Trustor - Financial definition
Concise definition of the term trustor
A trustor is an individual or entity that creates a trust by transferring assets to a trustee for the benefit of designated beneficiaries.
Comprehensive definition of the term trustor
In finance, a trustor, also known as a grantor or settlor, plays a crucial role in estate planning and asset management. They initiate a legal arrangement called a trust, in which assets are placed under the control of a trustee to be managed according to the trustor's instructions. For instance, a wealthy individual may establish a trust to ensure their assets are distributed to their children over time, rather than as a lump sum.
Trusts are used for various purposes, including minimizing tax liabilities, protecting assets from creditors, and ensuring that assets are used according to the trustor's wishes. In financial markets, trusts are often utilized in structured finance and investment products to segregate and manage risk effectively.