A living trust is a popular estate planning tool for those who want to avoid probate and ensure that their assets are distributed in accordance with their wishes after their death. However, many people are intimidated by the cost of starting a living trust and are unsure of what to expect. In this article, we’ll break down the costs associated with starting a living trust and provide tips on how to start a living trust.
What is a Living Trust?
A living trust is a legal document that allows you to transfer ownership of assets from yourself to the trust. You can serve as the trustee of the trust during your lifetime and then designate a successor trustee to manage the trust after your death. The trust will specify how your assets are distributed after your death and can provide for your spouse, children, or other loved ones.
What are the Costs of Starting a Living Trust?
The cost of starting a living trust can vary depending on several factors, including the complexity of your estate and the state in which you live. Here are some costs to consider when starting a living trust:
1. Attorney Fees
Many people choose to work with an experienced estate planning attorney when starting a living trust. Attorney fees can vary depending on the attorney’s hourly rate and the complexity of your estate. Some attorneys may charge a flat fee for preparing a living trust. According to LegalZoom, the average cost for an attorney-prepared living trust is between $1,200 and $2,500.
2. Trustee Fees
If you choose to designate a professional trustee to manage your living trust after your death, you will need to pay trustee fees. These fees can vary depending on the size of your estate and the services provided by the trustee. According to Trust Advisor, trustee fees typically range from 0.5% to 1% of the trust’s assets per year.
3. Filing Fees
When you create a living trust, you may need to file certain documents with your state’s government or county clerk’s office. Filing fees can vary depending on the state and county, but may range from $40 to $200.
4. Property Transfer Costs
To transfer ownership of your assets to the living trust, you may need to pay transfer costs. For example, if you own real estate, you may need to pay title transfer fees. These costs can vary depending on your state and the type of property you own.
5. Appraisal Fees
If you own valuable assets that need to be included in the living trust, you may need to have them appraised. For example, if you own a valuable art collection or jewelry, you may need to hire a professional appraiser to determine their value. Appraisal fees can vary, but may range from a few hundred dollars to several thousand dollars.
Tips for Starting a Living Trust
If you’re considering starting a living trust, here are some tips to keep in mind:
1. Do Your Research
Before you start a living trust, do your research and understand the costs and benefits involved. Talk to an estate planning attorney and consider whether a living trust is the right option for your estate.
2. Choose the Right Type of Trust
There are many types of living trusts, including revocable and irrevocable trusts. Revocable trusts are more flexible and allow you to change the trust’s provisions during your lifetime. Irrevocable trusts are more rigid but can provide tax benefits. Consider which type of trust is right for your estate.
3. Consider Naming a Successor Trustee
If you choose to serve as the trustee of your living trust during your lifetime, consider naming a successor trustee to manage the trust after your death. This can ensure that your assets are distributed according to your wishes and can prevent disputes among family members.
4. Plan for Funding the Trust
To ensure that your living trust is effective, you need to fund it with your assets. This may require transferring ownership of your assets to the trust, which can involve certain costs and fees. Plan for the costs of funding the trust when budgeting for the total cost of starting a living trust.
In conclusion, starting a living trust can be expensive, but it can also provide significant benefits for your estate. By understanding the costs involved and working with an experienced estate planning attorney, you can create a living trust that provides for your loved ones and ensures that your assets are distributed according to your wishes after your death. Hopefully, this article has provided you with some helpful tips and information on how to start a living trust.
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