Difference between Grantor and Trustee

By: | Updated: Dec-4, 2023
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A trust agreement is a legal document that provides instructions on how a property held in trust is supposed to be handled for its beneficiary. Aside from the beneficiary, the grantor and the trustee are important people who play equally significant roles in this legal undertaking. Let’s take a closer look at these two.

What is a Trust?

A trust is an agreement between an owner of accounts and property (grantor)and the trustee (the person who agrees to manage the funds/property. The trustee manages the trust on behalf of a third party (beneficiary). In most cases, a written document (called the trust agreement) specifies the instructions and/or rules of the trust relationship.

You may sometimes hear a trust referred to as an “alternative will.” However the trust creates a legal structure that owns your accounts and properties while you live.

It’s possible to name your trust as the beneficiary of specific accounts/property for the trustee to manage after you’ve died. The trustee will manage these accounts on behalf of your heirs.

You can also create a revocable trust while you’re living and be the trustee for your living trust. You can stay the trustee of a revocable living trust until you can no longer manage your financial affairs or until you die.

When the grantor dies, there is usually a backup trustee who has already been assigned as the successor trustee. When they take over management of the trust, there are steps that must be taken for them to assume responsibility for managing the trust on the beneficiary’s behalf.

Summary Table

Grantor Trustee
Initiates the trust Manages the trust
Initially funds the trust Handles the funds of the trust
An individual An individual or a corporation


Man holding keys
A grantor transfers his property to a trust

In estate management, a grantor (i.e. trustor, settlor) is the individual who sets up the trust agreement and provides the terms and conditions of the trust. The grantor holds the legal authority to transfer property into a trust. A trust can either be one that is modifiable at any time (revocable trust), or one that is not subject to any revisions. The Uniform Trust Code holds that all trusts are revocable unless stated otherwise in the terms and conditions of the trust. In most cases, the grantor is charged with the responsibility of initially funding the trust. Funding may come from deeds, security certificates, or tangible properties with no formal title.

Trusts are typically designed to have a single grantor to avoid any complications that may come up. There are instances when a grantor assigns himself as the beneficiary of a living trust, given that another party acts as the trustee.


The trustee (e.g. executor) is the person appointed by the grantor to take charge of managing the trust. A trustee can be just one person or a group of people. An individual nominated as a trustee holds the right to decline the appointment or drop the role completely. The grantor has the authority to remove the third party trustee in a revocable trust. The trustee may also be relieved of his duties if it has been stipulated as an option in the trust agreement. In instances where an irrevocable trust is in effect, the beneficiaries can replace the trustee with a majority vote if granted by the trust instrument. Without this provision, only a court action can remove a trustee. The name of the trustee, including the successor, must be clearly indicated in the trust instrument.

The trustee is expected to handle the property or assets in a way that would best serve the interest of the beneficiaries. A trustee may also be an organization that is accredited federally or by the state (e.g. banks, trust companies). Corporate trustees usually integrate their fiduciary organization into their private banking groups or investment management teams. It is also possible to have an individual trustee work in conjunction with a bank trustee. Unless expressed otherwise in the trust agreement, both shall perform the same role in a legal capacity.

Trustees are mandated to work with unquestionable integrity and good faith, as they basically manage the trust. They are charged with collecting trust assets and receipts from trust investments. They manage the expenses of the trust, defend and enforce claims on its behalf. It is also the trustee’s duty to distribute the amount (if any) to the beneficiaries as stated in the trust agreement.

Who Can Be a Trustee?

The choice of trustee up to you and there are several choices to consider, including:

  • Family members
  • Close friends
  • Professional third party

The person chosen to manage a trust should have the following qualities:

  • Have financial knowledge
  • Be able to request help when necessary
  • Be detail-oriented
  • Be organized
  • Have excellent communication skills
  • Be able to follow the rules

Grantor vs Trustee

So, what’s the difference between a grantor and a trustee? The responsibilities of each one is distinct and clear-cut. The grantor initiates the trust agreement and states all the terms and conditions contained therein. The trustee may be a person or a group of people appointed by the grantor to handle all trust property affairs.


If you don’t mind cheesy intro music, check out this YouTube video about grantors, trustees and beneficiaries.

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