How Much Does It Cost To Set Up A Trust?

How Much Does It Cost To Set Up A Trust In Texas?

A very popular question is: what does it cost to set up a trust? The answer depends on the type of trust that best suits your needs, if you need a trust at all. Very often, a trust is not needed as a part of an estate plan. This is discussed in my blog, "Do I Need A Living Trust?"

Types Of Trusts

People frequently ask about setting up a trust as part of an estate plan. Typically, they are talking about 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. Irrevocable trusts are seldom the right estate planning tool and should be used with caution. Intricacies of considerations in choosing an irrevocable trust should be discussed with a competent attorney.

Another form of trust is a testamentary trust. This is one that is set up under 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, the cost of the trust is included in the Will preparation fee. 

Trust Cost When Working With An Attorney

The cost of drawing up a living trust can vary widely depending on:

• The nature of your assets
• The terms you want to set for the operation and distribution of the trust
• Successor trustee arrangements
• Whether there need to be special provisions for certain beneficiaries, such as minors, disabled individuals, kids (grandkids) in college, or beneficiaries with substance abuse issues

The cost of a very simple living trust is a minimum of $1,500 - $2,000; in a large market, the cost may be more. The cost can go up incrementally with the complexity of the trust document. A complicated trust document can run from $2,500 - $5,000, or more. 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. There can be just one joint trust agreement for spouses if the terms fit that arrangement.

Additional costs will be incurred for drafting documents to transfer property into the trust, such as deeds, assignments, and letters of instruction to banks or investment companies. This cost will depend on how many different transfer documents are required and can range from $350 to several thousand dollars. 

Transferring assets into the trust, however, is an essential step in the process and should not be neglected, despite the extra cost. Failure to transfer assets into a trust defeats an essential purpose, avoiding probate.

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.

DIY Trust Dangers

Like just about anything these days, you can find forms online to create a living trust yourself. The standard warning applies here, "let the buyer beware". If you are 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 correctly, 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 inartful drafting can mess up your whole estate plan.

As an attorney with 45+ years of experience, I have seen a number of DIY trust agreements that were not legally adequate and failed to accomplish the intended purpose. In some instances, the DIY route can create more problems and expenses down the line than if nothing were done at all.

This is one time when it's better to be safe than sorry. You are better off spending the money to have an attorney draft the documents to do it right. 

Is A Living Trust Right For You?

If you are considering setting up a trust and would like to discuss your needs and the likely cost, please contact Adair M. Buckner to schedule a free initial consultation*.

Schedule A Free Consultation

*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)

** This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal, or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.