The difference between trustor vs. trustee is this: the trustor creates and funds the trust and the trustee manages the trust.
The trustor, who is the creator of the trust, is also called a grantor or settlor.
The trustor transfers property to the trustee, who then becomes the legal owner of the property and manages such property for the benefit of the beneficiaries.
The difference between trustor vs. trustee is important in understanding trust arrangements. In a trust arrangement, there are three parties: the trustor, the trustee, and the beneficiaries. Even if there are legally three parties, one person can be all three, who “wears three caps” so to speak.
The trustee is the legal owner of the property and manages the trust. However, just because the trustee is the legal owner of the property does not mean that the trustee can benefit from the property unless the trustee is also a beneficiary. The trustee only manages the property for the benefit of the beneficiaries. In return, the trustee is entitled to compensation (called “commission”) for his services in managing the trust.
The beneficiaries, on the other hand, take on a more passive role in a trust arrangement. They simply receive the income or principal from the trust, depending on the terms of the trust agreement. They can request an accounting from the trustee, but they cannot actively manage the trust property.
If you would like a consultation about the difference in trustor vs. trustee, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected].