If you're starting to prep your estate planning documents and have some questions about grantors or co-grantors — we can help.
What is a co-grantor?
Grantor is a legal term most often used in real estate and estate planning.
In real estate, the grantor is the property seller who conveys property to a buyer, or “grantee.” If there is more than one seller on the deed, then the sellers are co-grantors.
In estate planning, the term “grantor” is most often used with regards to trusts. When a trust is created, the person who creates it, decides what property is included, and makes the conveyance into the trust is the grantor. They are also sometimes referred to as the “trustor” or “settlor.” If you have more than one person creating and transferring property to a trust (typically spouses or domestic partners), then they are co-grantors.
The property in the trust is distributed to a grantee, more commonly called a beneficiary.
What kind of trust can have more than one grantor?
Any trust can have co-grantors. The trust can be a revocable living trust or irrevocable, a family or joint trust, or a special trust with specific provisions regarding distribution of assets.
If you are considering titling marital property (co-owned by you and your spouse) in the name of the trust, then you and your spouse need to be co-grantors, because the property is owned by both of you. Joint trusts (which have co-grantors) can be a good option if you do not own a lot of property, since they are flexible and it can be difficult to divide property, which you would have to do to have separate trusts.
There are a number of advantages to having a joint trust, but a married couple setting up individual trusts also has some benefits, so it would be helpful to read more and see which kind of trust might be the right fit for you.
Once the trust is created and funded, the trust property belongs to the trust—and in fact it must be retitled in the trust’s name in order to fund the trust. Depending on what kind of trust you create, you (as the grantor) may retain the authority to dissolve the trust and reclaim the trust property.
Who else is involved in a trust?
Every trust must have a grantor and a beneficiary, as mentioned above. Just as you can have co-grantors, you can also have multiple beneficiaries. As grantors, you can also choose how trust property is distributed, either equally among beneficiaries, or in unequal shares.
A trust must also have a trustee and a remainderman. The trustee is the person who administers the trust and pays out distributions to beneficiaries.
In some cases, the grantor and the trustee are the same person, and sometimes the grantor is the trustee as well, depending on the type of trust and how much access the grantor has to it while alive.
If both co-grantors also serve as co-trustees for a joint living trust, then the surviving spouse can continue as trustee even if the other is not available due to disability, resignation, or death. If both are no longer available to serve as trustees then a successor trustee will take over.
What rights do co-grantors have and how is it different from a trust with a single grantor?
If you are a single grantor with a trust, you get to make the decisions alone about what property or assets to put in the trust, who the trustee is, who the beneficiaries are, what guidelines to follow in making distribution to beneficiaries, etc.
If you have a co-grantor, your rights are similar to what they would be if you co-own property with a spouse or domestic partner—you need to make joint decisions about trust property, assets, beneficiaries, etc.