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A grantor trust is a trust in which the individual who creates the trust is owner of the assets and property for income and estate tax purposes. This trust allows the grantor the individual who establishes the trust to have control over the trust assets and receive income that is created from the trust.

Sample Living Trust Living Trust Revocable Living Trust

The type of trust you re administering determines whether you must file form 1041 for the trust or declare all items of income and deduction on the grantor s form 1040.

What is a grantor trust. A grantor trust is usually considered part of the grantor s estate when the grantor dies and as such can be subject to the estate tax. All grantor trusts are revocable living trusts while the grantor is alive. Grantors trust rules are rules applied to different types of trusts.

In some cases a trust can be treated as a grantor trust when a third person nonadverse to the grantor. Grantor trusts and non grantor trusts are the two main types of funded trusts trusts that hold assets. A trust where the grantor retains usufruct of the assets in the trust.

The grantor trust is often called a living trust or a revocable trust. One type of grantor trust that is useful in estate planning is a grantor trust. In short a grantor trust is a trust in which the grantor or the originator of the trust retains control over the trust.

That is the grantor may to use the assets she has placed into the trust even after ceding technical ownership. Therefore the income is included in the income of the deemed owner usually the grantor rather than the trust or any other person. In simple terms a grantor trust is a trust in which the grantor the creator of the trust retains one or more powers over the trust and because of this the trust s income is taxable to the grantor.