Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

Who is referred to as the grantor in financial terms?

1. The individual receiving a trust

2. The person who creates and funds a trust

3. The legal advisor managing the trust

4. The beneficiary of a financial settlement

The correct answer is: The person who creates and funds a trust

In financial terms, the grantor is specifically identified as the person who creates and funds a trust. This individual is instrumental in the trust's establishment as they have the authority to determine the trust's terms and objectives. The grantor contributes assets to the trust, effectively relinquishing personal ownership while still retaining certain powers, such as the ability to amend or revoke the trust during their lifetime, depending on the type of trust established. This role is crucial because the actions and decisions made by the grantor directly affect the trust's functionality, management, and ultimately, its beneficiaries. The grantor's intent in creating the trust often encompasses estate planning strategies, wealth management, and providing for family members or other designated beneficiaries in a structured manner. In contrast, the other roles mentioned—such as the individual receiving a trust (the beneficiary), the legal advisor managing the trust (typically a trustee or attorney), and the beneficiary of a financial settlement—do not align with the definition of a grantor, as these roles pertain to the reception, management, or benefits derived from trusts or financial arrangements rather than their creation and funding.