The benefit to a Grantor Trust is that it prevents the trust from be highly taxed. Here the trust is not seen as a separate taxpayer but rather appears as personal income to the trustor.

A popular type of grantor trust is the Totten trust. This type of trust is a popular way to avoid probate court. The trust is formed out of a bank account and the depositor is the trustor, trustee and only beneficiary until their death. Therefore they are able to make any changes or revoke the trust during their lifetime. Also, the beneficiary that is designated after the death of the trustor does not have any rights over the trust while the trustor is still alive. Therefore, the creditors of the future beneficiary cannot take from the trust.

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