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).
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