If you are looking for a way to avoid sending your assets through probate, you may find establishing a trust is an attractive option. You can set up a trust, place your assets into it, and establish how you want your trust assets distributed following your death. How you create your trust is important, as you may want to change the terms of your trust after you set it up.
Depending on how you create your trust, you may not be able to alter it afterward. The key question that will determine whether you can change your trust is whether you establish a revocable or irrevocable trust.
The American Bar Association explains that if you establish a revocable trust, you may be able to alter its terms after you establish it. You may even abolish the trust if you desire. Some people establish living trusts as revocable trusts, using them to keep and manage assets. And if you become incapacitated, your trustee will manage your assets per your instructions.
Revocable living trusts can also avoid probate. Upon your death, your trustee will distribute the assets from your trust to your specified heirs. However, a revocable trust cannot avoid estate taxes. After your death, the government will still have the right to tax your assets even if they reside in your living trust.
If you want to avoid certain estate taxes, you may place your assets in an irrevocable trust. An irrevocable trust can also guard your assets from certain forms of liability. However, when you put assets into an irrevocable trust, the assets belong to the trust. You give up the power to revoke the trust or make any changes to it.
A proper trust can help guard your assets and safeguard them against unexpected events. The kind of trust that best serves you, however, will depend upon your priorities. You may desire greater asset protection, or you may want to maintain tight control over the trust. With the variety of trusts available, you may find one that will best fulfill your needs.