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The term "grantor trust" also has a special meaning in tax law. A grantor trust is defined under the Internal Revenue Code as one in which the federal income tax consequences of the trust's investment activities are entirely the responsibility of the grantor or another individual who has unfettered power to take out all the assets. [20]
A grantor transfers property into an irrevocable trust in exchange for the right to receive fixed payments at least annually, based on original fair market value of the property transferred. [2] At the end of a specified time, any remaining value in the trust is passed on to a beneficiary of the trust as a gift. Beneficiaries are generally ...
In trust law, a settlor is a person who settles (i.e. gives into trust) their property for the benefit of the beneficiary. In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor. [a] Where the trust is a testamentary trust, the settlor is usually referred to as the testator.
The grantor can add or remove beneficiaries, add or remove assets from the trust or terminate the trust completely. Once the grantor dies, the trust then becomes set in stone and can no longer be ...
Grantor Trust: This trust is managed by the individual who established it. They exert a potentially high degree of control over the trust’s assets depending on how the trust was established.
The grantor creates the trust; The grantor transfers investment assets into the trust, but retains the power to "reacquire the trust corpus by substituting other property of equivalent value". The transfer is valid (complete) for estate tax purposes but is incomplete for income tax purposes. The grantor pays gift tax on the transfer [1]
Grantor retained annuity trust ('GRAT'): an irrevocable trust whereby a grantor transfers asset(s), as a gift, into a trust and receives an annual payment from the trust for a period of time specified in the trust instrument. At the end of the term, the financial property is transferred (tax-free) to the named beneficiaries.
A living trust is a legal document that allows you (the grantor) to put assets into a trust and outline exactly how you want them distributed after you pass away. A will works similarly, but the ...