The cost of a trust is a lot like purchasing a custom-fit, tailor-made suit. How much it will cost depends on a lot of different elements. Without knowing some of the details, it’s hard to determine the cost.
There are many different kinds of trusts and many different kinds of families and circumstances. That’s the simple reason why there’s no “one-size-fits-all” answer to the question “What does it cost to create a trust?”, as posed by a recent post on NJ.com. An estate planning attorney will need to have a clear understanding of the family’s situation, before they can even begin to recommend the type of trust that’s needed, or determine if a trust should be part of the estate plan.
The state Rules of Professional Conduct typically say that attorney fees must be reasonable—when taking into account factors such as the time and labor required, the novelty and difficulty of the issues involved and the skill required to perform the services. Attorneys may charge for estate planning services by the hour or a flat fee, again considering the specific client various factors. The fees aren’t determined by or related to the total value of the assets in the trust.
Those interested in a trust, should ask the attorney about and understand the fee arrangement before signing an engagement letter to retain him or her. The written engagement letter will lay out how the fee for services is determined.
Creating a trust is complex, and it should be created to match the specific needs of the settlor (the individual who creates the trust) and beneficiaries (those who benefit from the trust).
A revocable trust can be amended or ended for whatever reason, but an irrevocable trust is more rigid and is difficult to amend or terminate. That trust must be prepared to allow for unforeseen circumstances and maximum flexibility.
Another type of trust is a testamentary trust. This trust is created in your will and is effective upon death for the benefit of a surviving spouse or minor children. It may be less expensive to establish than an intervivos trust, which is a trust created and effective during your lifetime, for a specific purpose or with more specific terms.
Trusts that are created to protect the beneficiaries who are receiving governmental assistance, such as a special needs trust or a Medicaid trust, must have exact language prepared by experienced attorneys in trust and estates law. As a result, a special needs trust may cost more to have prepared.
An experienced estate attorney will walk you through the different scenarios and explain how they might apply to your family, before getting involved with a cost estimate. Once you and the attorney have discussed the details, he or she will be able to make recommendations, and that may be when the attorney is able to give you an idea of the cost of a trust.
Reference: NJ.com (May 26, 2017) “What does it cost to create a trust?”