grantor trust

Definition of "grantor trust"
  1. A type of trust where taxation is handled based on the tax rate of the settlor – the individual who made the trust. This happens due to the settlor's significant control and influence over the trust's benefits, administrative duties, and income, or because the settlor can take back the trust or has left themselves a potential future interest in the trust
How to use "grantor trust" in a sentence
  1. The IRS determined the trust to be a grantor trust due to the settlor’s considerable administrative powers and ability to influence the trust's income.
  2. Having retained a reversionary interest and the power to revoke the trust, she found herself with a grantor trust on her hands.
  3. Since he directly benefitted from the income of the trust, it was ruled as a grantor trust.

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