How Much Does a Living Trust Cost?
The average cost (i.e., legal fees) for a lawyer to draft a living trust is $730 on a flat fee basis. This cost points come from recent living trust projects on the ContractsCounsel platform from across all US states. Note, living trust costs can vary based on the geographic region and their complexity.
Living trusts are private documents, so do not require any sort of immediate filing fee with a court or government agency. However, there may be some other costs you may incur that are worth noting:
- Recording Fees for Transferring Assets. Once a living trust is created, you will need to transfer assets into the trust. If you are transferring real estate property, you may need to create a new deed which will involve costs being paid to the county's recording office. These fees can range from $10 to $300 generally.
- Filing Fee Upon Grantor Death. After the grantor's death, there may be small fees paid by the trustee if they need to file certain documents with the court for more complex cases involving real estate or contested claims.
- Updating Trust. Given you are still alive when you create a living trust, things may change and you may need to periodically update the document. This will involve attorney fees each time you update your trust.
- Trustee Fees. If you appoint a professional trustee, you will likely need to pay their annual fee for managing the trust's assets.
What is a Living Trust?
A living trust, also referred to as an inter vivos trust, is an estate planning legal document that helps you manage your assets while alive and will distribute them to beneficiaries upon your death. Living trusts will help you avoid probate and make sure your wishes are respected and executed.
Advantages of a Living Trust
Living trusts offer many advantages when it comes to estate planning and asset management. Below are some benefits you should know:
- Avoiding Probate. One of the main advantages of a living trust is it allows the assets in the trust to avoid the probate process. The probate process happens when someone passes away and their assets needs to be distributed based on their will (or by state laws if no will exists). Thus, a trust allows for the assets to be distributed to the beneficiaries quickly, privately, and without costs of probate.
- Trusts Offer Privacy. Living trusts are private documents, unlike wills which become a public document during probate. This helps the beneficiaries to avoid public scrutiny during the probate process.
- More Control. Living trusts give the grantor control of their assets, even in time of incapacity. If the grantor becomes incapacitated, the successor trustee can manage the assets on behalf of the grantor without any needs for the court.
- Revocability and Flexibility. Trusts are revocable and can be amended during the life of the grantor, if they are competent. This means you can change the trust during your lifetime and even revoke the trust, if you choose to. Changing the trust can be important if there are new assets required, tax laws change, or beneficiaries change.
- Efficiently Distributing Assets. As mentioned above, assets can be distributed to the beneficiaries much quicker than probate, which happens when there is only a will. Upon the death of the grantor, assets can be distributed by the successor trustee.
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Downsides of a Living Trust
Living trusts offer many advantages, but also have some downsides you should know about and consider. Here are some downsides of a living trust:
- Costs. Setting up a living trust involves attorney fees to do, which are typically higher than drafting a will. Living trust costs can increase based on the complexity of the assets of the estate.
- Complex Setup. Setting up a living trust is more complicated than drafting a will. It involves transferring the ownership of assets, which can be complicated legally and time consuming.
- Ongoing Maintenance. Living trusts will require on-going work and updates. For example, if you acquire more assets during your lifetime, they will need to be transferred to the trust or may be subject to the probate process.
- No Court Oversight. Avoiding probate is a benefit, but can also be seen as a downside since courts will not be involved and there will not be a formal legal process in distributing assets of the estate.
- Difficult with Certain Assets. There are some asset types that are difficult to transfer into a trust, like retirement accounts, out of state real estate, and personal property.
Funding a Living Trust
Once a living trust is set up, you will need to fund it by transferring assets into it. This can come with costs you should know about and consider:
- Appraisal Fees. If real estate is transferred into a living trust, you may need to get the assets appraised to determine the value. Appraisal fees can range from a couple hundred dollars to a few thousand dollars, depending on the property and location.
- Transfer Taxes. Some states may impose taxes when transferring real estate into a living trust, and can even be a percentage of the asset's value. Make sure to research your state's tax implications.
- Recording Fees. If you transfer real estate into a living trust, you may need to create a new deed and pay a recording fee at the country recorder's office. This can range from $10 to $300.
Can I Do My Own Living Trust?
Yes, technically you can create your own living trust without the help of an estate planning lawyer if your estate is relatively simple. This does come with risks, which includes:
- Errors or Mistakes. If you make any errors or mistakes when creating your trust document, this may lead the trust to fail. Errors could occur by using the wrong legal language or transferring assets into the trust.
- Funding the Trust. Funding the trust is complicated for certain types of assets. If done incorrectly, they may not be part of the trust and subject to probate.
- No Legal Advice. Creating a trust document yourself means you won't be receiving legal advice from an estate planning attorney. This may mean your trust document doesn't comply with state laws or consider unique tax laws.
- Updates and Amendments. If you make updates to your living trust over time, this increases the chance of making errors and mistakes.
It is better to use an estate planning attorney when:
- You have a complex estate
- Your estate is subject to federal or state estate taxes
- You have children from multiple marriages
- You have a special needs beneficiary
Should Bank Accounts be Included in a Living Trust?
Yes, bank accounts can and often should be included in a living trust. This will depend on your circumstances, but it is common for bank accounts to be included in living trusts.
Key Living Trust Terms to Know
- Trust Administration Fees: The fees charged by the trustee for managing the assets in the living trust and administering its terms.
- Attorney Fees: The costs associated with hiring an attorney to help create or manage the living trust.
- Probate Costs: The expenses incurred during the probate process if the assets aren't transferred to the trust before the trustor's death.
- Transfer Taxes: The taxes levied on the transfer of assets into the living trust.
- Funding the Trust: The cost of transferring assets into the living trust, including the fees for appraisals, deeds, and other paperwork.
Conclusion
In conclusion, you will incur costs when creating a living trust document and managing it. There are many benefits to creating a living trust document, mainly avoiding probate.
If you need help with a living trust document, feel free to post a job in the ContractsCounsel platform and receive competitive bids from lawyers to help you.
