Trustor vs Trustee: What’s the Difference?

When it comes to financial and estate planning, trusts are a crucial instrument that enable a family to put aside assets to be handed on when someone dies. They may also be able to alleviate some of the stress of the probate procedure for you and your loved ones. Those who aren’t conversant in estate planning may find some of the terminology surrounding trusts difficult to understand. For example, despite their striking resemblance in pronunciation, the terms “trustor” and “trustee” are distinct.

The person who establishes the trust and the person in charge of the trust’s assets are referred to as the trustor and trustee, respectively. However, this is not always the case and it’s important to remember that. Consider dealing with a local financial expert if you need assistance with trusts or other financial matters feel free to explore

Here we will give you a thorough explanation on Trustor vs Trustee.

What Is a Trustor?

The individual who establishes trust is known as the trustor. It is possible for the trustor to be a single individual, a married couple, a company, etc. An estate plan is typically a reason for establishing an irrevocable trust for a trustor’s children or other family members, who will inherit the trust’s assets when the trustor dies. There is, however, no need that the trustor’s relatives be beneficiaries.

The terms “trustor,” “grantor,” and “settlor” may all be used to describe the same person. In most cases, they’ll not only construct the trust, but they’ll also load it with money. The term “investment” might simply refer to money, stocks, or other financial assets. Personal property, such as jewelry, paintings, and other family artifacts, may also be placed in trusts.

What is a Trustee?

The trustor establishes the trust and contributes assets to it; the trustee, on the other hand, is in charge of its administration. With a living trust, the trustee might be the same individual as the trustor. An individual may set up a trust while still living in order to pass on assets to their relatives or children after the trustor passes away. The trustor may serve as trustee while they are still alive, but in order to distribute the trust’s assets, they must choose a successor trustee before they pass away.

In many cases, the trustee is a dependable member of the trustor’s family or close friend. They don’t have to be lawyers, but having a basic understanding of how trusts and estates operate can’t hurt.

Types of Trusts

Generally, trusts are used as part of a will or estate plan as a legal structure for storing assets and property. It’s vital to keep in mind that there are several kinds of trusts, each with its own set of advantages and disadvantages. The following are the two most prevalent kinds of trusts:

  • Revocable trust: Revocable living trusts allow you to dissolve the trust or remove assets from it while you’re still alive, which is known as a “living trust.” While you’re still living, you might serve as both the trustee and the trustor in this scenario. Making adjustments in this area is critical. It’s possible to withdraw assets from a revocable trust, such as an asset you thought you would leave to a loved one upon your death but subsequently decide to sell, for example.
  • Irrevocable trust: Irrevocable trusts are, as their name suggests, very rigorous. It’s a single entity from which you may take or leave assets. It’s a good way to keep assets safe from creditors, but you have to be very certain you want it before you create it.

Other forms of special trusts, such as bypass trusts, marriage trusts, generation-skipping trusts, special needs trusts, charity trusts, and spendthrift trusts, are available. Regardless of the form of trust, it is still necessary for a trustor and a trustee to set up and oversee each one.

Bottom Line

Regardless of the sort of trust they create, everyone who acts as a trustor is a trustor. However, a trustee is the person in charge of running the trust. Often, but not always, these two people will be one and the same. For a living trust, the trustee may remain the trustor until they die, at which time a new trustee will be appointed.

Estate Planning Tips

  • Consider dealing with a financial expert if you need assistance with trusts or other estate planning difficulties. It doesn’t have to be difficult to find a financial adviser. Within five minutes of signing up, you’ll be connected to a local financial expert. Start right now.
  • Your will should include a guardian for your children under the age of 18 in the event of your death. Don’t put your loved ones at risk by not planning for their care, even in the worst-case situation.
  • Make sure you are aware of your state’s estate tax regulations. Your estate planning and what goes into a trust might be affected by this.

We hope by now any confusions that you had regarding Trustor vs Trustee is cleared.


Tech Biz Ideas is a platform for providing business ideas full of techy thoughts which helps the audience to get benefit from this.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button