DIFINITION:
In estate planning, the grantor is the person who creates a trust or makes a gift. This individual transfers ownership of assets into the trust or designates them as gifts.
WHEN AND WHY IT’S USED:
The term grantor is used when establishing a trust or planning significant gifts, as it identifies the individual who sets the terms for asset management and distribution. The grantor’s role is central to the trust’s structure, determining whether the trust is revocable or irrevocable and outlining how assets will be handled. This designation is key in clarifying responsibilities and legal rights within the trust arrangement.
IMPORTANCE IN COMMUNICATION:
Discussing the role of the grantor with your advisor is essential for a clear understanding of your responsibilities in establishing a trust. It ensures that you know what rights you are giving up and what control you maintain over the assets. This dialogue is key to structuring a trust that aligns with your financial and legacy objectives.
Moreover, understanding your role as the grantor allows you to ask targeted questions about tax implications and future changes. This clarity builds confidence in your estate plan and ensures that all parties involved understand the terms and responsibilities of the trust arrangement.