustee, he may appoint another competent person to do so on his behalf.
Usually, a grantor trust will have not only one trustee, but also a successor trustee. This subject is responsible for assuming control and management of the trust in the event of the grantor’s death or psychic or physical incapacity. The job of the successor is to take over all day-to-day management of the trust and ensure that the assets are distributed on the basis of the grantor’s written instructions. For example, a successor trustee may distribute assets to trust beneficiaries after the grantor’s death. In other cases, the successor may retain control of the trust assets and instead provide income to the beneficiaries.
While the grantor is alive, he is usually responsible for taxes on the trust’s income. Typically, the beneficiaries receive the income from the trust but do not have to pay any income tax on it. Tax laws for trusts can vary, depending on where the trust is created and run. These laws can also change at any time.
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