Legal Definitions - trustor

A trustor is the individual or entity who creates a trust. This person establishes the terms of the trust, decides what assets will be placed into it, and names the trustee (the person or entity who manages the trust) and the beneficiaries (the people or entities who will benefit from the trust). The trustor is essentially the originator of the trust agreement, transferring ownership of their assets to the trust for the benefit of others. The terms "settlor" and "grantor" are often used interchangeably with "trustor."

• Scenario: Estate Planning for Children
  Sarah, a successful entrepreneur, wants to ensure her children are financially secure even after she's gone, but she doesn't want them to receive a large inheritance all at once. She consults with an attorney to create a revocable living trust, transferring her investment portfolio and real estate into it. The trust document specifies that her sister will manage these assets as trustee, distributing funds for her children's education and living expenses at certain ages.

  In this situation, Sarah is the trustor because she is the one creating the trust, defining its terms, and transferring her assets into it for the benefit of her children.

• Scenario: Charitable Giving
  Dr. Alistair Finch, a retired professor, wishes to establish a perpetual fund to support scientific research at his alma mater. He creates an irrevocable charitable trust, funding it with a significant portion of his personal wealth. The trust document names the university's endowment office as the trustee, responsible for investing the funds and distributing grants according to Dr. Finch's specified criteria.

  Dr. Finch acts as the trustor by initiating the charitable trust, contributing his assets to it, and setting out the rules for how the funds should be managed and distributed for research purposes.

• Scenario: Special Needs Planning
  Maria and Roberto have a son, Miguel, who has special needs and receives government benefits. They want to leave him an inheritance without jeopardizing his eligibility for these crucial programs. They work with a lawyer to establish a third-party special needs trust, designating a professional trust company as the trustee. They then transfer a life insurance policy and some savings into this trust.

  Maria and Roberto are the trustors in this scenario. They are the ones who create the special needs trust, fund it with their assets, and dictate the conditions under which the trust assets can be used to supplement Miguel's care without affecting his public benefits.