You can search for an article about living trusts on the web and find about a million of them. But finding any information about the approximate cost to create a living trust is tough.
You should know that a living trust is a separate legal vehicle that you can create to manage your assets both while you’re alive and after you pass away.
Trusts are created to make certain that the assets placed in the trust are used in a way in which the creator of the trust instructs, such as only for education purposes, to buy a first home, or to be distributed only after the beneficiary reaches age 25. The task of enforcing the terms or instructions for the trust assets falls to the trustee—the person the trust creator names to manage the trust in accordance with the trust guidelines. Usually, the creator names him- or herself as trustee, then has a successor trustee assume control when they pass away.
A major benefit of a trust is that it allows your estate to avoid the probate process.
So, What Does it Really Cost?
Of course, that’s not the answer you really want to hear, but it’s true.
The national average cost for a living trust for an individual is $1,100-1,500, and the national average cost for a living trust for a married couple is $1,700-2,500. But generally, a trust ranges in price from $1,500 to $3,000. And there are several factors that can affect the cost of creating a trust by an attorney. They include the following:
- The type of trust;
- The trust’s purpose:
- The complexity of the estate plan;
- The size of the estate;
- The number of assets to be retitled to place in the trust:
- Whether it’s for a single person or married couple.
- Your tax situation;
- Your financial circumstances;
- Whether there is a person to be appointed to manage assets for minor children; and
- The specific terms (such as when and how funds are disbursed to the beneficiary).
Those are just a few of the things that must be considered.
So, you can see that the costs of establishing a living trust can vary widely. Add in the fact that costs vary from state to state depending on laws and from region to region. The community where the attorney practices—Manhattan, NY, or Hibbing, MN—will also see a difference in the going hourly rate. The attorney rates in New York City will be much more than those of an attorney in a small town in northern Minnesota. Plus, each state or locale, an attorney with more experience in estate planning, may charge more than one who is a general practitioner and works in all areas of the law. In fact, some states, like California and Texas, offer attorney certification in estate planning and probate law, so those attorneys are considered specialists.
Attorney Time in the Trust Creation Process
The cost of preparing a living trust is primarily a factor of an attorney’s time. Lawyers frequently bill by the hour, but in estate planning, it’s common for a law firm to offer a flat rate to create certain documents.
Some estimates say that it should take about 10 hours of billable attorney time to have a living trust prepared that addresses your objectives. This process entails several components:
- Working with the attorney to understand the available options for your specific situation;
- Undergoing a detailed fact-finding interview with the attorney;
- Having a discussion in which the details of a customized plan are explained;
- Document drafting and review by the attorney;
- Your final review and signing the trust before a notary and witnesses; and
- Funding the trust by retitling the assets you want to be placed in your trust.
With all of these steps, it’s easy to see how the cost of preparing a living trust can vary based on the amount of time it might take any individual practitioner to work through a step.
That said, when an attorney prepares a living trust for a client, he or she will make certain that it is done properly and legal, so all your wishes are carried out, and the trust addresses all of your concerns and objectives.
What About Do-It-Yourself?
Just like searching the Internet for information on the cost of creating a living trust, you can also find many articles that will show you how to do it yourself.
While DIY may be the answer for some when replacing the brakes on a car or installing a ceiling fan, for those who don’t have the aptitude or background in automotive repair or electrical work may end up with a serious problem. Creating a living trust with the use of Internet forms can lead to a similar disastrous result. And with estate planning, you may not have the chance to recover or remedy your mistake if it’s discoverable after you’re dead.
The big issue with Internet forms is that they typically provide you with general, one-size-fits-all, boiler-plate documents¬—documents that don’t address your specific issues or account for the distinctive characteristics of your family and lifestyle.
Create a Living Trust Online in Less Than 15 Minutes!
Ask yourself if you want to create such an important document so quickly. If it were that easy, why would anyone ever ask an attorney for help?
Some of these living trust websites even provide you with a money-back guarantee. Well, it’s frequently a 30-day money back guarantee, and what good is that? How would you know that you made a critical mistake in a month unless you had an attorney review your work? In fact, if you read the fine print, you’ll see that many will of these websites try to limit their liability by declaring that they are not a law firm or a substitute for an attorney or law firm. So, creating your trust in minutes really isn’t a selling point if it’s authored by an unknown computer program that has no idea of your financial or family situations.
You should take this language to heart because if something goes wrong, you—and more likely your family or other beneficiaries of your living trust—will be out of luck. They will have nowhere to turn if an asset isn’t titled correctly in the trust, you name someone who isn’t reliable as a successor trustee, you leave your family with a tax mess, or the trust doesn’t consider the eligibility requirements for government aid programs such as Medicaid.
We all want to saving time and money; however, the far-reaching impact of doing your own living trust could prove to be much more expensive than just paying an experienced estate planning attorney to draft your living trust and estate plan for you in the first place.
Your return on the expense of a qualified estate planning attorney who’s familiar with the probate, trust, and estate tax laws of your will pay off for you and your family in the long run. Consider additional legal bills and court fees, as well as stress, delays, and headaches for your beneficiaries and family when you look at the cost of creating a living trust.
The Same Is True For Your Complete Estate Plan
In addition to a living trust, a complete estate plan should include several important documents, for example, you should also have a last will & testament, financial and medical powers of attorney, a HIPAA release, and advanced medical directive (also known as a living will). Each of these can be found on the Interest, but the same pitfalls and warnings in a preparing an estate planning for yourself apply.
What does it cost to create a living trust?
It depends on the several factors that must be considered to create a tailored legal document that will address the objectives for your estate and the complexity of your estate. It also depends on your local law firm rates and the laws in your state. Finally, it depends on the risk you are willing to take and size of the burden you want to place your beneficiaries and family after you pass away in the event that you try to create your living trust without the assistance of a qualified estate planning attorney.
Of course, cost is a factor in this process, but it shouldn’t be the determining factor when you are trying to provide a legally valid estate planning document for your beneficiaries and family.