What does a revocable living trust cost? When most people think of trusts, they tend to believe that estate planning is only for very wealthy people. In reality, estate planning and trusts can be beneficial to anyone with assets or property.
When considering estate planning, specifically revocable living trusts, a common question is how much will it cost to draft this document? Let's explore this question and review some general information about revocable living trusts.
How Much Does It Cost to Make a Revocable Living Trust?
A revocable living trust is a legal document that outlines how you want your assets and property handled after you die. This document is drafted and goes into effect during your lifetime. You can place assets in the trust to be distributed to your beneficiaries upon your death. This trust can be changed or adjusted throughout your life, giving you flexibility and maximum control over your assets.
Getting help from a probate lawyer to draft a revocable living trust is highly encouraged. Each state has its own requirements that make a revocable living trust valid. If you aren't sure of your state's laws, a licensed attorney can help. Furthermore, some states require an attorney to transfer certain assets to trusts.
ContractsCounsel's marketplace data shows that the average cost of hiring an attorney to make a revocable living trust is $1,500 - $2,500 in all states.
Revocable living trusts allow you to organize your assets, avoid probate, and make the distribution of your property after death easier for your beneficiaries.
What's Typically Included in a Revocable Living Trust?
The elements of a revocable living trust will vary depending on the individual, assets, and wishes. Different states will also have requirements that must be met to make the document a binding contract .
Typically, to be enforceable, a revocable living trust should contain the following information:
- The name of the owner or grantor of the trust
- An appointed trustee to manage the trust
- The name of a successor should the trustee die
- The names of the beneficiaries of the trust
- How assets are to be distributed amongst the named beneficiaries
Once the trust is established, it will have to be funded with your assets and property. You are able to add or remove assets to your trust at any time, giving you flexibility with managing your revocable living trust.
The following assets are commonly included in revocable living trusts:
- Cash Accounts: You can add checking accounts, savings accounts, money markets, and CDs to a living trust. In some cases, adding a CD to a trust may be deemed "retitling" the CD, leading to early withdrawal penalties. It is best to allow a CD to mature before adding it to a trust.
- Non-retirement Investment Accounts and Brokerage Accounts: These accounts include any assets held in your name, jointly, or tenants in common. IRAS, 401(k)s, and qualified annuities are not eligible for a living trust.
- Non-qualified Annuities: For non-qualified annuities, you can either retitle them into the name of your trust or designate your trust as the primary or secondary beneficiary of the annuity.
- Stocks and Bonds: Stocks and bonds can only be added to a living trust if held in certificate form. You will need a new certificate before adding stock or a bond to your trust. You must also insure shares for 2% of their current value.
Any tangible personal property can also be added to a revocable living trust. Items like:
- Household goods
- Motor vehicles
- Life Insurance: The main benefit of putting your life insurance policy into your revocable living trust is that it allows your trustee to borrow against the policy. If you ever become incapacitated, this money can be used to pay for any medical expenses you may incur.
- Real Estate: You can transfer real estate into your trust, but you will need to record a new property deed for each property you own in the name of the trust. If there is a mortgage, your trust will take over the mortgage until the property is passed onto a beneficiary. Then, the beneficiary will take over the mortgage.
Advantages and Disadvantages of a Revocable Living Trust
There are various advantages and disadvantages to establishing a revocable living trust. Some advantages include:
- You can change a revocable living trust at any time, providing flexibility in managing your assets.
- Revocable trusts cover your assets during your life, if you become incapacitated, and after your death.
- When you have a living trust, your family members avoid the slow probate process.
- Although more expensive to put into place, in the long run, revocable living trusts will incur fewer costs
- Revocable living trusts provide privacy because they are not entered into public records after your death, unlike a last will and testament .
- All of your assets in your revocable living trust benefit from FDIC protection.
Some disadvantages to making a revocable living trust are:
- Revocable living trusts are most costly than wills to establish.
- There are no tax benefits involved with making a revocable living trust.
- Not all of your assets will be qualified to be included in a revocable living trust.
- All of the assets that you add to your revocable living trust must be retitled.
Examples of When You May Need a Revocable Living Trust
Contrary to popular belief, revocable living trusts are not just for the wealthy. Most estate planning professionals will advise that if you have a net worth over $100,000, have assets in real estate, or have specific wishes on how you want your assets and property to be distributed; then a revocable living trust may be right for you.
Revocable living trusts have the unique advantage of protecting you and your assets during your life, if you ever become incapacitated, and after your death. If you are unsure if a revocable living trust is right for you, you should consult with a probate lawyer to advise you about your estate planning options.
Cost of Making a Revocable Living Trust
Hiring an attorney to make a revocable living trust will incur costs because it requires a trained probate or estate planning lawyer to complete the project.
ContractsCounsel's marketplace data shows the average revocable living trust drafting costs to be $1,500 - $2,500 across all states.
How Do Lawyers Charge for a Revocable Living Trust?
Probate lawyers can choose to bill their clients in a variety of ways. Some attorneys use an hourly rate fee structure for projects like drafting wills and trusts, while others use a flat fee rate that they quote before beginning the project. Generally, costs will vary depending on the complexity of the revocable living trust.
Hourly Rates for Revocable Living Trusts
An hourly rate fee structure is a popular way for attorneys to bill their clients. In this scenario, the lawyer has a set hourly rate, and they will charge their client the number of hours they spent on their client's task. This fee structure allows a lawyer to be compensated for any and all time they spend on a specific case.
According to ContractsCounsel's marketplace data, the average hourly rate for a probate or estate planning lawyer ranges from $250 - $350 per hour.
Flat Fee Rates for Revocable Living Trusts
Flat fee billing structures are popular for projects with a definite ending, like contract drafting . Attorneys will quote a client a flat-fee price for the completion of a specific task. If the client agrees, they will pay upfront for the legal services.
ContractsCounsel's marketplace data shows the average flat fee rate for a revocable living trust cost to be $1,500 - $2,500 .
Do I Need a Lawyer for a Revocable Living Trust?
It is possible to create a living trust without the assistance of a lawyer; however, it is not recommended. Revocable living trusts can be complex documents, and if they do not adhere to the requirements set by your state, they may not be enforceable.
The only way to ensure that your revocable living trust will be upheld if you become incapacitated or after your death is to have an experienced, licensed attorney help you draft the document.
Several situations will make establishing a revocable living trust even more complicated. If any of the following scenarios apply to you, reach out to a probate lawyer to find out your options.
- You wish to have specific conditions apply to your trust
- You don't know what to put in your trust
- You owe estate taxes
- You wish to skip generations in the distribution of your assets
- Any of your beneficiaries has special needs or is on government assistance
- You have a large life insurance policy
- You don't know how to transfer assets into a trust
Get Help with a Revocable Living Trust
Do you need help with a revocable living trust? If so, post a project in ContractsCounsel's marketplace to receive flat fee bids from probate lawyers and family lawyers to handle your project. All lawyers on the ContractsCounsel's platform are vetted by our team to make sure you are provided with top-tier service.