A trust is a legal entity that you transfer ownership of your assets to, perhaps in order to decrease the value of your estate or to simplify passing on assets to your intended beneficiaries after you die. It may cost least $1,000 to have an estate attorney set up a trust for you.
Your overall trust costs will increase any time you seek legal advice and need to pay legal fees. For some assets you transfer into a trust, you may also pay filing fees for changing the name on a title, deed, registration, or license. Also consider management costs to a trust, like the cost of an accountant to file an annual tax return for the trust.
Why your trust may cost more
The cost of a trust can vary significantly based on multiple factors. One major factor is where you live. Estate planning lawyers generally charge more in metropolitan areas than in less-populated areas. Lawyers with more experience or additional areas of expertise will also charge more.
Here are some potential reasons you’ll pay more to set up a trust:
Having a large or wealthy estate with many assets can increase your trust costs. The more assets you need to transfer into your trust, the more you’ll probably pay. However, you don't need to be wealthy to benefit from a trust. A trust can be an essential part of any estate plan because it helps direct assets to your heirs according to terms you set out in the trust document.
You’re leaving assets to many beneficiaries. Certain situations may also be more complex (and expensive) than others when you're setting up a trust, like if you add stipulations for how and when someone can receive the trust assets. This includes trust funds, which are trusts that distribute assets over a period of time.
Leaving assets to a business or creating a charitable trust can also require extra planning and legal work, which can increase the cost of creating the trust.
Planning for certain beneficiaries may prove more complicated, such as someone with disabilities or someone who is in the care of a legal guardian, and opening a trust for them (like a special-needs trust) can be more expensive.
You want to create a trust through your will. Called a testamentary trust, this type of trust won’t be created and funded until after you die. Drafting the trust document may require more planning than a living trust, and you may also need a lawyer to create or adjust your will, which will cost more.
You want to create an irrevocable trust. An irrevocable trust is one that generally cannot be changed or closed once you create it. It does offer certain advantages, like asset protection from creditors or lawsuits, so it is likely to cost more to set than a simple revocable trust. It’s good to talk with an estate lawyer (who you'll need) to ensure the irrevocable trust is the best estate planning option for your situation.
You want to draft other estate planning documents. It is nice to have one lawyer or one law firm draft all your necessary estate planning documents if possible. Certain documents may also work best if made in conjunction (like making a revocable living trust with a pour-over will), and can increase your total costs.
Any additional legal advice, like how to minimize estate tax or handle business succession will also add to the overall costs of your trust.
Other trust costs to consider
The cost of a trust goes beyond just the creation of a trust agreement. Transferring ownership of assets to the trust may require paying filing fees. For example, you may need to pay a one-time fee to your county clerk to update the deed for any real estate property. These fees are usually small but add up to the total cost of establishing a trust if you have many assets. If you’re transferring jointly owned assets, that may require more time and planning, even if the final cost is the same.
Trust management is also necessary cost of a trust, which lasts as long as the trust exists. Naming yourself as trustee is likely the lowest cost option, but you still need to name a successor trustee who will handle the trust property after your death. That could mean just trust administration — disbursing assets to beneficiaries after you die — but management could last for years if you have beneficiaries who won’t immediately receive their assets. Any other expenses — like renewing registrations or filing the trust's annual income tax returns — will probably come out of the trust, decreasing the trust’s value and simply taking time.
You could also hire a corporate trustee to manage your trust instead of naming yourself trustee. Corporate trustees are financial institutions that manage trusts and this option would significantly increase the cost of having a trust. (Learn more about trustee fees.)
Another potential cost of a trust you might incur is you needed to update your trust document and hired an attorney to help you do it.
Cost of trusts vs wills
Trusts and wills are both legal documents that help you dictate who gets your assets after you die. A will is an essential document in your estate plan, and wills typically cost less money to create compared to a trust, which may not be necessary for everyone. For example, a will may be enough for you if you don’t have much to pass on or if you’re bequeathing everything to just one or two people and they aren't minor children.
Certain types of trusts do offer distinct advantages though, like decreasing the value of your estate — potentially allowing you to qualify for income-restricted programs, like Medicaid. After death, a trust usually allows your loved ones to avoid the probate process, where a probate court determines who will get your things. A strong will can make probate smoother, but a trust can still offer more of a guarantee that your exact wishes are followed, which may make the costs worth it.