Summary
- The cost of setting up a trust can run from $1,000 to $10,000 or more, depending on the complexity.
- Ongoing costs include trustee fees, accounting, administration, change fees, and taxes.
- The type of trust, complexity, number of beneficiaries, and your state can affect the cost of your trust.
- Unbiased can connect you to a financial advisor with expertise to answer your questions on trusts, estate planning, tax strategy, and more.
What is a trust?
A trust is a legal structure that allows individuals to protect their assets, avoid probate, and transfer ownership to a beneficiary.
Trusts aren’t all alike. Different types serve a number of purposes, and each has its advantages and drawbacks.
Trusts are beneficial because they make the transfer of assets more seamless by avoiding probate. The probate process can take between 4% and 7% of your estate’s value. For a $1 million estate, that’s between $40,000 and $70,000. Spending a little time and money setting up a trust can help avoid this.
The cost of setting up a trust might be a concern, as it requires legal and financial expertise. Here’s a closer look at what you could pay to set up a trust.
What are the costs involved with a trust?
Setting up a trust involves the services of a handful of professionals.
To ensure you’re setting up the right structure with the right strategy, hiring the right people to help you set it up is a must, even if you plan to appoint yourself as trustee or do much of the legwork yourself.
In our research, we’ve found that most basic revocable trusts cost between $1,000 and $3,000. Standard irrevocable trusts often cost anywhere between $2,000 and $5,000, but can cost north of $10,000 to set up.
Legal fees
Setting up a trust typically requires the expertise of an attorney, who usually has an hourly rate between $250 and $500 per hour. Flat fees for setting up trusts are more common. Uncomplicated revocable trusts may cost between $1,000 and $2,500, while more complex trusts could cost upwards of $7,000. Trusts for ultra-high-net-worth individuals could reach $25,000 or more.
Trustee and administration fees
The trustee is the person responsible for administering the trust. If the trust doesn’t specify the amount to be paid to the trust, the beneficiaries and the trustee can agree on an hourly rate. For straightforward bookkeeping and distributions, you may see rates between $50 and $100 per hour. You may also see a flat rate of $500 to $1,500 per year for trustee services.
Advisory fees
The investments may come with a management fee, usually around 1% of the assets under management (AUM). This is paid to the investment advisor before distributions are made to the trust's beneficiaries. It’s also a cost you’d expect, whether you have your investments in a trust or not.
Accounting costs
Trusts are required to file their own taxes, and compliance is essential. Estimates to prepare taxes for a trust land are around $2,000. However, depending on how you set up the trust, you may be able to file the income from a trust on your personal income taxes, which may lower your tax bill.
Tax considerations
Setting up a trust affects your taxes, and the indirect costs you’ll see are significant. It’s worth seeing your CPA and financial advisor to determine your best move.
Income tax: Tax brackets are higher on trusts. Trusts reach the highest income tax bracket of 37% at just $16,000, while an individual taxpayer doesn’t hit that bracket until they have over $640,000 in income.
Because of the higher tax bracket for trusts, it’s common to see trusts distribute income to beneficiaries rather than keep it in the trust.
Estate tax: Moving assets to a trust will count towards your lifetime gift exclusion, and you’ll need to report it to the IRS. It may be subject to estate taxes, which can be upwards of 40% for estates over $30 million. Estate planning is critical for this reason.
Property maintenance
If you have property in the trust, the costs of maintaining and managing it must come from the trust.
Change fees
Drafting revisions to your trust can cost up to 30% of the original drafting fee.
What influences the cost of your trust?
Much of the cost of setting up a trust is attorney’s fees, which compound when there’s more work they need to do to set up your trust. Some key factors that influence the cost of setting up a trust include the following:
Type of trust
How the trust is set up is the single biggest factor in cost.
Some trusts are simpler to set up than others. A revocable living trust allows you, the grantor, to make changes to the trust throughout your lifetime. You can also report income from the trust on your personal income, which cuts down on administrative costs and potentially lowers taxes (A trust reaches the 37% tax bracket at $19,000, while the personal income doesn’t reach the 37% tax bracket until you’ve made over $626,350).
An irrevocable trust cannot be changed once it is set up. You don’t have any flexibility, but it does offer better asset protection, protection from judgments and creditors, and potentially lower estate taxes.
Complexity
The complexity of a trust will determine how expensive it is to set up. If you have multiple marriages, blended families, businesses, second homes, and out-of-town investment properties, drafting a plan and managing the trust is more complex.
State
States have different laws and requirements for trusts, which can make setting up a trust more costly in certain states. Some states may be more expensive than others due to the higher cost of living.
Number of beneficiaries
Quite simply, if the trust serves more people, it will be more costly to set up and maintain.
What are the costs of different types of trusts?
While it’s difficult to say exactly what the costs of your trust will be, it’s helpful to look at what the different types of trusts typically cost.
You’ll often see standard revocable trusts in the $1,000 to $3,000 range, while irrevocable trusts can cost anywhere from $2,000 to $10,000+.
| Type of trust | Description | Revocable or irrevocable | Set up costs | Ongoing costs |
|---|---|---|---|---|
| Marital trust (A trust) | Provides income to a surviving spouse while preserving principal for heirs | Usually becomes irrevocable at death | $1,000 to $3,000 | Typical; 0.5% to 1.5% annually |
| Bypass trusts (B trust) | Minimizes estate taxes while providing for the surviving spouse. | Irrevocable at death | $3,000 to $6,000 | Typical; 0.5% to 2.0% annually |
| Charitable trusts | Increase philanthropic impact, generate an income stream, reduce taxes, and preserve wealth. | Irrevocable | $10,000 to $25,000+ | Varies, anywhere between 0.5% to 1.1% annually, may be much more due to ongoing valuations of assets |
| Generation-skipping trusts | Transfers wealth to grandchildren to reduce estate taxes. | Irrevocable | $3,000 to $10,000 | Moderate to high complexity; $1,500 to $20,000+ per year |
| Grantor Retained Annuity Trust (GRAT) | Transfers appreciating assets while paying an annuity to the grantor. | Irrevocable for the term | $2,000 to $20,000 | Similar to complex irrevocable trusts: 0.5% to 2% annually during term. |
| Irrevocable life insurance trust (ILIT) | Holds life insurance outside the taxable estate. | Irrevocable | $1,000 to $4,000 | Lower admin burden; often $500 to $2,500 per year. |
| Special needs trusts (SNT) | Supports disabled beneficiary without affecting benefits. | Usually irrevocable | $2,000 to $6,000+ | Ongoing oversight required: $1,500-$10,000+ per year, depending on complexity. |
| Spendthrift trust | Protects assets from creditors and beneficiaries from their own poor financial decisions. | Either revocable or irrevocable | $1,500 to $5,000 | Typical; 0.5% to 2% annually. |
| Testamentary trusts | Created via will and begins after death. | Irrevocable at death | $1,000 to $3,000 | Varies; $1,500 to $10,000+ per year. |
| Totten trusts | Simple payable-on-death bank account. | Revocable | $0 to $100 | Minimal to no administration: often $0 to $200 per year |
Bottom line
The cost of setting up a trust shouldn’t deter you from making the right financial moves. The right setup helps keep your assets secure while avoiding probate, preserving your estate and legacy.
For all your estate and financial planning questions, Unbiased can match you with a financial advisor to help with your unique needs.