How Much Does It Cost To Create A Family Trust

How Much Does It Cost To Set Up A Trust?

Types Of Trusts

People will frequently hear about setting up a trust as part of an estate plan. Typically, this is a revocable living trust, although some situations call for an irrevocable living trust. A revocable trust is one that can be completely or partially revoked either during the lifetime of the person creating the trust or afterward. An irrevocable trust means just that: it cannot be revoked.

Another form of trust is a testamentary trust. This is one that is set up as part of a Will and does not become effective until your death. The trust I will be discussing here is a living trust. If a trust is set up under a Will, that fee is included under the will preparation fee.

Do You Need A Trust?

Not every person needs a trust. Unfortunately, some "trust salesmen" have held big seminars as they travel through town to try to convince everyone that they need a living trust.

Generally, unless you have a complex estate, you do not need a living trust to dispose of your estate. A living trust is a good idea if you own real property or mineral interests in another state. Sometimes, also, people prefer to use a living trust rather than a will to keep the terms of their bequests private. A will, if probated, becomes a public record, whereas a trust does not. There are other instances when a living trust is a good idea and instances when it is not.

If you have determined that setting up a trust is a good idea for you, you are most likely wondering how much it will cost you. Unfortunately, the standard lawyer answer is "it depends."

DIY Trust Dangers

Like just about anything these days, you can find forms to create a trust yourself online. The standard warning applies here, "let the buyer beware". If a person is very savvy, these might be sufficient. However, the danger is if the trust agreement is not done correctly, and transfers to the trust are not made, you will not have saved any time or money.

In fact, you most likely will have greatly increased the cost of handling your estate in the long run. The probate process or some variation thereof will still be required. Unintended consequences of in-artful drafting can mess up your whole estate plan.

As an attorney with 40+ years of experience, I have seen a large number of DIY trust agreements that were not legally adequate and failed to accomplish any intended purpose. In some instances, the DIY route can create more problems and expense down the line than if nothing were done at all.

This is one time where it's better to be safe than sorry. You are better off spending the money to do it right.

Trust Cost When Working With An Attorney

The cost can vary widely depending on the nature of your assets, the terms you want to set up for the trust, successor trustee arrangements, and whether there need to be special provisions for certain beneficiaries such as minors or disabled individuals.

The most simple trust agreement will run at least $1,500. It can be just one joint trust agreement for spouses if the terms fit that arrangement. However, any trust agreement must contain certain basic terms in order to be effective. Even simple trust agreements generally run 20 to 30 pages in length.

More complex trust agreements can run several thousand dollars, plus the cost of preparing documents to transfer assets into the trust. If you are appointing a bank or other corporate trustee, they will require extensive terms to cover their administration of the trust, which may add additional expense.

In addition, documents transferring your assets into the trust must be drawn up and executed to accomplish the purpose of the trust. Document transferring usually runs about $250 to $350 per deed or assignment to the trust of each property. Transferring assets into the trust, however, is an essential step in the process and should not be neglected, despite the extra cost.

Cost Is Offset By Potential Savings

These costs may seem high, but there are significant potential savings down the road by probate avoidance or other transfer-on-death expenses. Many times, the initial cost of setting up a trust offsets the likely cost of probate if a trust had not been created. The trust can also make the passage of assets much simpler and more private than probate.

Non-Monetary Savings Of A Trust

There are non-monetary savings involved in using a trust as well. The process of transferring assets after your death can be greatly simplified for your loved ones. This saves a lot of stress and frustration at a time when family members already are overwhelmed. Also, the disposition of your loved one's estate is already settled, so there are fewer chances of family feuds after the death.

Next Steps

To get a better idea of the information we will need to help you discuss whether a trust is a good legal move for you, download our free trust questionnaire.