Grantor Trust (Noun)
Meaning
A trust established to shift the income to someone who is taxed at a lower rate than the grantor for a period of 10 years or more.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The grantor trust was set up to benefit the grantor's grandchildren for a period of 15 years, shifting the income to their lower tax bracket.
- This type of grantor trust allows the grantor to take advantage of their children's lower tax rates while still maintaining control over the trust's assets.
- The lawyer explained that a grantor trust could be used to minimize taxes by transferring income to beneficiaries in lower tax brackets for 10 years or more.
- Establishing a grantor trust for a period of at least 10 years enabled the clients to reduce their tax liability by shifting income to their children.
- The financial advisor recommended creating a grantor trust to benefit the grantor's minor children, taking advantage of their lower tax rates for the next 12 years.