Grantor vs. Grantee

A grantor is a person or organization that transfers ownership of their assets or real property to someone else. A grantee is the person or organization that receives the assets or property. Both terms are common in real estate transactions and estate planning.

In real estate and estate planning, a grantor is someone who willingly transfers ownership of their assets, whether by gift, sale or agreement, to pass the assets to others after death. A grantor’s responsibilities typically include^[0]

• Willingly agreeing to transfer a specific asset (or assets) they own.

• Taking whatever steps are necessary to make this transfer.

• If a trust is involved, transferring chosen assets into the trust, designating beneficiaries (grantees), and naming the trustee and successor trustees to manage the trust.

• Signing all documents required to make the transfer legal.

In both real estate and estate planning, the grantee is the recipient of the assets the grantor transfers, whether by buying them, receiving them as a gift, getting them as an award or inheriting them. Grantee responsibilities typically include:

• Verifying that the grantor actually owns the assets.

• Accepting ownership of the assets.

• If real estate is involved, paying for or financing the property so that the grantor is paid, and then registering the property title with local authorities.

• Fulfilling all conditions and obligations detailed in the written agreement to transfer the assets.

In real estate, the grantor is the person transferring property to someone else. More specifically, the grantor is the seller in a real estate sale and the landlord for a rental property. The grantee in real estate is the one to whom the grantor transfers the property. In a real estate sale, the grantee is the buyer, and in a rental situation the grantee is the tenant^[0]

Here are some common types of real estate deeds where the terms "grantor" and "grantee" often occur:

• Special warranty deed: In this type of deed, the grantor states there are no undisclosed factors that could void the title, such as liens. However, this verification only applies to the time period over which the grantor owned the property. Short-term owners most often use special warranty deeds. For example, a bank that has foreclosed on a property might use a special warranty deed. The grantor is the seller and the grantee is the buyer.

• General warranty deed: Here the grantor states that there are no undisclosed issues with the property title or the actual property during and before the time the grantor owned the property. The grantor is the seller and the grantee is the buyer.

• Grant deed: In a grant deed, the grantor guarantees that that there are no title issues from during the time the grantor owned the property and that the grantor hasn’t transferred the property to anyone else. The grantor is the seller and the grantee is the buyer.

• Quitclaim deed: In this type of deed, the grantor doesn’t guarantee an absence of issues with the title. This type of deed is most often used to transfer a property between family members. The grantor transfers the property and the grantee takes ownership.

• Interspousal deed: An interspousal deed transfers property between spouses. It’s most commonly used in divorce situations, where the couple shared the ownership of the home but only one partner gets the house in the divorce. The grantor is the spouse relinquishing property ownership and the grantee is the spouse who will take full ownership of the property.

• Special-purpose deed: With this type of deed, the grantor transfers property to the grantee on behalf of someone else. The grantor isn’t liable if problems arise later on. 

• Deed in lieu of foreclosure: This type of deed allows a homeowner who can’t keep up with their mortgage payments to transfer the property back to the lender. Here, the grantor is the homeowner and the grantee is the lender^[0]

  Cornell University Legal Information Institute. Deed. Accessed Oct 3, 2023.

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In estate planning, the terms grantor and grantee often appear in trust agreements. Trusts allow people to leave assets to heirs without having to go through the probate process. The grantor sets up the trust and transfers their assets into it. The grantee is the beneficiary or heir who will receive trust assets per the trust agreement.

The grantor is responsible for:

• Choosing what type of trust to create.

• Appointing a trustee to manage the trust and deciding how the trust will be managed.

• Selecting beneficiaries.

• Transferring selected assets into the trust.

» MORE: How to set up a trust

The terms grantor and grantee are referenced in two main types of trusts:

• Living (inter-vivos) trusts: A living trust can be revocable (the grantor can revoke it or make changes) or irrevocable (the grantor cannot revoke or make any changes). For example, Jack and Marie (the grantors) create a revocable living trust and name their three children as the beneficiaries (grantees). Jack and Marie can add assets to the trust when they wish, and they can add additional grantees if they have more children^[0]

  University of Minnesota Extension. Trusts: definitions, types and taxation. Accessed Oct 3, 2023.

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• Testamentary trusts: A grantor establishes a testamentary trust in their will, and it becomes active upon the death of the grantor, under certain circumstances. For example, parents may fund a testamentary trust to make sure their minor children can pay college tuition if both parents die before the children are ready for college^[0]

  Iowa State University Extension and Outreach. Trusts as an Estate Planning Tool. Accessed Oct 3, 2023.

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» MORE: How to name guardians for children

Here are a handful of the many subcategories of trusts:

• Grantor trusts: In this type of living trust, the grantor retains ownership of the assets in the trust. The grantor pays taxes on those assets at the grantor’s personal tax rate, which is generally lower than trust tax rates. For example, Joe creates a grantor trust and names his two children as the grantees (beneficiaries) for when he passes. During his lifetime, he retains ownership of the assets and pays income tax on the trust income at his personal tax rate^[0]

  IRS.gov. Abusive Trust Tax Evasion Schemes - Questions and Answers. Accessed Oct 3, 2023.

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• Special needs trusts: These irrevocable living trusts provide financial support to people with disabilities without affecting their eligibility for disability benefits. For example, Miriam’s adult son Eric has a spinal injury that’s left him unable to work. Miriam (the grantor) sets up a special needs trust for Eric (the grantee) so he can afford to live independently in his own apartment. The income Eric draws from this type of trust still allows him to collect his Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) benefits and remain on Medicaid so he can live comfortably.

» MORE: How conservatorship works

• Charitable trusts: A type of irrevocable living trust that allows the grantor to leave assets to the charity of their choosing. For example, Elana (the grantor) has no children and is passionate about animal welfare. She creates a charitable trust so that when she dies, her favorite tax-exempt animal rights charity (the grantee) will receive a sizable donation.

• Spendthrift trusts: These trusts, which can be revocable or irrevocable, limit the grantee’s access to the assets. For example, Elvin’s beloved grandson, Brad, has trouble controlling his spending. To avoid Brad squandering his inheritance within the first few months, Elvin (the grantor) sets up a spendthrift trust that will give Brad (the grantee) a monthly income after Elvin’s passing, rather than a lump sum.

• Bypass trusts: This type of irrevocable trust for married couples allows a spouse to transfer their share of the estate to the surviving spouse at death. The surviving spouse may get income from and use the trust assets; but the trust’s beneficiaries, which the first spouse names, inherit the assets when the surviving spouse dies. For example, Thomas and Jill (the grantees) are an older married couple. They set up a bypass trust so that when one of them passes, the survivor can manage the trust. When the remaining spouse passes, Thomas’s children from his first marriage, Samantha and Aaron (the grantees), will inherit the trust assets. This ensures that Elvin’s assets do not pass to Jill’s other heirs or future spouse if she remarries.