Grantor Trust

A grantor trust is a vehicle through which rich people grant their children, well… stuff. The trick with a grantor trust is that the grantor (the one who created the trust itself) still has control over the trust; i.e. who gets what, when, and how.

The trust is then deemed to be kinda-sorta "revocable" (they can take back or reallocate a lot of the rights or establish a "must-stay-in-haunted-mansion-overnight-to-receive-funds" clause). Or worse, that the trust is then taxable to the grantor.

Why would someone set up a Grantor Trust instead of an Irrevocable Trust, which avoids taxes? Well, it might make sense if the grantor wasn't exactly Parent of the Year and their kids ended up just... not all that trustworthy or worldly. Then the Grantor Trust is sadly probably the way to go.