Settlor vs. Grantor -- What's the Difference?

Learn the Difference Between Living Trust Terms

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Are you the settlor or the grantor of your revocable living trust? You're not the first trustmaker or trustor to ask that question. Does that sound confusing? It's really not. All four terms mean the same thing.

A Settlor aka Grantor aka Trustmaker aka Trustor

The other day a client called me because he was really confused about some forms he needed to fill out to fund his investment accounts into his revocable living trust.

He was asked to identify the "grantor" of the trust on one of the forms, and to identify the "settlor" on another. He looked to his trust agreement for answers, and he found that the document named as the "trustmaker" and initial "trustee."

I explained to the client that the terms grantor, settlor, trustmaker, and trustor -- one that he hadn't run into yet -- all mean the same thing for estate planning purposes. All refer to the person who creates a trust.

This individual can be different from other titles you'll see sprinkled throughout the trust agreement, and this is where things can get a bit confusing. The "trustee" is the individual charged with managing the trust. That's pretty clear-cut, but often the trustmaker of a revocable living trust will act as trustee of his trust, so both terms -- along with settlor, trustor and grantor -- would still refer to the same person. This isn't the case with irrevocable trusts, which typically require that the trustor hand over control of the trust to another party appointed to act as trustee.

A "successor trustee" is someone else entirely. This is an individual named to take over for the trustmaker of a revocable living trust under certain circumstances if he acts as trustee himself. The successor trustee would step into the role of trustee if the trustmaker were to become mentally incapacitated or -- more commonly -- when he dies.

Then there are the beneficiaries, the individuals who inherit or otherwise receive funds from the trust. Every trust agreement is a legal contract between these three essential parties -- the trustmaker, the trustee, and the trust's beneficiaries -- even if one or more of them is the same individual. And yes, a trustmaker can also name himself as a beneficiary of his trust. 

What's in a Name?

These terms are the same regardless of what type of trust you form -- revocable, irrevocable or testamentary. If you created it, you're the grantor/settlor/trustmaker/trustor. I prefer to use the term "trustmaker," which is a more modern term, because it clearly describes what the person's title means. Even after 13 years as an attorney, I still sometimes get confused about legal terms that end in "or" and "ee," like lessor and lessee, mortgagor and mortgagee. The more modern approach is for the title to clearly describe the person's role in the transaction. Legal documents are complicated enough without using confusing legal terms that can be easily mixed up and misspelled.

Further Reading