Settlor vs. Grantor: What Is the Difference? (And Why It Matters for Your Trust)
They Are the Same Person. But Understanding the Terms Helps You Read Your Trust with Confidence.
Summary
Settlor and grantor are two names for the same role: the person who creates a trust. Arizona law uses settlor. The IRS uses grantor. Here is why the terminology exists, what each term means, and how all the trust roles fit together.
Are Settlor and Grantor the Same Thing?
Yes. A settlor and a grantor are the same person. Both terms refer to the individual who creates and funds a trust. Whether you search for "settlor vs grantor," "grantor vs settlor," or "trust settlor vs grantor," the answer is the same: these words describe one role. The only difference is which legal tradition or government agency is using the term.
If you have been reading your trust document (or shopping for an estate plan) and noticed that some sources say "settlor" while others say "grantor" or even "trustor," you are not missing something. They all describe the same role.
So why do three different words exist for the same person? That is actually a useful question. The answer tells you something practical about how trust law works, where your documents come from, and what matters when you sit down to read them.
Why Multiple Terms Exist: Settlor, Grantor, and Trustor
Trust law has been around for centuries. It developed in English common law, where the person who created a trust was called the settlor because they "settled" property into the trust for someone else's benefit. That term stuck in legal academia, in the Uniform Trust Code (which most states have adopted), and in the Restatement (Third) of Trusts, which is the leading scholarly reference on trust law in the United States.
Meanwhile, American tax law developed its own vocabulary. The Internal Revenue Code refers to the trust creator as the "grantor" because they "grant" property to the trust. If you have ever heard the phrase "grantor trust," that comes directly from IRC Sections 671 through 679. It describes a trust where the creator still controls the assets for income tax purposes. Every revocable living trust is a grantor trust while you are alive.
Then there is "trustor." This term shows up most often in California and a few other western states. It follows the same logic as "lender" and "borrower" or "lessor" and "lessee." The trustor creates the trust. The trustee manages it.
Three traditions. Three terms. One person.
Grantor vs. grantee: a common confusion. While "grantor vs settlor" is a question about trust terminology, "grantor vs grantee" is a real estate distinction. In a property deed, the grantor is the person transferring ownership and the grantee is the person receiving it. When you transfer your house into your trust, you (the grantor) convey the deed to the trust (the grantee). The same person can be the grantor on a deed and the settlor of the trust receiving the property. Understanding this distinction prevents confusion when you read your trust-related documents.
Which Term Does Arizona Use?
Arizona adopted the Uniform Trust Code in 2009 as part of Title 14, Chapter 11 of the Arizona Revised Statutes. The statute uses "settlor" exclusively.
ARS § 14-10103 defines a settlor as "a person, including a testator, who creates or contributes property to a trust." Every reference to the trust creator throughout the Arizona Trust Code uses this term. When Arizona courts interpret trust disputes, when the statute describes a settlor's rights to revoke or amend a trust, when the law discusses what happens after a settlor dies, the word is always "settlor."
Your trust document, however, might say something different. The attorneys who prepare your documents choose their own drafting conventions. Some Arizona attorneys use "settlor" to match the statute. Others prefer "grantor" or "trustor" because their clients find those terms easier to understand. The legal effect is identical regardless of which word appears on the page.
If your trust document says "grantor" but an Arizona statute says "settlor," do not worry. They mean the same person. The courts know this, your trustee knows this, and your bank knows this.
Where You Will See Each Term
Once you know that all three terms mean the same thing, it helps to understand where each one tends to show up. This makes it easier to read your trust documents, tax forms, and legal correspondence without second-guessing the language.
- Settlor. Arizona statutes (ARS Title 14, Chapter 11). The Uniform Trust Code. The Restatement (Third) of Trusts. Law school textbooks. Court opinions in most UTC states.
- Grantor. IRS forms and publications. Federal tax law (IRC §§ 671 through 679). Financial advisors and CPAs. Some trust documents drafted by attorneys who prefer tax terminology.
- Trustor. California trust documents and statutes. Some western states. Occasionally used by Arizona attorneys who trained in California.
- Trust maker. Consumer-facing legal websites and DIY estate planning platforms. Not used in statutes or case law. You may see it online, but you will not see it in a courtroom.
Want to understand how your trust works and what each role means for your family? Join one of our free estate planning workshops.
What the Settlor (or Grantor) Actually Does
Regardless of what your document calls this person, the role is the same. The settlor is the person who:
- Creates the trust by signing the trust agreement
- Decides the rules: who inherits, when they inherit, and under what conditions
- Funds the trust by transferring assets into it (real estate, bank accounts, investments)
- Chooses the trustee who will manage the assets
- Names the beneficiaries who will receive the assets
- Retains the right to change, amend, or revoke the trust at any time (in a revocable living trust)
In a typical revocable living trust, the settlor wears three hats at the same time. You are the settlor (you created it), the trustee (you manage it), and the primary beneficiary (you use the assets). Nothing changes in your daily life after the trust is signed. You still control everything. You still pay your own bills, deposit your own checks, and make your own decisions.
That arrangement continues until one of two things happens: you become incapacitated, or you pass away. At that point, your successor trustee steps in and follows the instructions you wrote.
The Other Trust Roles: How They Fit Together
People also search for "settlor vs grantor vs trustee" because the terms can blur together when you first encounter them. The distinction is straightforward: the settlor (or grantor) creates the trust and writes the rules, while the trustee manages the assets and carries out those rules. In a revocable living trust, you are typically both. But when the settlor passes away or becomes incapacitated, the successor trustee takes over and the two roles separate permanently.
Understanding the settlor's role is easier when you see how it connects to the other people involved in a trust. Here are the key roles and what each person actually does.
Trust Roles at a Glance
Who does what in a revocable living trust
| Role | What They Do | When They Act |
|---|---|---|
| Settlor (Grantor / Trustor) | Creates the trust, sets the rules, funds it with assets | From the day the trust is signed. In a revocable trust, retains full control during their lifetime. |
| Trustee | Manages trust assets, pays bills, makes investment decisions | During the trust's entire existence. The settlor usually serves as initial trustee. |
| Successor Trustee | Steps in to manage assets and carry out distributions | When the original trustee dies or becomes incapacitated. No court appointment needed. |
| Beneficiary | Receives assets from the trust according to its terms | The settlor is primary beneficiary during their lifetime. Named beneficiaries inherit after death. |
| Trust Protector (optional) | Can modify terms, replace a trustee, or adjust distributions | After the settlor can no longer make changes. Acts as a safeguard if circumstances change. |
What They Do
1 of 2
In a typical revocable living trust, one person fills the first three roles at the same time: you create it, you manage it, and you benefit from it. The other roles activate when you no longer can.
The trust protector role is optional and not included in every trust. Arizona adopted the Uniform Trust Code in 2009 (ARS Title 14, Chapter 11).
The Trustee
The trustee is the person responsible for managing trust assets. They have a fiduciary duty to act in the best interests of the beneficiaries, follow the trust's terms, keep accurate records, and make prudent decisions about investments and distributions.
During your lifetime, you are usually the trustee of your own revocable trust. That means you manage everything yourself. The role becomes important when you can no longer serve, either because of incapacity or death. That is when the successor trustee takes over.
The Successor Trustee
Your successor trustee is the person you name to step in when you can no longer manage the trust yourself. This is one of the most important decisions in your estate plan. The successor trustee handles everything: paying final bills, managing investments during administration, distributing assets to your beneficiaries, and filing any required tax returns.
Unlike a personal representative (the probate equivalent), a successor trustee generally acts privately. In most cases, no court supervises the process and no public filings are required. That privacy is one of the biggest advantages of a trust over a will.
The Beneficiary
A beneficiary is anyone who receives assets from the trust. You are the primary beneficiary of your own revocable trust while you are alive. After you pass, your named beneficiaries (children, spouse, grandchildren, charitable organizations) receive their shares according to the terms you set.
Your trust can include conditions on how and when beneficiaries inherit. You can stage distributions at certain ages, restrict spending to specific purposes like education, or set up protections for a beneficiary with special needs. A direct beneficiary designation cannot do any of that.
The Trust Protector
A trust protector is an optional role that gives a named person the authority to make changes to the trust after the settlor can no longer do so. This might include the power to modify trust terms if tax laws change, remove and replace a trustee who is not performing well, or adjust distribution schedules based on a beneficiary's circumstances.
Not every trust includes a trust protector. But for families who want flexibility built into a long-term plan, it can be a practical safeguard. The trust protector acts as an oversight layer, separate from the trustee, with limited but meaningful authority.
The Grantor Trust Distinction (Why Tax Language Matters)
There is one context where the word "grantor" carries specific technical weight, and it is worth understanding even though it does not change who the person is.
In federal tax law, a "grantor trust" is a trust where the creator (the grantor) is still treated as the owner of the trust assets for income tax purposes. This means all trust income, deductions, and credits flow through to the grantor's personal tax return. No separate trust tax return is required. The trust uses the grantor's Social Security number, not its own EIN.
Every revocable living trust is a grantor trust while the settlor is alive. This is actually a good thing. It means the trust is "tax invisible." You do not pay higher trust tax rates, and your tax situation stays exactly the same as it was before you created the trust.
When the settlor dies, the revocable trust becomes irrevocable by operation of law. At that point, it is no longer a grantor trust. The successor trustee obtains a new EIN from the IRS, and the trust may need to file its own tax return (Form 1041) depending on its income.
Bottom line: "grantor trust" is a tax classification, not a different type of trust. It just means the IRS still considers you the owner. For a revocable living trust, that is exactly what you want.
How the Settlor's Role Evolves Over Time
A revocable living trust changes character as life circumstances change
Trust is created and funded
You sign the trust agreement and transfer assets into it. You are simultaneously the settlor, the trustee, and the primary beneficiary. Nothing changes in your daily life.
You manage your trust during your lifetime
You buy, sell, and manage trust assets freely. The trust uses your Social Security number. All income flows to your personal tax return. The IRS treats the trust as invisible.
If you become incapacitated
Your successor trustee steps in and manages trust assets on your behalf. No court involvement. No conservatorship petition. Your trust instructions guide every decision.
After your passing
The revocable trust becomes irrevocable by operation of law. Your successor trustee obtains a new EIN from the IRS. The trust may need to file its own tax return (Form 1041).
Distributions to beneficiaries
Your successor trustee follows the instructions you wrote: pays final expenses, settles debts, and distributes assets to your named beneficiaries according to your terms.
Trust is created and funded
You sign the trust agreement and transfer assets into it. You are simultaneously the settlor, the trustee, and the primary beneficiary. Nothing changes in your daily life.
You manage your trust during your lifetime
You buy, sell, and manage trust assets freely. The trust uses your Social Security number. All income flows to your personal tax return. The IRS treats the trust as invisible.
If you become incapacitated
Your successor trustee steps in and manages trust assets on your behalf. No court involvement. No conservatorship petition. Your trust instructions guide every decision.
After your passing
The revocable trust becomes irrevocable by operation of law. Your successor trustee obtains a new EIN from the IRS. The trust may need to file its own tax return (Form 1041).
Distributions to beneficiaries
Your successor trustee follows the instructions you wrote: pays final expenses, settles debts, and distributes assets to your named beneficiaries according to your terms.
The settlor's role ends at death, but the instructions they wrote continue to govern everything that happens next. That is the lasting power of a well-drafted trust.
Arizona-Specific Context
If you live in Arizona and are creating or reviewing a trust, here are the practical details worth knowing about terminology and how the state handles trust law.
- Arizona adopted the Uniform Trust Code in 2009. The full text is in ARS Title 14, Chapter 11 (Sections 14-10101 through 14-11103).
- The Arizona Trust Code uses "settlor" exclusively. If you see "grantor" or "trustor" in your trust document, it is the attorney's preference, not the statute's language.
- Arizona has no state estate tax and no state inheritance tax. Your trust planning in Arizona is primarily about avoiding probate, protecting your family during incapacity, and controlling how and when your beneficiaries inherit.
- Arizona is a community property state. If you and your spouse create a joint trust, both of you are settlors of the trust. Under ARS § 14-10103, each person is a settlor of the portion of trust property attributable to their contribution.
- A settlor's rights in Arizona include the ability to revoke or amend a revocable trust at any time (ARS § 14-10602), the right to direct the trustee's actions, and the right to receive trust property during their lifetime.
Common Questions About Trust Terminology
Does It Matter Which Term My Trust Uses?
No. Courts, banks, title companies, and the IRS all understand that settlor, grantor, and trustor mean the same thing. Your trust is equally valid regardless of which word your attorney used. The only thing that matters is consistency within the document itself. If your trust calls you the "grantor" on page one, it should use that term throughout.
Can a Trust Have More Than One Settlor?
Yes. Joint trusts created by married couples have two settlors. Under Arizona law, each spouse is a settlor of the portion of trust property they contributed. This is especially relevant in Arizona because community property rules mean most marital assets are owned equally. When one spouse dies, their half of the community property typically becomes irrevocable while the surviving spouse's half remains revocable.
Is the Settlor Always the Trustee?
In a revocable living trust, yes, typically. You create the trust and you manage it. But this is not a legal requirement. You could name someone else as trustee from the start, though that is unusual for a revocable trust. In irrevocable trusts, the settlor almost always names a different person as trustee because the settlor is giving up control of the assets.
What Happens to the Settlor's Role After Death?
Once the settlor passes away, the revocable trust becomes irrevocable. The settlor's role ends. The successor trustee takes over, the trust gets its own tax identification number, and distributions begin according to the terms the settlor wrote. The settlor's wishes, documented in the trust, continue to govern everything that happens next.
Have questions about your trust or how the roles work? Schedule a free consultation and we will walk through it with you.
Here is the bottom line. The grantor creates the trust by signing the agreement and funding it. The person who creates a trust may also be called a settlor or trustor. After that, a trustee takes responsibility for administering the trust according to its terms. Whether you call yourself the grantor or the settlor, your role is the same.
Related Questions
Common questions about the topics covered in this article
Continue Reading
Legal References
ARS § 14-10103: Arizona Trust Code definitions. Defines "settlor" as a person, including a testator, who creates or contributes property to a trust. Addresses multi-settlor trusts and the effect of revocation powers on settlor status.
ARS § 14-10602: Method of revocation. Establishes that a settlor may revoke or amend a revocable trust by substantially complying with a method provided in the trust terms or by any other method manifesting clear and convincing evidence of the settlor's intent.
Uniform Trust Code § 103: Definitions. Uses "settlor" as the standard term for the trust creator. The official comments note that the term is intended to include the commonly used terms "grantor" and "trustor." Arizona's version is ARS § 14-10103.
Restatement (Third) of Trusts § 3 (2003): Defines the settlor as the creator of a trust. The Restatement was developed in coordination with the Uniform Trust Code and uses the same terminology.
IRC §§ 671 through 679: Internal Revenue Code provisions governing grantor trusts. These sections determine when a trust's income is taxable to the grantor (the person who created and funded the trust) rather than to the trust itself.
Protect What Matters Most
Our team of estate planning professionals is here to help you navigate the complexities of trusts, wills, and financial planning.