Understanding Trust
Classifications
Learn the key differences between grantor and non-grantor trusts, revocable and irrevocable trusts, and how to legally execute a non-grantor trust with a notary.
Grantor vs. Non-Grantor Trusts
This distinction determines who pays taxes on the trust's income — the grantor or the trust/beneficiaries.
Grantor Trust
Income taxed to the grantor
A grantor trust is one where the grantor retains enough control or benefits that the IRS treats all trust income as the grantor's personal income. The grantor pays tax on all trust income, regardless of whether it's distributed.
- The grantor retains certain powers or benefits (IRC §§ 671–679)
- All trust income is taxed on the grantor's personal tax return
- Grantor is responsible for paying tax on trust income
- Simpler to administer — no separate trust tax return needed
- Grantor can often modify or revoke the trust
- Best for revocable living trusts and basic estate planning
Non-Grantor Trust
Income taxed to the trust or beneficiaries
A non-grantor trust is a separate taxable entity. The trust files its own tax return (IRS Form 1041) and pays tax on undistributed income at trust tax rates. Income distributed to beneficiaries is taxed at their individual rates — enabling income shifting to lower-bracket family members.
- The grantor has relinquished sufficient control and benefits
- The trust is a separate taxable entity — files IRS Form 1041
- Trust pays tax on undistributed income at trust tax rates
- Income distributed to beneficiaries is taxed at their individual rates
- Enables income shifting to lower-bracket family members
- Best for irrevocable trusts and advanced tax planning
Key takeaway: A grantor trust is simpler but offers no tax savings — all income is taxed to the grantor. A non-grantor trust is more complex but can shift income to beneficiaries in lower tax brackets, potentially reducing the overall tax burden. Always consult a tax advisor to determine which structure is right for your situation.
Revocable vs. Irrevocable Trusts
This distinction determines whether the grantor can change or cancel the trust after it's created.
Revocable Trust
Changeable — grantor retains control
A revocable trust (also called a living trust) can be modified, amended, or completely revoked by the grantor at any time during their lifetime. The grantor retains full control over the trust assets and can move property in and out freely.
- Grantor can modify, amend, or revoke the trust at any time
- Grantor retains full control over trust assets
- Assets remain part of the grantor's estate for tax purposes
- No creditor protection — assets are reachable
- Simple to set up and maintain
- Ideal for probate avoidance and basic estate planning
Irrevocable Trust
Permanent — grantor gives up control
An irrevocable trust cannot be easily modified or revoked once established. The grantor transfers assets to the trust and gives up ownership and control. In exchange, the assets may be removed from the grantor's taxable estate and may receive creditor protection.
- Cannot be easily modified or revoked once established
- Grantor gives up control — assets are transferred to the trust
- Assets may be removed from the grantor's taxable estate
- May provide creditor protection depending on structure
- More complex to set up and administer
- Ideal for asset protection, tax planning, and legacy planning
Important distinction: The grantor/non-grantor classification is about tax treatment, while the revocable/irrevocable classification is about control. These are independent characteristics — a trust can be revocable grantor, irrevocable grantor, or irrevocable non-grantor. Most non-grantor trusts are irrevocable, because retaining the power to revoke would trigger grantor trust status under IRC § 676.
Quick Reference: The Four Combinations
How these classifications combine in practice.
| Combination | Tax Treatment | Control | Common Use |
|---|---|---|---|
| Revocable Grantor | Taxed to grantor | Grantor retains control | Living trust, probate avoidance |
| Irrevocable Grantor | Taxed to grantor | Grantor gave up control | Intentionally Defective Grantor Trust (IDGT) |
| Revocable Non-Grantor | Taxed to trust/beneficiaries | Grantor retains control | Rare — usually triggers grantor status |
| Irrevocable Non-Grantor | Taxed to trust/beneficiaries | Grantor gave up control | Asset protection, tax planning, complex trusts |
How to Notarize a Non-Grantor Trust
Follow these steps to legally execute your non-grantor trust document with a notary public.
Generate Your Trust Document
Complete the TrustApp questionnaire for your Non-Grantor Trust. Your document is generated with proper signature blocks and notary acknowledgment sections ready for execution.
Review the Document Carefully
Read your entire trust document before signing. Verify all names, beneficiary designations, asset descriptions, and distribution provisions are correct. Consider having an attorney review it.
Locate a Notary Public
Find a notary public in your area. Notaries are available at banks, credit unions, law offices, postal/shipping stores, government offices, and through mobile notary services. In Canada, look for a Commissioner of Oaths or Notary Public.
Bring Required Identification
All signers must bring valid government-issued photo ID (passport, driver's license, or government ID card). The notary will verify identity before witnessing signatures.
Sign in the Notary's Presence
Do NOT sign the document before meeting the notary. The grantor, co-trustees, and any required witnesses must sign in the notary's physical presence. The notary will apply their seal or stamp.
Notary Completes Acknowledgment
The notary completes the notary acknowledgment section (jurat or acknowledgment), including their commission number, expiration date, and official seal. This makes the document self-authenticating in court.
Obtain an Apostille (If International)
If the trust will be used in a foreign country that is party to the Hague Apostille Convention, you may need an apostille from your state or provincial Secretary of State or equivalent authority.
Store the Executed Document Safely
Keep the original executed trust document in a secure location (fireproof safe, bank safe deposit box, or with your attorney). Provide copies to your co-trustees and successor trustees.
Where to Find a Notary
Common locations where notary services are available.
Banks & Credit Unions
Often free for account holders
Postal & Shipping Stores
UPS, FedEx, USPS locations
Law Offices
Attorneys are often notaries
Mobile Notary Services
They come to you — fees apply
Government Offices
City halls, county clerks
Online/RON Notaries
Remote Online Notarization (where legal)
In Canada: Look for a Commissioner of Oaths or Notary Public. Each province has its own rules — some provinces require a notary who is also a lawyer. Contact your provincial law society for a directory.
Internationally: If your trust will be used in a foreign country, you may need an apostille or authentication certificate from your government's foreign affairs office. Check whether your country is party to the Hague Apostille Convention.
Legal Disclaimer: TrustApp provides self-service document generation tools and is not a law firm. Documents are generated based on your inputs and are not a substitute for advice from a licensed attorney. Laws vary by jurisdiction — consult a qualified legal professional before signing or filing any trust document.