What is the Average Cost to Prepare a Living Trust?

What is a living trust?

A living trust is a legal document that allows you to transfer assets to your beneficiaries after your death, without going through the probate process. You, as the grantor, transfer your assets into the trust. The trust becomes the owner of your assets during your lifetime. After your death, the assets are distributed to your beneficiaries according to your wishes and on any schedule you choose.

A living trust is an important part of an estate plan. With a living trust, you can be the trustee (the manager of the assets) and also maintain the power to make any changes you want to the trust. You can move assets in or out of it, or even cancel the trust completely. Many people choose to have a living trust instead of a last will because, unlike with a will, the assets in the trust do not have to go through probate court after your death.

Revocable vs. irrevocable living trusts

There are two main types of living trusts: revocable and irrevocable. A revocable living trust allows you to change, update, or even cancel it while you’re still alive. The biggest benefit is flexibility. You stay in control of your assets and can update the trust as your life or financial situation changes. However, revocable living trusts don’t protect your assets from creditors or provide as many estate tax planning benefits.

On the other hand, you cannot change an irrevocable living trust after it’s created. Once you transfer assets into this type of trust, you typically no longer have control over them. Yet giving up control is also one of the biggest downsides. An irrevocable trust can also be more complicated and expensive to establish.

For a majority of people, revocable trusts usually make more sense for simple estate planning. They’re far easier to set up and manage, not to mention budget for. Nonetheless, if you believe an irrevocable trust would be better for your situation, it’s highly recommended to consult an attorney for advice. 

How much does a living trust cost to set up?

The cost of a living trust can vary based on a variety of factors. Most people pay between $400 and $4,000 to prepare a revocable living trust, depending on the size and complexity of the estate, the types of assets the trust will contain, and the state you live in (some states have more legal requirements). Another big factor is whether you take a do-it-yourself (DIY) approach or hire an estate planning attorney.

Keep in mind that all these estimates are only for revocable trusts. The cost of irrevocable trusts can vary widely due to their complexity, so it’s best to consult an attorney to get an accurate price range. 

For revocable living trusts, on the other hand, here’s what you might expect to pay: 

DIY living trusts 

The average cost of a will and trust using a do-it-yourself approach ranges from $400 and $1,000, depending on the factors above like complexity and the level of service provided. Online estate plan tools typically ask you to answer a few questions, then provide you with a living trust agreement in addition to other documents like a pour-over will or a healthcare directive (also called living will).

If your estate planning needs are simple—meaning you don’t have complicated investments, properties in multiple states, or dependents with special needs—an online estate planning tool can be a smart choice. The lack of personalized legal advice may be a drawback for some, but many estate planning tools offer this as an add-on. For example, with LegalZoom you have the option to add attorney review and get unlimited calls with a licensed attorney for a year after creating your trust.

Using an attorney for a living trust 

The average living trust estate plan cost when you hire an experienced attorney can typically range from $1,500 to $4,000, but can be $5,000 or more for a complex estate. The biggest factor here is often the attorney’s hourly rate, which varies widely by state and region. Legal fees often range between $200 and $500 per hour, but you may be able to find an estate attorney that offers a flat rate for more basic living trusts. 

When you prepare a living trust, you want to make sure it is done properly so that all of your wishes are carried out, it fulfills all legal requirements, and it carries the maximum benefits. Using an estate planning attorney means that the trust will be completed correctly, but the associated fees can greatly increase the cost of a living trust. It also might take longer to complete the estate planning process. Still, if you have a complicated estate with multiple properties, complex personal finances, or assets in different states, it can be worth it for peace of mind.

How much does a trust cost to maintain?

Revocable living trusts don’t incur significant maintenance costs if you are acting as the trustee and managing things by yourself. If you hire professionals for taxes, legal advice, or bookkeeping (among other services), then maintaining a trust can involve ongoing fees that can last for years, if not the trust’s entire lifetime. Also, if at any time you need to change your trust—for example, adding new assets, updating beneficiaries, or modifying terms—you’ll pay an attorney to implement these updates.

In most cases, though, the main revocable living trust maintenance costs come into play once you die, after which the trust becomes irrevocable. At this point, your trust might appoint a professional trustee, which can lead to higher administrative fees. 

What affects the cost of maintaining a trust?

These are some of the most common factors that affect how much it costs to maintain a trust once it becomes irrevocable. 

• Where you live. Legal fees and administrative costs largely depend on your location. As a general rule, expect to pay more in major cities like New York or San Francisco, while smaller towns often have more affordable attorney rates. 
• How much you own. More assets mean more work and higher costs. For instance, a trust that holds multiple properties, various investments, or business membership interests generally costs more to maintain than a trust with just a family home and basic savings account. If you or your estate hires a trustee to manage the trust, their fee is usually a percentage of the total value of the trust. 
• The complexity of your trust. A straightforward trust with one or two beneficiaries will cost less than a trust with special conditions or several heirs. Moreover, assets like property that need to be sold or contingent distribution plans can also add to your maintenance costs.

Regardless of how you create a trust—whether by yourself, with an attorney, or with a service like LegalZoom—be sure to map out a realistic budget to keep your (and your estate’s) yearly maintenance costs predictable. 

What do trust maintenance fees cover? 

Trust fees depend on the work performed and the previously discussed factors. Here’s what you’ll typically pay for:

• Trust administrative expenses. These fees are usually handled by the trustee and cover the day-to-day management of your trust. They include fees to manage trust assets, distribute assets to beneficiaries, maintain records, and make sure the trust complies with all legal requirements in your state. 
• Tax preparation. Your trust may need its own tax returns. If so, your trust estate may pay professional tax preparation fees to track income, account for deductions, and prepare all documents to meet the IRS’ requirements. 
• Accounting. Someone needs to track the money flowing in and out of your trust. This includes recording expenses, tracking income, and maintaining financial records. 
• Legal advice. As questions or concerns come up (e.g., asset protection or interpreting trust terms), you or your beneficiaries may need to consult your trust attorney for clarification. 
• Dispute resolution. If disagreements arise between beneficiaries or with outside parties like creditors, be prepared to pay for mediation costs, court filing fees, or attorney rates to resolve the issues. 
• Investment management fees. While trust attorneys don’t handle investments, financial planners typically charge fees to select and manage investments within your trust. 

Before you agree to any paid service proposal, make sure you get a clear explanation of what’s covered in the fees to avoid surprises down the road. 

How to transfer assets into a trust

Once a living trust is created, you need to transfer assets into the trust. To do this, legal ownership of all the assets—including real estate, bank accounts, automobiles, and investment accounts—must be changed. (Keep in mind that fees associated with transferring ownership are typically not included in the cost of a living trust.)

• Step 1: Gather trust documents. Before you start transferring assets, have a copy of your trust document handy. You’ll need the official name of your trust and the trustee information.
• Step 2: Contact relevant institutions. You’ll need to transfer ownership of each type of asset through the proper channels. For example, if you want to place your home in the trust, a new deed must be created with the trust as owner of the home, so you’ll need to obtain the correct deed. For financial accounts, speak to your bank or financial advisor. 
• Step 3: Retitle the asset. You need to change the ownership of each asset so that it belongs to your trust. For real estate, new property deeds must be properly executed and filed with your local registrar to be valid. For financial assets, you’ll typically fill out transfer forms to retitle bank accounts, stocks, and bonds. It’s a good idea to talk to an attorney before you transfer title ownership, especially for real estate.

For each asset you transfer, keep a copy of the updated title or account details in your records. And don’t forget to review your trust documents regularly to make sure any new assets are included.

How do living trusts fit into a larger estate plan?

While a living trust is a powerful tool for managing your assets, minimizing estate taxes, and avoiding the probate process, it doesn’t cover everything. A comprehensive estate plan includes a will, powers of attorney, and health care directives, in addition to your living trust. 

Many online services offer living trusts as part of a more comprehensive package that also includes these items. LegalZoom’s living trust package includes a pour-over will, healthcare directive or living will, financial power of attorney, HIPAA authorization, and other documents you need to create your trust.

If you hire an estate planning attorney to create your living trust, ask exactly what is included in their fee before you agree to work together. Attorney’s fees for drafting a will are generally lower than for a trust. The most important thing is to make sure your loved ones are fully protected with a comprehensive estate plan that covers all of your bases. 

FAQs

How long does it take to create a living trust?

The time it takes to create a living trust depends on the complexity of your estate and whether you use a DIY estate planning tool or work with a lawyer. A DIY living trust could take just a few hours to a couple of days, depending on how much time you dedicate to filling out the forms. If you’re using an estate attorney, the process could take a few weeks, as they’ll need to gather information, meet with you, and prepare the trust documents.

Can you revoke a living trust?

You can revoke a living trust as long as it’s a revocable trust. A revocable living trust gives you the power to change, update, or cancel it anytime while you’re alive. You can remove assets, add new ones, or rewrite sections of the trust as needed. This flexibility is one of the main reasons people choose a revocable trust over an irrevocable trust.

Does a living trust have to go through probate?

No, one of the main benefits of a properly created and funded living trust is that it avoids the time-consuming probate process, which can take months to finalize. The assets in a living trust are owned by the trust itself, so they bypass probate and can be distributed to your beneficiaries faster. Avoiding probate court also keeps your personal details private.

What net worth should I have to set up a trust?

There’s no strict net worth requirement to set up a living trust. In fact, living trusts are useful for people with all levels of wealth. If you own a home or have financial assets like bank accounts or investments, a living trust can help you avoid probate and help ensure your wishes are honored after your death.

Is a trust expensive?

A trust doesn’t have to be expensive. You can create a living trust online for as little as $400. The cost depends largely on how complex your estate is and whether you want professional legal advice. Plus, it can be well worth it: When an estate goes through the probate process, which is what happens when you don’t have a trust, there are probate court costs and fees that can add up to even more than the average cost of will and trust preparation.

Miles Almadrones contributed to this article.