What's the Cost of a Trust?

What's the Cost of a Trust?

Trusts are a popular estate planning tool that allow individuals to control the distribution of their assets after their death. However, setting up a trust can be costly and it's important to understand the various fees and expenses involved before making a decision.

Initial Setup Costs

The first cost associated with setting up a trust is the attorney's fee. The cost of an attorney can vary depending on the complexity of the trust and the experience of the attorney. On average, the cost of setting up a trust can range from $1,000 to $3,000.

In addition to the attorney's fee, there may be other costs associated with the initial setup of the trust, such as filing fees and notary fees. These costs can vary depending on the state in which the trust is established.

Ongoing Maintenance Costs

Once the trust is established, there are ongoing maintenance costs that must be considered. These costs can includetrustee fees, accounting fees, andtax preparationfees.

Trustee fees are the fees paid to the person or entity responsible for managing the trust. These fees can vary depending on the size of the trust and the complexity of the assets held within the trust. On average, trustee fees can range from 1% to 2% of the value of the trust.

Accounting fees are the fees paid to the person or entity responsible for maintaining the financial records of the trust. These fees can vary depending on the complexity of the assets held within the trust. On average, accounting fees can range from $500 to $2,500 per year.

Tax preparation fees are the fees paid to the person or entity responsible for preparing the trust's tax returns. These fees can vary depending on the complexity of the assets held within the trust. On average, tax preparation fees can range from $500 to $2,500 per year.

Investment Costs

If the trust holds investments, there may be additional investment costs to consider. These costs can include management fees, transaction fees, and brokerage fees.

Management fees are the fees paid to the person or entity responsible for managing the investments held within the trust. These fees can vary depending on the size of the trust and the complexity of the assets held within the trust. On average, management fees can range from 0.5% to 2% of the value of the trust.

Transaction fees are the fees paid to buy or sell investments within the trust. These fees can vary depending on the type of investments held within the trust. On average, transaction fees can range from $7 to $10 per trade.

Brokerage fees are the fees paid to the brokerage firm responsible for executing the trades within the trust. These fees can vary depending on the brokerage firm used. On average, brokerage fees can range from $5 to $10 per trade.

Conclusion

In conclusion, setting up a trust can be a costly endeavor. It's important to understand the various fees and expenses involved before making a decision. While the costs associated with setting up and maintaining a trust can be significant, the benefits of having a trust can outweigh the costs for many individuals. A trust can provide peace of mind knowing that your assets will be distributed according to your wishes after your death.