The Difference Between a Grantor & a Beneficiary


The legal field often uses strange sounding words such as “inter vivos” and fiduciary. Many terms are legal terms of art; they have specific meanings. In the estate-planning context, specifically concerning trusts, the terms “grantor” and “beneficiary” generally denote two different people; a person can be both a grantor and a beneficiary in certain circumstances.

Trusts and the Grantor

A trust is an estate plan in which a person creates a separate legal entity — the trust — and transfers property into that trust, the disposition and administration of which is controlled by a set of instructions called a declaration of trust. A grantor is the person who creates the trust. Depending on your jurisdiction, the grantor may also be known as a settlor, trustor or donor.


The beneficiary is the person who enjoys the benefits of the property placed in the trust. Beneficiaries hold equitable title to the property; generally, a beneficiary has no direct control over the asset. Instead, the beneficiary may be entitled to certain benefits — such as income earned by the property — distributed over time.


The trustee acts as the gatekeeper for the trust. He holds legal title to the property. This means that he has access and control over it, but he does not enjoy the benefits of it. Instead, the trustee must act according to the terms set forth in the declaration of trust. For example, the grantor may state in his declaration of trust that the trustee is to distribute a lump sum to the beneficiary when the beneficiary graduates from college. The trustee is a fiduciary; this means he must act with the utmost of good faith and fair dealing and cannot do anything contrary to the terms of the trust or do something against the beneficiary’s interest in the property.


A person may be a grantor-trustee-beneficiary if he sets up an inter-vivos trust, also known as a living trust. In a living trust, the grantor creates the trust, but names himself as the initial trustee and beneficiary. This allows the grantor to retain complete control over his property during his lifetime. Living trusts generally contain provisions that call for successor trustees and beneficiaries to take over if the grantor becomes incapacitated and can no longer act on his own behalf or dies. In most cases, the grantor, trustee and beneficiary are three separate individuals or groups of individuals

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