A grantor trust is a trust in which the grantor or settlor (the person creating the trust) retains control over the assets placed in the trust—or the income from the assets placed in the trust—to such an extent that the grantor or settlor is taxed on the trust’s income. For example, a revocable trust (a trust that may be revoked) is a grantor trust.

The controls retained by a grantor or settlor that may result in tax liability for the grantor or settlor are set out in the Internal Revenue Code (IRC), in the United State Code (federal statutes) at 26 U.S.C. §§ 671-677.

In Alaska, as in all states, grantor trusts are governed by both state law and federal tax law. A grantor trust is defined by the grantor's retention of certain powers or interests in the trust, which results in the grantor being treated as the owner of the trust assets for income tax purposes. The specific rules that determine whether a trust is a grantor trust are found in the Internal Revenue Code (IRC) at 26 U.S.C. §§ 671-677. These sections detail the conditions under which the grantor is considered to retain control or an interest in the trust assets, such as the power to revoke the trust, to direct the income, or to use the trust assets for the grantor's own benefit. If the trust meets the criteria of a grantor trust under these federal statutes, the grantor is responsible for reporting and paying income tax on the trust's income. Alaska does not have a state income tax, so the primary concern for Alaskan grantors in terms of taxation is at the federal level. However, Alaska trust law will still govern the non-tax aspects of creating and operating a trust within the state.