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Trustor vs. Trustee: What’s the Difference?


Trusts are a useful tool for financial and estate planning, allowing a family to set assets aside to be passed on when someone dies. They can also help your family potentially avoid the headaches of the probate process. Some of the language around trusts, though, can be confusing to those who aren’t completely fluent in estate planning. For instance, while they sound extremely similar, trustor and trustee aren’t quite interchangeable. The trustor is the person who forms a trust, while the trustee is the one who manages the assets in the trust. Though they can certainly be the same person, this isn’t always the case. If you need help with trusts or understanding other financial topics, consider working with a local financial advisor.

What Is a Trustor?

The trustor is the person who creates a trust. The trustor can be a single person, a married couple or, in some cases, a corporation or organization. Trustors often set up the trust as part of an estate plan, with the purpose of passing on assets in the trust to their children or other family members after the trustor dies. However, beneficiaries don’t have to be related to the trustor.

The term “trustor” is sometimes interchangeable with grantor and settlor. Generally speaking, they will not only form the trust, but fill it with assets. This could simply mean money, stocks and other investments. Trusts can also be used to hold physical assets, like land, homes, vehicles or personal property, such as jewelry, art and family heirlooms.

What Is a Trustee?

While the trustor is the person who forms a trust and puts assets into it, the trustee is the person who’s responsible for managing the trust. The trustee can be the same person as the trustor, which is often the case with a living trust. This is when someone sets up a trust while they’re still alive for the purpose of eventually passing on assets to their children or other relatives after the trustor dies. While still living, the trustor may also serve as the trustee, but they would have to name someone else to be the trustee upon their death for the purpose of actually distributing the property within the trust.

The trustee is often a trustworthy relative or friend of the trustor. While they don’t have to have legal experience, it certainly can’t hurt if they have a general knowledge of how trusts and estates work.

Types of Trusts

Trustor vs. Trustee

Trusts are a legal framework that can house assets and property, generally for the purpose of being part of an estate plan. It’s important to note, though, that there are a number of different types of trusts, each of which has their own pros and cons. The two most common types of trusts are as follows:

  • Revocable trust: Sometimes called a revocable living trust, it’s one where you can dissolve the trust or take some assets out of it while you’re alive. In this case, you might be both the trustor and the trustee while you are alive. The ability to make changes here is key. For instance, if you have an asset you think you want to leave to someone upon your death but later decide to sell it, for instance, you can easily remove it from a revocable trust.
  • Irrevocable trust: As its name implies, irrevocable trusts are quite rigid. It is indivisible and you can remove assets from it. This is useful for protecting assets from creditors, but it does mean that you have to be completely sure it’s what you want prior to creating it.

There are a number of other types of special trusts available for use, including marital trusts, bypass trusts, generation-skipping trusts, charitable trusts, special needs trusts and spendthrift trusts. Each of these types of trusts have their own specific use, but a trustor and trustee still create and manage them, respectively.

Bottom Line

A trustor is any person who forms a trust, regardless of the type of trust it is. A trustee, on the other hand, is the person who manages the trust. In some cases these will be the same person, but not always. In the case of a living trust, the trustor may be the trustee as well until they die, at which point someone else will become the trustee.

Estate Planning Tips

Trustor vs. Trustee
  • For help with trusts or any other estate planning issues, consider working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool connects you with financial advisors in your area in five minutes. Get started now.
  • Another thing not to forget when estate planning is to name a guardian for your minor children in your will. Make sure you have a plan for their care, so that in the worst case scenario your family is at least able to execute your plan for them swiftly.
  • Make sure you know the estate tax laws for your state. This could impact how you go about planning your estate and what exactly goes into a trust.

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