grantor trust
- noun
- /ˈɡræntər trʌst/
- Specialized
:
fideicomiso otorgante
- The mother's living trust was almost certainly a revocable grantor trust until she died, which means that the mother picked up all income from the trust on her own individual income tax return up until her death.
Examples
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This advantage is reduced somewhat, however, by the fact that the trust will cease qualifying as a grantor trust at the date of the grantor's death.
Academic text (1999) -
Under the IRC, a GRAT is considered a grantor trust, sometimes known as a defective trust or defective grantor trust, which means that, for income tax purposes, the property owned by the trust is generally still treated as if it were owned by the grantor.
Academic text (1999) -
It could be a grantor trust (in which case it would be neither a simple nor complex trust).
Blog text (2) -
Under the IRC, a GRAT is considered a grantor trust, sometimes known as a defective trust or defective grantor trust, which means that, for income tax purposes, the property owned by the trust is generally still treated as if it were owned by the grantor.
Academic text (1999) -
In a grantor trust, the creator of the trust retains certain powers, making them responsible for the trust's income taxes.
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The IRS treats income generated by a grantor trust as taxable to the grantor who established it.
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After her passing, the assets in the grantor trust were still reported on her final tax return.
Surface Forms
Morphology
The compound clearly combines 'grantor' (the person who grants rights) and 'trust' (a legal arrangement), so a learner who knows both would infer it is a trust associated with or created by the grantor. However, the specific legal implications—retained powers, tax treatment and other technical features—are specialized and not predictable from the constituents alone, making the term only partially transparent to a B1 learner.
Etymology
The term grantor trust comes from the simple picture of a grantor, the person who gives assets, who still holds some control over the trust that keeps those assets. Because the grantor keeps powers or benefits, the trust's income is treated as if it belongs to them; it is 'taxed to them', so the name shows the trust is linked to its creator.
