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 Missouri, as in other states, a grantor trust is defined by the relationship between the grantor and the trust's assets or income. If the grantor retains certain powers or benefits, such as the ability to revoke the trust or control over the trust's income, the trust is considered a grantor trust for tax purposes. The Internal Revenue Code (IRC) sections 671 through 677 detail the specific powers and controls that, if retained by the grantor, will classify the trust as a grantor trust. This includes the power to revoke the trust, to control beneficial enjoyment, or to deal with trust property for less than full and adequate consideration. In such cases, the grantor is treated as the owner of the trust for federal income tax purposes and must report the trust's income on their personal tax return. It's important to note that while the federal law provides the framework for grantor trust rules, the trust's administration and the implications for state tax may vary and should be considered in the context of Missouri's laws and regulations.