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How Much Does it Cost to Set Up a Trust?
The average cost of setting up a trust in New York is about $6,000. The range starts at about $1,500 for a pooled trust joinder and runs to more than $10,000 for a complicated irrevocable trust with several property transfers and a defensive drafting strategy. A big law firm charges considerably more. An average irrevocable trust costs about $6,000; a special needs trust usually costs less than other types. Where a particular trust falls in that range depends on the factors below. If you would like an estimate for your own trust, call us at 212-233-1233 or email [email protected].
What Raises the Cost
Complexity is the main driver. An irrevocable trust costs more than a revocable one, and a trust built for Medicaid asset protection or general asset protection costs more than a trust that simply avoids probate. A sizeable trust estate, a deed transfer, a co-op transfer, a grantor who needs a nursing home and a trust that leaves out a close relative each add work. So does the need for companion documents: a gift and loan promissory note, a Medicaid application, a spousal refusal, a springing power of attorney, a living will, a health care proxy or a last will and testament.
Some examples. A complex irrevocable trust with Medicaid asset protection, a sizeable trust estate and several property transfers to fund it costs more than a special needs trust. A trust that needs court intervention costs more still, because the attorney’s hourly rate for the court work becomes part of the cost of the trust; an average hourly rate for an attorney setting up a trust is about $500. Unanticipated work is charged in the same way. A trust that leaves out a relative costs more because additional protection and safety measures are built into the procedure, and the attorney may later have to appear in court to testify to the validity of the trust.
What the Setup Fee Covers
For most engagements the fee covers an initial consultation to identify your goals, family situation and assets; drafting the trust document with one or two rounds of revisions; the signing ceremony with the appropriate formalities (notarization and witnesses); the companion documents usually prepared with a trust, namely a pour-over will, a durable power of attorney, a health care proxy and a HIPAA release; a Certification of Trust for use with banks and other third parties; and initial guidance on funding, that is, how to retitle accounts, transfer deeds and move assets into the trust.
Funding is often broken out as a separate engagement, particularly for a client with several properties or many accounts to retitle. Drafting and signing the trust is one piece of work; the more time-consuming job of moving all of the client’s assets into it is sometimes a second piece with its own fee.
Cost Ranges by Type of Trust
Different structures require different amounts of drafting and implementation.
| Type of trust | Typical fee | What drives it |
|---|---|---|
| Pooled trust joinder | From about $1,500 | Joining an existing pooled (d)(4)(C) special needs trust for Medicaid planning. The trust already exists; the work is completing the joinder agreement, transferring assets and coordinating with the pooled trust administrator. |
| Basic revocable living trust | $3,000 to $5,000 | A routine family situation with one or two homes, ordinary assets and no tax planning beyond the basics, with companion documents. |
| Third-party special needs trust | $3,500 to $6,000 | A stand-alone SNT in a parent’s plan. Drafting requires care with benefits rules and coordination with the rest of the estate plan. |
| Medicaid Asset Protection Trust | $5,000 to $8,000 | An irrevocable MAPT, including the deed work for the home. |
| Irrevocable Life Insurance Trust | $3,000 to $5,000 | Holding life insurance outside the taxable estate, plus the ongoing cost of administering the trust (paying premiums, sending Crummey notices). |
| Complex irrevocable trusts | $6,000 to $15,000 or more | SLATs, dynasty trusts, IDGTs and similar advanced structures, depending on complexity and the tax planning involved. |
| Charitable trusts | $5,000 to $12,000 | Charitable Remainder Trusts and Charitable Lead Trusts, with additional fees for ongoing tax compliance. |
| Defensively drafted trusts | $8,000 to $15,000 or more | Where a contest is anticipated and protective measures are built in: video-recorded signings, medical evaluations, multiple consultations. |
Why Real Estate Transfers Drive Cost
Real estate is one of the largest single variables. Putting a property into a trust means preparing a new deed from the grantor as an individual to the grantor as trustee, recording it at the City Register in New York City or the County Clerk elsewhere, preparing and filing the transfer tax forms (the TP-584 and the local New York City forms), coordinating with the mortgage holder and the insurance carrier, and updating the property tax records. A co-op apartment adds coordination with the cooperative board and the management company, which has to approve the transfer.
A single property transfer in New York City typically adds $1,000 to $2,000 to the cost of the trust. Several properties add more, and co-ops add more again because of the board approval requirement.
Hourly Billing as an Alternative
Some attorneys bill trust planning by the hour rather than for a flat fee. Hourly billing makes sense when the scope of work is unpredictable: a complex family situation with litigation in prospect, planning that may change as early findings come in, or a matter where the client wants the option to scale the work up or down. Our hourly rates depend on the attorney handling the matter.
The trade-off is predictability against precision. A flat fee gives the client certainty about the total cost; hourly billing matches the cost to the work actually done. For most trust planning, a flat fee is easier to budget and leaves both sides satisfied.
Compared With the Cost of Doing Nothing
The setup fee should be measured against the realistic alternatives.
| Alternative | What it costs you |
|---|---|
| Doing nothing | Your estate passes by intestacy or under an outdated will. Probate fees, executor commissions, attorney fees during administration and family disputes often consume far more than the trust fee. |
| A simple will-based plan | Cheaper up front, but it does not avoid probate, gives no privacy, does nothing for incapacity and offers less flexibility. |
| Do-it-yourself planning | Internet forms or self-help books. Cheap or free, with a high risk of error, and almost always inadequate for anything but the simplest situation. |
For a client with real estate, several beneficiaries or any real complexity, the trust-based plan is worth the extra cost. The fee is usually recovered many times over in probate savings, privacy and planning flexibility. The benefits are the ones a trust is built for: avoiding the hassle, delay and cost of probate; avoiding a restrictive guardianship in which a judge appoints a stranger to make life decisions for you; protecting your family from the government, in-laws, lawsuits and creditors; protecting you from long-term care and nursing home costs; sparing your family from giving notice to creditors at your death; keeping your money in the family; and tailoring exactly how your assets are managed and distributed.
Ongoing Costs After Setup
Setting up the trust is one cost; administering it is another. For most personal trusts the ongoing legal fees are modest: a consultation now and then when a question comes up, annual tax return preparation by an accountant, and the occasional specific issue. A large or contested trust involves more. We go over the expected ongoing costs during the initial planning so that there are no surprises later.
If you would like an estimate of what your trust would cost, we can give you one after a short conversation about your assets and goals. Call us at 212-233-1233 or email [email protected].
About the Author
Albert Goodwin Esq. is a licensed New York attorney with over 18 years of courtroom experience. His extensive knowledge and experience make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
