@melpaw57 wrote:
My understanding is that a grantor trust is a trust in which the individual who creates the trust is the owner of the assets and property?
That is correct, but you need to understand not only trust and estate law, but tax law as well.
For one thing, the technical legal term for one who establishes a trust is called the settlor (some use the term trustor). The term grantor is actually a federal tax term and is applicable for the purposes of establishing who owns the corpus (assets) held in the name of the trust for tax purposes (note that creditors may also be able to reach these assets depending upon the terms of the trust and parties thereto).
One example, which may very well apply here, is a trust called an intentionally defective grantor trust (IDGT). This trust is essentially irrevocable for all purposes but the grantor(s) are still taxed on the income generated by the trust assets. The purpose of an IDGT is to move assets out of the estate(s) of the grantor(s). As a result, the trust is treated separately from the grantor(s) for gift and estate tax purposes, but is treated as being owned by the grantor(s) for income tax purposes (and the grantors report and pay any tax due on the income).
You really need to consult, in person, with local tax and legal counsel for this matter. There are variations and permutations of trusts, wills, and estate planning techniques and some are extremely complex. A local professional who can review all of the terms of the trust is your best bet for a complete understanding.
