In some states new statutes allow easy nonjudicial modification of trusts, if all trustees and beneficiaries agree. Even termination and full distribution are allowed. In a sole beneficiary-trustee trust, with no remainder beneficiaries, isn't this a problem for asset protection and estate taxes due to too much control by beneficiary.
Some states permit under specific circumstances that adult beneficiaries and trustees can make certain modifications to a trust by agreement. Some states may require that the grantor of that trust be alive at the time or perhaps consent to the modification. These rules differ significantly from state to state, and even examining the statute in different states alone may not be enough guidance without also considering applicable case law in that particular state and how it interprets the statute (i.e., court cases in that state addressing the issue). Further, the terms of the trust may be relevant as the trust terms may expand or restrict the applicable state law. Generalizations should also be made with great care. There may be differences depending on the modifications involved (different issues may be subject to different trust or statutory terms).
Your question presumes that if you have a trust with one person as sole trustee and beneficiary that there would be asset protection benefits. While theoretically this may be possible, this is certainly not a recommended approach. Worse, if you were speaking of a typical revocable living trust with the grantor, trustee and beneficiary one and the same person, there really is no meaningful protection. For estate tax purposes if the sole trustee is the sole beneficiary, perhaps with an ascertainable standard restriction on distributions you might be able to argue that the trust assets are not included in the beneficiaries estate, but a safer approach would be to at least have an independent co-trustee and prohibit the beneficiary from making distributions to himself or herself. An even safer approach that that would be to have only an independent trustee. The rules are complex, the situations vary dramatically from person to person, and state laws also differ significantly, so caution is necessary in applying any of these general comments to any particular situation.
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