The Cost of Creating a Trust: What you Need To Know
Creating a trust can be a valuable way to protect your assets, minimize your tax burden and ensure that your assets are managed and distributed according to your wishes. However, setting up a trust can also be a complex and costly process. Hi, I'm Jill Ward and in this blog post, I'm going to share with you some of the costs associated with creating a trust. My interest in trusts came about because I handled trusts and estate real estate transactions here in Hawaii, and as an attorney and a realtor, I understand the importance of placing your assets like your real estate investments into a trust.
The cost of a trust can vary greatly depending on several factors, including the type of trust you choose, the complexity of your financial situation, and the amount of assets you're placing in the trust. Here are some of the costs you may encounter when you're creating a trust.
Legal Fees
First are the legal fees. Hiring an attorney to draft your trust agreement may be one of the larger expenses associated with creating your trust. Legal fees can range from a few $100 to 1000s of dollars depending on the complexity of your situation.
Trustee Fees
The second expense is trustee fees. If you choose to appoint a professional trustee, such as a bank or a trust company, you may be charged annually for their services. These fees, like the legal fees, can range from hundreds of dollars to 1000s of dollars per year, depending on the complexity of your personal trust.
Account Set Up Fees
The third cost with creating your trust account setup fees. If you are setting up a trust account with either a bank or a trust company, you may be charged a one time fee to set up that account. These fees can range from $50 to about $500.
Management Fees & Financial Planning Fees
The fourth fee you may encounter are investment management fees. If your trust includes investments, you may be charged fees for managing these assets. These fees can range from a small percentage of the assets under management to a flat fee per year. So one of the last fees associated with creating a trust may be for a financial planner or a tax attorney. If your estate is large enough to be subject to estate taxes, you may need to pay additional fees for a financial planner or tax attorney in order to minimize your estate taxes. The cost of a trust can vary greatly, but you can anticipate spending several $1,000.
Consider Your Options and Costs Before You Start Planning!
It is important to carefully consider all of the costs associated with creating a trust and to work with an attorney who can help you understand the costs and benefits of different structures of trusts. It's critical to keep in mind that several $1,000 may seem like a steep cost now, however, consider the amount of assets that you hold. Real estate is one of the first assets that comes to mind, you need to ask yourself what is the value of your real property. Now consider the value of your stocks, bonds, insurance policies, LLCs, bank accounts, retirement accounts, and your tangible personal property. The value of your assets is not your only consideration, but ensuring that your family members are taken care of and your wishes are made perfectly clear have great value.
I hope this blog helped you discover more about the trust process and what you can expect it to cost. Your real estate costs are one of if not the biggest asset in your portfolio. So you want to make sure it's protected and held in a trust. With that being said, reach out to me if you have any questions on this and if you’d like to stay up to date with my videos and blogs, don’t forget to check out my YouTube Channel!