Settlor Law & Legal Definition
A settlor is the person who creates a trust by a written trust declaration, and may transfer initial assets into the trust. A settlor is also referred to as a "trustor", "grantor", or a "donor." Under the law of the vast majority of states today, the settlor’s retention of power and control does not prevent a valid and enforceable trust from being created. However, in the past and in only a few jurisdictions today, such an arrangement would be insufficient. The court would hold that the trust is illusory because the settlor did not really transfer a beneficial interest to another person and did not actually impose fiduciary duties.
The settlor, trustee, and beneficiary can be different people. But, one single person could be the settlor, trustee and beneficiary. For example, one person may create a trust and put property in it, make himself the trustee, and use the property for his own benefit. In that case he would be the settlor, trustee, and beneficiary all at the same time. Revocable living trusts under which the settlor, trustee, and lifetime beneficiary are the same person are sometimes called Dacey trusts.
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