SETTLORS
Back to GlossaryDefinition
The person who creates and initially funds a trust. The settlor is also known as the grantor or creator.
Summary
A settlor is the person who establishes a trust by creating the legal document and transferring assets into it. Think of the settlor as the 'founder' of the trust - they decide how it will work, who will benefit from it, and what rules will govern it. The settlor has significant control over the trust's structure initially, though they may give up some control once the trust is created. This role is fundamental to understanding how trusts operate, as the settlor's intentions and instructions shape the entire trust arrangement.
Usage Context
Understanding the settlor's role is crucial when studying trust formation, estate planning, and the legal relationships between parties in a trust. This term is foundational for comprehending how trusts are created and the initial authority the creator has over trust terms.
Common Confusions
- Confusing settlor with trustee (the person who manages the trust)
- Thinking the settlor and beneficiary cannot be the same person
- Believing the settlor always retains control over the trust after creation
- Mixing up the terms settlor, grantor, and trustor (they mean the same thing)
- Assuming the settlor must fund the trust with their own money initially
