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What is a Settlor? A Comprehensive Guide to Trust Creation
Definition & Meaning
A settlor is an individual who establishes a trust through a formal written declaration. This person may also transfer initial assets into the trust. The settlor is sometimes referred to as a trustor, grantor, or donor. In most states, a settlor can maintain certain powers and control over the trust without invalidating it. However, historically, some jurisdictions required a complete transfer of beneficial interest to another party for the trust to be considered valid.
Table of content
Legal Use & context
The term "settlor" is commonly used in estate planning and trust law. It is relevant in various legal areas, including civil law and family law. A settlor's role is crucial when creating a trust, which can be used for asset protection, estate management, and tax planning. Users can manage their own trusts using legal templates available from US Legal Forms, which are drafted by qualified attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A person creates a trust to manage their real estate assets for their children. They designate themselves as the trustee and outline how the assets should be distributed after their death.
Example 2: A settlor establishes a revocable living trust, transferring their bank accounts and investments into it, while retaining the right to alter the trust during their lifetime. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Allows for revocable trusts without a full transfer of assets.
New York
Requires specific language in the trust document to clarify the settlor's intentions.
Florida
Recognizes both revocable and irrevocable trusts with different tax implications.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Trustee
The person or entity responsible for managing the trust and its assets.
Beneficiary
The person or entity entitled to receive benefits from the trust.
Grantor
Another term for the settlor; the individual who creates the trust.
Common misunderstandings
What to do if this term applies to you
If you are considering establishing a trust, start by determining your goals and the assets you wish to include. You can explore ready-to-use legal form templates from US Legal Forms to assist in creating your trust. If your situation is complex, it may be wise to consult with a legal professional to ensure compliance with state laws and to address any specific concerns.
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