Some trusts require you to give up control of your assets. You hand them over to the trust...now the assets are owned by the trust and controlled by the trustees.
A grantor trust works differently. The person granting assets to the trust (known as the “grantor”) keeps control of the assets. Because of this structure, the tax rules for these trusts are different...these regulations are called the grantor trust rules.
Generally, the IRS taxes these assets as if they belonged to the grantor (meaning they use that person’s individual tax rate rather than the rate that would apply if the trust held the asset outright).
Related or Semi-related Video
Finance: What is a trust deed?3 Views
Finance allah shmoop What is a trust deed here This
is okay So that's more of a trust fall A
trust deed is a kind of how to build it
kitt which instead of describing the construction of ah balsa
wood airplane describes how assets should be owned cared for
managed and eventually disposed of two the beneficiary or whoever
bought him in the first place or who were involved
in the model airplane build from the beginning What does
that mean Well a trustee lays out the rights and
obligations of the bank underwriting the purchase of whatever inventory
is involved here In this trust deed it lays out
the rights of the people transacting and it spells out
who gets called defend or when there is a conflict
And this is particularly useful in a world where there
is indeed not a lot of trust Essentially a business
owner is just holding merchandise that was bought by the
bank like eighteen miles of denim fabric with intentional rips
and tears in it You know those things as the
business owner stitches together hundreds than thousands of sets of
genes which they then sell into the fashion market places
In new york and milan the bank via their trust
deed owns that merchandise until the business owner essentially buys
them out of it or pays back the loan amount
committed when the merge was initially bought The trusty it'sjust
the legal documentation that outlines the various obligations of both
parties i'ii think of it as a contract light Why
would you want one of these arrangements If you're a
business owner Like why bother with all this trust deed
stuff and inventory and banks Well if you didn't have
tohave one well you wouldn't But if you're a fledgling
company hoping to make it big in the big city
and you need lots of inventory to make lots of
genes or nobody takes you seriously well then you do
what you have to dio and you can imagine that
banks charge very high interest for setting up the's trust
deeds because the credit risk they take here is usually
reasonably very high like the levi stitching company just vanishes
one night or was in fact a meth lab using
the denim as a mano a filtration process and the
mexican mafia comes in one night ending and this little
companies Entrepreneurial activities Well another reason banks charge high interest
is because the last thing they want tohave to dio
is repossess eighteen miles of denim and then try to
get their money back by selling that eighteen miles of
denim on ebay So as a result not only do
trusted borrowers pay high interest but they also have to
carry relatively expensive insurance on that inventory So that at
the end of the day the on the bank isn't
left high and dry Or at least you know just 00:02:44.81 --> [endTime] dry
Up Next
A regular trust is a legal vehicle into which assets are placed so that it is legally clear who is to receive what. A living trust is a established...
What is an Inverse Floater? An inverse floater is a type of floating rate coupon bond. However instead of paying a basis point factor above a certa...