Settlor Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Settlor, written in plain English, along with examples of how it is used.
What is Settlor?
(n) Settler is the person who transfer the rights and possession of the property owned by him with an agreement in writing where in the beneficiaries are named. Ex. A person executing a will to distribute his property after his death is a settler. A trustor transferring his property to a trust is also known as settler
History and Meaning of Settlor
In legal terms, a Settlor is also referred to as a Trustor or Grantor. A Settlor is a person who creates a trust by transferring their assets to the trust. The trust document outlines the terms of the trust, and it identifies a trustee who will manage the assets on behalf of the beneficiaries. The Settlor’s role is to establish the trust and to transfer assets to the trust’s ownership.
Historically, trusts were created to avoid feudal laws that prevented land transfer to heirs. In England, trusts came into existence in the 12th century during the time of the Crusades. The Knights would transfer their estates to trusted friends, who would take care of their property and provide for their families in their absence. Over time, trusts became more common, and people started to utilize them to avoid taxes.
Examples of Settlor
A Settlor sets up a trust for the benefit of his children and transfers the title of the family home to the trust.
A business owner creates a trust to provide for his employees and transfers assets used for the business to the trust.
A grandparent creates a trust to provide for his grandchildren’s college education and funds it with cash and securities.
Legal Terms Similar to Settlor
Trustee - a person who is responsible for managing the assets in the trust.
Beneficiary - a person who benefits from the trust assets.
Fiduciary - a person who has a legal obligation to act in the best interests of another person or entity.