What’s the difference between a trustor & trustee?

The trustor opens a trust and the trustee manages it

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Elissa SuhSenior Editor & Disability Insurance ExpertElissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

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A trust is an estate planning tool that you can use to pass money and assets to your chosen beneficiaries. The person who opens a trust is called the trustor, which is synonymous with the terms grantor and settlor. The trustor elects how to fund the trust and under what conditions beneficiaries can receive trust assets. The trustor can appoint a trustee or serve as trustee themselves if they've established a revocable trust

The trustee is the person or entity that manages the trust’s day-to-day activities, keeping an account of the trust’s activities and filing and paying trust taxes. They have a fiduciary duty to the trust and can only sell trust property and distribute trust assets to beneficiaries according to the rules set by the trustor in the trust document. Failing to act in the trustor’s terms are grounds for removal of the trustee. 

Key takeaways

  • The trustor, also known as the grantor or settlor, creates the trust

  • The trustee oversees the trust administration process

  • Using a trust as part of your estate plan can help avoid probate

Can a trustor and trustee be the same person?

A trustor can either act as the sole trustee or co-trustee of their revocable trust. During their lifetime, the trustor has the power to amend or dissolve a revocable trust and they retain ownership over the trust property for tax purposes. If you're the trustor and also the trustee, remember to appoint a successor trustee — whether a person or an entity like a trust company — to take over responsibilities upon your death.

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The trustor can't typically serve as trustee of their irrevocable trust, which you cannot amend or dissolve except under narrow circumstances. The trust property does not belong to the trustor, and so this type of trust can provide them with additional benefits, like asset protection or a reduction in potential estate taxes. You’ll need to consult with an estate attorney to set up an irrevocable trust, since they’re more complex in nature.

Thinking about setting up a trust? Learn more about a revocable vs irrevocable trust.

Can a trustor be a beneficiary?

The trust beneficiary receives the money or assets in the trust. Trusts can be used to pass along an inheritance to loved ones and family members, or even to provide them money during the trustor’s lifetime as with a trust fund. With a revocable trust, the trustor can also benefit by receiving the trust income (as the income beneficiary). On the other hand, the trustor shouldn’t be the beneficiary of an irrevocable trust in any capacity, or else it would not be viewed as an irrevocable trust by the IRS

Learn more about how to set up a trust.

Beneficiaries aren’t limited to trusts; you can name a beneficiary in a last will and testament, which also lets you pass on assets and belongings. Wills and trusts can work together as part of an estate plan.

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