What is a grantor trust?
A grantor trust is a type of trust that you can set up in the state of Washington to pass assets to your heirs after you die. This type of trust is sometimes referred to as an inter vivos trust. It is an agreement between the grantor, who sets up the trust, and the trustee, who is responsible for managing the assets. The grantor typically puts money or other assets into the trust, making them the beneficiary of the trust. The trustee is in charge of managing and distributing the assets according to the grantor’s wishes. The grantor trust is typically revocable, which means that the grantor can modify the terms of the trust at any time. This feature allows the grantor to update the trust as their financial circumstances change. A grantor trust can also be used as an estate planning tool, allowing the grantor to avoid federal estate taxes. In addition, a grantor trust may provide asset protection from creditors and other potential legal challenges. In short, a grantor trust is an agreement between the grantor and the trustee to transfer assets to heirs after the grantor’s death. The grantor can make changes to the trust at any time, and the trust is often used to minimize the grantor’s tax burden.
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