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 Georgia, as in other states, the concept of a grantor trust is governed by both federal tax law and state trust 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. This means that the grantor must report and pay taxes on the trust's income on their personal tax return. The specific rules detailing what constitutes a grantor trust are found in the Internal Revenue Code (IRC) at 26 U.S.C. §§ 671-677. These sections include provisions such as the power to revoke the trust, to control beneficial enjoyment, or to deal with trust property for less than full and adequate consideration, among others. Georgia state law will also provide rules regarding the creation, administration, and duties related to trusts, but the determination of grantor trust status for federal income tax purposes is primarily a matter of federal law.