Meaning & use
grantor trust
Last updated
Meanings
nouncountablelawfinance
A legal arrangement in which the person who puts assets into a trust keeps some control over it and is taxed on its income.
Grammar: Countable: you can say a grantor trust or several grantor trusts.
Patterns
- set up a grantor trust
- assets in a grantor trust
- the grantor trust rules
She set up a grantor trust so that the family business would pass to her children without going through probate.
Because it is a grantor trust, he still pays income tax on the money it earns each year.
The lawyer explained that a grantor trust can be changed while the person who created it is still alive.
nouncountablelawfinancetechnical
A trust whose creator is treated as its owner for tax purposes, so its income is reported on that person's own return.
Grammar: Often used before another noun, as in grantor trust rules or grantor trust status.
Patterns
- grantor trust status
- be treated as a grantor trust
- qualify as a grantor trust
Under these rules the arrangement is treated as a grantor trust, so no separate tax return is filed.
The accountant checked whether the fund still had grantor trust status after the new trustee took over.
Word forms
| plural | grantor trusts |
|---|
Common combinations
- set up a grantor trust
- They set up a grantor trust to hold the holiday home for the whole family.
- grantor trust rules
- The grantor trust rules decide who must report the income.
- a revocable grantor trust
- A revocable grantor trust lets the creator change the terms later.
- income from a grantor trust
- She pays tax on all income from a grantor trust she created.
Synonyms and how they differ
- grantor
- This is the person who creates the trust, not the trust itself, so it cannot replace the full phrase.
- living trust
- A living trust is set up during someone's life; it may or may not be a grantor trust for tax purposes.
Word family
Commonly confused: grantor trust or grantor? grantor trust or grantee?
grantor trust vs grantor
Grantor is the person who creates the trust; grantor trust is the legal arrangement itself. Learners often use the two as if they meant the same thing.
grantor trust vs grantee
A grantee receives property or rights, while a grantor gives them; the two sit on opposite sides of the same transaction.
Practice
Which sentence uses "grantor trust" correctly?
Choose one answer.
A grantor trust is the arrangement itself, so it is created or set up, as in option C. Options An and B use it for a person, which is wrong because the person is the grantor; option D confuses the trust with a trustee, who manages assets.
Make it your own
Write a sentence using “grantor trust”, then check it and compare it with the examples above.