A trust agreement is a legal document that outlines the terms and conditions of a trust. It is a legal tool that can be used for various purposes, such as estate planning, asset protection, and tax planning.
One of the key elements of a trust agreement is the identification of the grantor. In simple terms, a grantor is the person who creates the trust and transfers their assets into it.
The grantor is also known as the trustor or settlor. They are the legal owner of the assets placed in the trust and are responsible for managing the trust until they pass away or become incapacitated.
There are several reasons why a person may create a trust, one of which is to avoid probate. By transferring assets into a trust, the grantor can ensure that their assets are distributed according to their wishes without going through probate court, which can be time-consuming and costly.
In addition, a trust can provide greater asset protection and privacy than a will. Trusts are not public documents, and their contents are typically only known to the grantor and their designated beneficiaries.
Another benefit of a trust is its flexibility. The grantor can customize the terms of the trust to meet their specific needs and goals. For example, they can specify when and how the beneficiaries will receive distributions from the trust.
It is important to note that the grantor`s role in a trust may change over time. For example, if the grantor becomes incapacitated, the trustee (the person who manages the trust) will take over managing the trust. Ultimately, the grantor`s role ends upon their death, at which point the trustee will distribute the assets according to the terms of the trust agreement.
In summary, a grantor is the person who creates a trust and transfers their assets into it. They are responsible for managing the trust until their death or incapacitation, at which point the trustee takes over. A trust can provide numerous benefits, including asset protection, privacy, and flexibility.