Grantor Trust Reimbursement Statutes

Creating a trust that qualifies for grantor trust status means the creator of the trust (the trustor) will be responsible for payment of the income tax liability associated with the trust during the trustor’s lifetime. When the trustor (rather than the trust) pays the trust’s income taxes, the beneficiaries and the trustor benefit. The beneficiaries are relieved of the tax burden, and the growth of trust property is enhanced. The payment of the trust’s income taxes reduces the trustor’s