Trusts are a way of managing assets for beneficiary. There are different types of trusts and they are taxed differently. The settlor is the person who puts assets into a trust. The trustee is the person who manages the trust. The beneficiary is the person who benefits from the trust. The settlor, in the terminology of Internal Revenue Code, the grantor who reserved the right to revoke the trust or retained beneficial enjoyment of the trust income is taxable on the trust’s income. Trusts, like corporations and individuals are income taxpaying entities. Like corporations trusts make distributions to the beneficiaries of the trust. However, these distributions will be deductible by the trust. The grantor trust rules are the direct descendants of Helvering v. Clifford (309 U.S. 331 (1940)). As early as 1924, Congress enacted the predecessors of the grantor trust rules. These early statutory grantor trust were inadequate in Clifford case. The Court held that the settlor was taxable on the trust’s income.