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Home Resources Estate Planning Setting Up a Trust: Living Trust Cost & Checklist

Setting Up a Trust: Living Trust Cost & Checklist

Emily Crowley

Published December 23, 2021 | Written by Emily Crowley

A trust is a useful estate planning document that works alongside your last will and testament to manage your assets and distribute them to beneficiaries privately after your death.

Parents decide to create a living trust to hold assets for children

How Do Living Trusts Work?

A living trust is a way to set aside assets that you plan to leave to beneficiaries after your death with specific instructions for how they’ll be distributed.

A person or institution you name, called the successor trustee, will take over the responsibility of managing the trust after your death. This includes overseeing the distribution of assets and/or the continuation of the trust for the benefit of the beneficiaries. Trusts can also be used to make charitable donations.

A revocable living trust is the most flexible type of trust to manage because you maintain control of your assets during your lifetime.

Benefits of a trust

People choose to pass down assets using living trusts because they offer a variety of benefits:

  • Control: A trust gives you greater control over assets.
  • Protection: Trusts protect property from the probate process. A trust can also shelter a house or a farm, keeping it from being sold and divided in probate.
  • Privacy: A trust is private, unlike a will, which is a public document and part of the court records.
  • Avoiding probate: The probate process can be a headache. A trust allows the assets in it to skip probate so your beneficiaries will inherit assets quickly.
  • Avoiding some taxes: Assets held in a trust can avoid probate taxes.

Types of trusts

There are several kinds of trusts that you can use to ensure your assets are distributed according to your wishes and your unique situation. Let’s discuss a few of the more common ones:

With a revocable living trust, you still own and control all trust assets. While you are alive, you will still pay taxes on the assets. The trust assets can be accessed by debt collectors. Upon your death, most revocable trusts become irrevocable trusts. Your assets pass on to your beneficiaries more easily.

An irrevocable living trust removes assets from your ownership and control. The trust protects these assets from debts, judgments, and fines. This trust can only be changed with the permission of the beneficiaries.

A testamentary trust only takes effect upon your death. With it, you can allocate your property in more complex ways than you can with a will.

How Much Does a Living Trust Cost?

Setting up a trust through an estate planning attorney typically costs at least $1,000-$2,000. Larger estates, more beneficiaries, and complex business arrangements will drive up the cost even more.

Alternatively, you can create your trust yourself for much less if you’re willing to put in the extra time. If you don’t have legal experience, our estate planning document creator will guide you through the process of setting up your living trust.

If you decide to set up a trust yourself, you should plan to spend at least $150 as any trust will have set-up costs, filing fees, and fees for name and title changes, as well as ongoing administrative costs.

How to Start a Trust Fund

Set up a trust well before you need it. It’s fairly easy to set up a living trust, but it will take some time to carry out the steps. You should also plan to review your assets and create a plan for how you want your assets distributed.

Step 1: Decide what assets you want to place in the trust

When deciding what assets to include, think about whether it will otherwise go through probate.

Also consider including instructions for how assets will be distributed when the time comes. For example, you could set up your trust so that your child inherits from your trust after they reach a certain age or receives monthly payments of a certain amount rather than a lump sum.

Common trust assets include:

  • Cash and bank accounts
  • Certificates of deposit
  • Business interests
  • Real estate
  • Personal property
  • Investments and stocks
  • Intellectual property

Some assets, such as your retirement funds, can’t go in a trust. Other assets, like healthcare savings plans, already avoid probate and don’t need to be included in a trust.

If you need guidance on which assets to transfer to your trust, be sure to seek legal advice.

Step 2: Determine which type of trust you need

Do you want to maintain full control of your assets while you live? If so, select a revocable living trust, which can change with your needs.

Are your assets and tax situation complicated? Look into an irrevocable trust. You lose the ability to change the trust after it’s created, but you gain some tax and asset protection.

Step 3: Select a trustee and successor trustee(s)

With a living trust, many people name themselves (the grantor) as the trustee, keeping full control over the assets. If you wish, you can name another person as trustee or name a co-trustee to manage the trust alongside you. Fiduciary duty binds your trustee to make decisions in your best interest and in accordance with your wishes.

Even if you name yourself as the trustee, you need to name another person to oversee the trust after your passing. This person is called the successor trustee. After your death, they will take over the responsibility of managing trust assets according to your instructions.

The trustee or successor trustee may be a dependable family member, business partner, lawyer, financial institution, or other entity.

Step 4: Create and sign your trust document

Place the assets you selected earlier into the trust: home, business, etc. You will need to list them on your trust document.

What documents are needed to create a trust:

  • The grantor’s (your) name and information
  • A list of property and assets that the trust will hold
  • The beneficiaries’ names and information
  • When and how they will receive assets
  • The trustee’s name and information
  • A successor trustee’s name and information

In most states, you will need to get your living trust notarized, so be sure to check your state’s trust laws.

Step 5: Open a trust account

To open a trust bank account, you will need to bring the trust information to the bank and create an account under your trust’s name.

The documentation you’ll need includes everything from step 4, plus a tax ID. Your bank will tell you if you need anything else and how to gather signatures (or digital signatures) from the people involved.

Step 6: Transfer assets into your trust

The next step involves transferring assets under your name into the trust.

  • Deposit or transfer money directly into the trust’s bank account.
  • For real estate, change the deed into the trust’s name. Then file it, normally in the county recorder’s office.
  • Change your vehicle’s title to the trust. Usually, this involves a visit to the motor vehicles department in your locality.
  • Re-register stocks and bonds in the trust’s name. You might be able to do this online, or it may take a visit to your broker.
  • If you wish, have your life insurance pay into your trust.

Keep in mind that if you choose to create a revocable living trust, you can change or add trust assets at any time while you still have the mental capacity to do so.

If I Have a Trust Do I Need a Will?

Yes, even if you have a trust, you should still have a will since a trust can’t hold certain assets or cover everything relating to your estate. You need a last will and testament to establish guardianship of minor children, plan for your funeral, and more.

Depending on the size and complexity of your estate, some people only need a will. Others need both to carry out their wishes properly.

Related resource: Trust vs Will: What’s the Difference?

Emily Crowley

Emily Crowley

Estate Planning Editor

Emily Crowley is a staff writer at Legal Templates. Her background in nonprofit motivates her to improve access to legal advice in underserved groups, especially in end-of-life wishes and estate...

In This Article

  • How Do Living Trusts Work?
  • How Much Does a Living Trust Cost?
  • How to Start a Trust Fund
  • If I Have a Trust Do I Need a Will?

Create your living trust

Use our revocable living trust form to transfer your assets without probate.

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