How Much Does It Cost To Set Up a Trust?
by Unbundled Legal Help
Trusts can play an integral part in a solid estate plan. However, there are fees associated with setting up a trust. With the help of a proficient attorney, establishing a trust can cost $1,000 or more. Fortunately, an unbundled lawyer can help. We can connect you today with one in your area.
Getting the help you need to set up a trust is more accessible than you think. Unbundled Legal Help can connect you today with a quality trust lawyer in your area.
What Is a Trust?
You have heard the terms “trust” or “trust fund” in the past, but what exactly do they mean?
A trust is a legal, fiduciary document created by an individual, the grantor. It appoints a person, the trustee, and gives them the right and responsibility to hold assets for the benefit of designated beneficiaries. The trustee will distribute the assets to the beneficiaries upon the grantor’s death.
Trusts can be created to transfer many types of assets, including the following:
- Real property
- Life insurance policies
The grantor funds the trust by putting assets in the name of the trust, thereby transferring ownership of the asset to the trust.
There are many types of trusts and different ways to create them, offering many benefits and advantages.
Types of Trusts
Trusts are not one size fits all. Choose one based on your wants, needs, and goals. Some of the most commonly used trusts include the following.
A revocable trust, often referred to as a living trust, is one of the most common trusts.
Revocable trusts provide great flexibility. The terms of the trust do not become permanent until you have passed away, allowing you the ability to change, modify, or revoke your trust at any time. This becomes invaluable whenever you experience changes in your circumstances. For example, if you divorce, you can update your trust with necessary changes.
An irrevocable trust is the opposite of a revocable trust. Unlike revocable trusts, you cannot modify or revoke an irrevocable trust.
Irrevocable trusts are used less often because of their inflexibility. Once you set up and fund an irrevocable trust, you can’t undo your actions.
So why have an irrevocable trust? Many grantors choose irrevocable trusts for their ability to protect assets. When assets are placed in this type of trust, they are untouchable, safeguarding them from creditors and other, unintended beneficiaries.
Irrevocable trusts are appealing to those with large estates and many assets, as they also protect against steep estate taxes.
Special Needs Trust
A special needs trust can be set up for the benefit of an individual with special needs who requires long-term care. These trusts are beneficial and allow the beneficiary to receive financial help without jeopardizing their eligibility for government benefits.
Special needs trusts are often set up by parents with a special needs child. This provides peace of mind, knowing if anything were to happen, their child would be taken care of.
Asset Protection Trust
The main function of an asset protection trust is to protect an individual’s assets from possible future creditors. While they can be expensive to set up, they keep assets secure, similar to an irrevocable trust.
A testamentary trust is established in your last will and testament. Once you pass away, the will dictates the terms of the trust and becomes irrevocable.
As the name indicates, a charitable trust is one set up to benefit a charity. This type of trust can serve to lower or eliminate estate and gift taxes.
There are two types of charitable trusts: charitable lead trusts (CLT) and charitable remainder trusts (CRT). The primary difference between the two is how the trust’s income is distributed.
With a charitable lead trust, you determine which assets go to which charities, and the remainder goes to specified beneficiaries when you pass away. A charitable remainder trust lets you allocate assets to your beneficiaries, with the rest going to the charities of your choice.
Spendthrift trusts are a popular option for those wishing to put assets in a trust for the benefit of another, but perhaps the beneficiary is young or bad with money.
A spendthrift trust gives the trustee power over the trust, only providing assets to the beneficiary as the trustee sees fit.
Benefits of Having a Trust
Usually, grantors decide to set up trusts for the many benefits and advantages they can provide:
- Many trusts eliminate the need for probate: Probate is the process that allows for the distribution of assets once a person has passed away. You appoint an executor for your estate in your will, and if you don’t have one, the probate court can appoint one. The executor is in charge of many tasks, including ensuring assets are taken care of and allocated to the intended beneficiaries. Probate can be very expensive and time consuming. When a trust is in place, it helps avoid the need for probate, saving your family time, money, and aggravation.
- Protect your privacy: When an estate goes through probate, a quick public records search reveals information regarding your estate. A trust is a private legal document, allowing you to protect your privacy.
- Protect your beneficiaries: Trusts can safeguard assets against creditors and unintended beneficiaries, helping ensure beneficiaries are able to receive the assets you’ve left for them.
- Promote unity and prevent conflict: When an individual passes away, problems frequently arise regarding assets and who gets what. With a trust in place, you eliminate these conflicts. With little room for misunderstanding, families will likely acknowledge and respect your wishes.
- Reduce estate and gift taxes: Many are unaware that a person’s estate must pay estate and gift taxes, and these taxes can get quite expensive. Having a trust in place can diminish the amount of estate and/or gift taxes your estate will need to pay, allowing your beneficiaries to enjoy a greater amount of assets.
Steps Involved in Setting Up a Trust
After you’ve decided what type of trust to establish, whether by doing research or consulting with a lawyer, the process will include these steps:
- Creating a trust agreement: The trust agreement is a legal document outlining the trust’s details. It will include the names of the trustee, the beneficiaries, and how the assets will be managed and distributed at designated times.
- Signing and notarizing: After creating the trust document and reviewing it to ensure it is correct and accurate, the designated parties will sign and notarize the document.
- Funding the trust: After the trust agreement is created and signed, you will fund the trust or transfer the chosen assets to the trust. If, for example, you are transferring real property, documents will need to be drafted to transfer the property from your name to the name of the trust. Funding the trust will depend on the types of assets you place in it.
Some trusts will require additional steps.
How Much Does It Cost to Set Up a Trust?
The cost to set up your trust will depend upon whether you are setting it up yourself or use a qualified attorney. Generally, you can expect to pay $1,000 or more to set up a trust.
If you use a lawyer to set up your trust, you can expect to pay them hourly. Hourly rates start at $150 and can go up to $450 or more. Attorneys will charge for the time it takes them to meet with you to discuss your needs, draft the document, review it with you, and get it signed.
You can use online services to create your own trust, but it is important to consider that sometimes the cheaper route ends up being more costly. For the best outcome, it is best to consult with a knowledgeable lawyer to help guarantee you have the appropriate trust that suits your goals and desires.
Seek Assistance from an Unbundled Lawyer
Don’t be discouraged—legal help is more accessible than you may think.
An unbundled lawyer might be your best option. An unbundled lawyer offers a “pay as you go” service. If you wish to put in the work to establish your trust but would like the assistance of a lawyer to give you assurances that you’re on the right track, an unbundled lawyer can be a wonderful ally.
Unbundled Legal Help has a network of experienced attorneys ready to provide high-quality legal services. Whether you need limited assistance or would like a significant amount of help, we can connect you today with a local trust lawyer.
Contact us today to get started.