Probate is the public legal process of distributing a decedent’s assets to heirs and designated beneficiaries and paying off any debt in accordance to a decedent’s will, or according to state law if there isn’t a will.
Because probate is a public process, it can be challenged by someone who wishes to dispute some aspect of the will or the distribution of assets. As a result, many people who wish to avoid potential disputes around their estate after passing away will set up a trust to keep assets private.
A trust will pull assets away from the public probate estate. However, just because the assets in a trust are private does not mean it is not taxable. All assets, including those hidden in a trust, are still part of a decedent’s taxable estate.
There are two main types of trusts, irrevocable trusts and revocable trusts. An irrevocable trust can’t be taken apart or altered after you create it. However, you can move assets in and out of a revocable trust while you are still alive.