Yes, a revocable trust can have two grantors when it is set up as a joint living trust (commonly used by spouses or partners). According to a 2023 National Estate Planning survey, nearly 40% of people creating living trusts admit they are unsure how joint grantor rules work. In this article, you’ll learn:
- 🏡 Joint Trust Setup – Learn how married couples or partners can create one living trust with both individuals named as grantors.
- ⚖️ Legal Framework – Understand what federal tax rules and state trust laws say about having multiple grantors.
- 🔧 Drafting Essentials – Explore key requirements and steps for drafting a trust with two grantors.
- 🚫 Pitfalls to Avoid – Find out common mistakes to avoid when setting up a two-grantor trust (like unclear language or execution errors).
- 📊 Trust Comparisons – Compare the pros and cons of joint (two-grantor) trusts versus separate trust arrangements.
🏛 Federal Rules for Co-Grantor Trusts
At the federal level, there is no law forbidding two people from creating a revocable trust together. For income tax purposes, a revocable living trust is treated as a grantor trust, meaning the trust’s creator pays taxes on its income. Under IRS grantor trust rules, if a trust has two grantors, each person is treated as the owner of the portion they contributed (per IRC §671). Each co-grantor effectively maintains control of their share. For gift tax purposes, this means moving assets into a joint revocable trust is generally not a taxable gift: each grantor retains power to revoke their contributions, so the IRS views them as still owning those assets.
For tax filings, a joint living trust typically uses one grantor’s Social Security number (SSN) at a time. In practice, the trust can use either grantor’s SSN and even switch to the surviving grantor’s SSN when one person dies. This means you do not need to obtain a new EIN just because there are two grantors. Instead, the trust reports under one grantor’s SSN until it becomes irrevocable. Once the last surviving grantor dies and the trust is no longer revocable, it generally must obtain its own EIN for any continuing tax reporting.
Besides taxes, federal law defers to state law on trust creation. There is no federal statute that restricts the number of settlors of a trust. The Uniform Trust Code (adopted by most states) likewise allows trusts created by multiple competent grantors and focuses on state-specific validity rules. In short, a properly drafted joint revocable trust with co-grantors is recognized under federal law just like any other living trust. All standard trust regulations (e.g. anti-fraud or financial reporting rules) still apply, but they do not limit the number of grantors.
🏠 State Law Variations for Co-Grantor Trusts
Trust law is primarily governed by state statutes and case law, so how co-grantor trusts work can vary. Most states that have adopted the Uniform Trust Code (UTC) permit trusts with multiple settlors, as long as each person has the legal capacity to create a trust. Under these modern laws, a joint revocable trust by a couple is generally valid if executed properly (meaning both grantors sign and notarize the trust in states that require it). Even in states without the UTC, courts typically honor a trust if the document clearly shows a joint intent. Key point: each grantor must meet all usual trust-creation requirements (capacity, formalities, etc.).
In practice, the most common two-grantor trusts are created by married couples. Spouses often fund one joint living trust together to manage shared assets and avoid probate. In community property states (e.g. California, Texas, Washington), this process is streamlined: spouses simply pool their community assets into the trust, since community property is owned jointly by default. Even so, they should execute the trust in both names. In separate property states (like New York, Florida, Illinois), couples can still create a joint trust, but they must clearly document each spouse’s ownership share of assets. Many estate planning attorneys simply draft one joint trust for both spouses; others use mirrored trusts that coordinate separate trusts. Either way, the trust document must clearly identify each spouse’s contributions and powers.
Trusts with unrelated co-grantors (such as business partners or friends) are much rarer. Legally, any two adults with capacity could set up a trust together, but estate planners usually advise caution. For example, siblings inheriting a rental property might technically co-found a trust to manage it, but without very specific terms this can lead to disputes. State law generally allows it, but courts will require the trust to spell out each person’s share, decision-making powers, and how conflicts are resolved. In most cases, unrelated parties might choose separate trusts with cross-beneficiary provisions instead.
Since laws differ by state, it’s important to get local advice. Generally, if a co-grantor trust is validly formed in one state, other states will enforce it, but details of administration (like successor provisions) might vary. For example, if one grantor dies, some states say the surviving grantor simply continues the trust alone; others recommend explicitly stating that in the document. In summary: co-grantor trusts are legally permitted in virtually all states, but the trust should be tailored to state requirements and clearly explain each grantor’s role.
🚫 Avoid These Common Co-Grantor Trust Mistakes
- ❌ Unclear Grantor Identification – Failing to clearly name both grantors in the trust document can cause confusion or invalidate one person’s role. Always list each grantor by name and signature.
- ❌ Role Confusion – Mixing up the grantor (trust creator) and the trustee (trust manager) roles. Remember: grantors set up the trust, while trustees manage assets. Each role should be clearly defined.
- ❌ Lack of Updates – Not specifying what happens when one grantor dies or becomes incapacitated. The trust should explicitly state who succeeds as trustee and whether the trust remains revocable by the survivor.
- ❌ Ignoring State Law – Assuming all states treat co-grantor trusts the same. Different jurisdictions may have unique rules or formalities. Always consult local estate statutes or an attorney.
- ❌ Incomplete Funding – Forgetting to properly transfer or retitle each grantor’s assets into the trust. If assets remain outside the trust name (in both names), they may not be governed by the trust as intended.
- ❌ Execution Errors – Failing to properly execute the trust for each grantor (e.g. omitting a required notarization or signature). Each grantor must sign under any state-required formalities to make the trust valid.
🤝 Co-Grantor Trust Scenarios
| Scenario | Description |
|---|---|
| Spouses as Co-Grantors | Married couples creating one living trust together, each named as a grantor. This simplifies joint estate planning and probate avoidance. |
| Partners or Siblings | Two unrelated people (such as business partners or siblings) form a joint trust for shared assets. This is rare and requires very clear drafting of each person’s interests. |
| Adding Another Grantor | One person originally created the trust and later includes a second person as co-grantor (often after marriage). This typically requires drafting a new joint trust document. |
Most commonly, a two-grantor trust involves spouses pooling assets into one living trust. In this setup, both partners sign the trust agreement and jointly own the trust property. Each spouse retains control: for example, if one spouse dies, the surviving spouse typically continues as sole grantor and trustee and can still revoke or change the trust. This continuity of control is a key reason married couples choose joint trusts.
By contrast, co-grantor trusts for non-spouses are unusual. If two friends or business partners tried to share one living trust, they would need very explicit terms. Each person’s contributions and rights must be spelled out; otherwise disputes can arise. Most estate planning experts recommend separate trusts or joint ownership agreements for unrelated individuals, since a shared trust can complicate decision-making or inheritance.
Finally, consider someone who set up a trust alone and then marries. To add a spouse as co-grantor, the usual approach is to create a new joint trust. The original trust is revoked, and a new trust is executed with both spouses named as grantors. All assets are then transferred into the new trust. This ensures the trust document clearly reflects that both individuals are grantors, avoiding ambiguity about their powers or ownership.
📊 Pros and Cons of Co-Grantor Trusts
| Pros of Two-Grantor Trust | Cons of Two-Grantor Trust |
|---|---|
| Streamlines estate planning for couples: one trust covers both grantors’ assets. | More complex to draft: each grantor’s share is legally distinct and taxed separately. |
| Avoids duplicating trust documents and fees for married partners sharing assets. | Potential confusion on death of one grantor if the trust isn’t explicit about succession. |
| Surviving grantor retains full control after the first grantor dies, simplifying administration. | Generally not ideal for non-spouses: joint ownership can complicate unrelated partners. |
| Both grantors share authority (each can revoke or amend the trust while alive). | Requires precise language: mixing up roles or forgetting formalities can void terms. |
| Efficient management of jointly held property (esp. in community property states). | Minor gift tax issues if one grantor adds assets without equal contributions (though usually minimal for spouses). |
In many cases involving married couples, the benefits outweigh the drawbacks. A joint trust can significantly reduce paperwork and ensure each spouse’s assets pass smoothly to the other. However, it demands careful drafting: for example, the trust must clearly say how the surviving spouse takes over when the first passes away. The downsides are more pronounced for unrelated co-grantors, since the advantages of joint planning don’t apply. Overall, the decision depends on your situation. A joint trust can save time and cost for spouses, but it must be done correctly to avoid legal or tax surprises.
🔑 Key Terms Explained
- Grantor (Settlor): The person who creates and funds the trust. In a revocable living trust, the grantor usually retains the power to amend or revoke the trust.
- Co-Grantor: A second person who joins another as a grantor on the same trust. Co-grantors share the status of “creator” in a joint trust.
- Trustee: The individual or institution responsible for managing the trust assets according to its terms. Grantors often serve as co-trustees while they are alive.
- Beneficiary: Someone who is entitled to receive benefits (income or principal) from the trust. In a joint trust, the surviving spouse is usually the primary beneficiary during life.
- Joint Living Trust: A living trust created by two people together (typically spouses). It holds the combined assets of both and continues after one grantor dies.
- Uniform Trust Code (UTC): A model law drafted by the Uniform Law Commission, adopted by most states, that standardizes trust rules. The UTC generally permits trusts created by multiple settlors with legal capacity.
❓ Frequently Asked Questions
Q: Can a revocable trust have two grantors?
A: Yes, a revocable trust can have two co-grantors (such as spouses or partners) if it is set up as a joint living trust with both named as grantors.
Q: If a trust has two grantors, can one revoke it after the other dies?
A: Yes, as long as one grantor is alive, the trust remains revocable. The surviving grantor retains full authority to amend or revoke the trust.
Q: If a trust has two grantors, do we need an EIN because of two SSNs?
A: No, a joint trust generally uses one grantor’s Social Security number for taxes. It can use either grantor’s SSN (even switching after one dies), so a separate EIN isn’t typically needed.
Q: Is a co-grantor the same as a co-trustee?
A: No, they are different roles. A grantor creates the trust, while a trustee manages it. Being a co-grantor does not automatically make someone a co-trustee.
Q: Can I add someone as a grantor to my existing trust?
A: No, a trust must be created by all its grantors simultaneously. You would typically draft a new joint trust naming both individuals from the start.
Q: Do co-grantors have equal control over the trust assets?
A: Yes, co-grantors typically share equal control. In a joint living trust, each grantor has the authority to amend or revoke the trust, unless the trust document specifies otherwise.