When it comes to estate planning, a living trust is often one of the first options people consider. A living trust allows you to manage and protect your assets during your lifetime, while ensuring they are distributed according to your wishes after you pass away. It offers several advantages, such as avoiding probate, maintaining privacy, and providing more control over your assets.

One of the most common questions people have is: What does it cost to set up a living trust? The price of creating a living trust can vary depending on various factors, including the complexity of your estate, who you hire for assistance, and where you live. In this blog, we’ll break down the costs involved and what to expect when creating a living trust.

What is a Living Trust?

A living trust is a legal document that lets you transfer your assets into a trust while you’re still alive. As the trustee, you manage these assets during your lifetime, but upon your death, they are distributed directly to your beneficiaries without going through probate.

There are two main types of living trusts:

  • Revocable Living Trust: This type allows you to make changes or revoke the trust during your lifetime.

  • Irrevocable Living Trust: This type cannot be modified once it is created, providing more protection from creditors and estate taxes.

Now that we have a clear understanding of what a living trust is, let’s dive into the factors that affect the cost.

Factors That Impact the Cost of a Living Trust

1. Complexity of Your Estate

The complexity of your estate is one of the primary factors that influence the cost of setting up a living trust. A simple estate, such as a house and a few bank accounts, will cost less to manage. However, if your estate includes multiple properties, investments, or a business, the trust setup will likely be more complex and, as a result, more expensive.

2. Hiring a Professional

There are a few ways to create a living trust, each with different price points:

  • Attorneys: The most reliable method for creating a living trust is through an estate planning attorney. Their fees typically range from $1,000 to $3,000 for a basic trust, with more complex estates potentially costing $5,000 or more. Attorneys may charge a flat fee or an hourly rate, which could be anywhere from $150 to $500 per hour, depending on their experience and your location.

  • Online Services: For a more affordable option, online services like LegalZoom and Rocket Lawyer offer living trust creation. These services generally cost between $100 and $1,000, depending on the complexity of your trust. While these platforms provide templates and guidance, they don’t offer the personalized legal advice an attorney would.

  • DIY Kits: For those with a simple estate and some knowledge of estate planning, DIY kits are an inexpensive option. Prices for these kits range from $50 to $100. However, they come with the risk of errors, which could potentially invalidate the trust or lead to other issues down the road.

3. Location

The cost of creating a living trust can also vary depending on where you live. In areas with a higher cost of living, such as major cities, professionals tend to charge higher fees. Additionally, some states have specific laws that may increase the cost of setting up a trust. It’s a good idea to research local pricing and talk to professionals in your area to get a better sense of what to expect.

Breakdown of Costs

Here’s a closer look at what you can expect to pay for a living trust, depending on the route you take:

1. Attorney Fees

Hiring an estate planning attorney is often the best choice, particularly if you have a complex estate. On average, attorney fees for a living trust range from $1,000 to $3,000. If your estate is complicated, fees can climb to $5,000 or more. Some attorneys may charge by the hour, typically between $150 and $500 per hour.

2. Online Services

Online services are a more affordable option, with fees typically ranging from $100 to $1,000. These services usually provide step-by-step instructions and templates to help you create your living trust. While they’re much cheaper than hiring an attorney, you won’t receive personalized legal guidance.

3. DIY Kits

If you prefer to go the DIY route, kits are available for as little as $50 to $100. While this is the most budget-friendly option, you’ll need to be familiar with estate planning laws to avoid mistakes that could complicate the trust.

4. Additional Costs

In addition to the upfront costs of setting up the trust, there are a few other potential expenses to consider:

  • Funding the Trust: After creating the trust, you’ll need to transfer your assets into it, a process known as "funding" the trust. Depending on the number of assets you have, this could involve some administrative fees.

  • Ongoing Maintenance: Your living trust may need periodic updates, especially after major life changes like marriage, divorce, or the birth of a child. Updates can be done by an attorney, and additional fees may apply.

  • Trustee Fees: If you hire a professional trustee (such as a bank or trust company), they will charge fees to manage the trust. These fees are usually based on a percentage of the trust’s assets.

Is a Living Trust Worth the Cost?

Given the expenses involved in setting up a living trust, you might wonder whether it’s worth it. Here are some of the major benefits that make a living trust a smart investment:

1. Avoiding Probate

One of the main reasons people set up a living trust is to avoid the probate process. Probate can be slow, costly, and public, which could result in your family spending unnecessary time and money. With a living trust, your assets are transferred to beneficiaries quickly and privately, without the need for probate.

2. Privacy

Unlike a will, which becomes a public record during probate, a living trust remains confidential. This helps protect your family’s privacy and ensures that the details of your estate are not made public.

3. Control and Flexibility

A revocable living trust offers the flexibility to modify or revoke the trust during your lifetime. This gives you the ability to adjust your estate plan as circumstances change, ensuring your wishes are always in alignment with your current situation.

4. Beneficiary Protection

A living trust can protect beneficiaries who may have difficulty managing their inheritance, such as minors or individuals with special needs. You can appoint a trustee to manage the trust, ensuring your assets are used for your beneficiaries’ benefit in accordance with your wishes.

5. Estate Tax Planning

While a living trust by itself doesn’t necessarily reduce estate taxes, it can be part of a larger estate planning strategy that includes tax-saving strategies like gifting or the use of irrevocable trusts.

Conclusion

The cost of creating a living trust varies based on factors such as the complexity of your estate, who you hire to assist you, and where you live. Although setting up a trust requires an upfront investment, the benefits—such as avoiding probate, maintaining privacy, and ensuring your assets are distributed according to your wishes—often outweigh the costs.

Whether you choose to work with an attorney, use an online service, or opt for a DIY approach, it’s important to create an estate plan that fits your needs and helps protect your family’s future.

At Doane & Doane, we specialize in estate planning, including living trusts. Contact us today to learn how we can help you design a custom plan that meets your goals and ensures peace of mind for you and your loved ones.