When planning your estate, what costs more, a will or a trust? Since an attorney can prepare an average will for $400 to $500 and set up an average trust for about $2,000 to $2,500, your decision is made, right?
But wait, there is more to it! You don't have to be a CPA to figure that it costs five times more to set up the average trust than the average will. The key words here are “set up. ” The prices I just quoted are for exactly that—“setting up” your will or trust. Those up-front costs don’t include the cost of administering your wishes after your death.
Probate Fees Please Attorneys
When you die, what does it cost to carry out your carefully laid plans? Many people believe it’s simply the cost to create the document that plans their estate: their will or trust. If your attorney draws up a will for you, it may cost $400. However, upon your death, your estate goes through the probate process.
The fees for settling your estate could easily reach $10,000 (the average cost of probate). Now the total cost of settling your estate isn’t $400—it’s a whopping $10,400. This explains why a will is one of the most expensive legal documents in this country and why many attorneys prefer to draft a simple will rather than spend the time and effort creating and funding a trust.
No Court or Attorneys Required With A Trust
Remember that the average trust costs $2,000 to $2,500 to set up, but there’s no probate. A trust eliminates the total cost of probate and that potential $10,000 probate fee.
Your successor trustee has the immediate right to distribute your property according to the plan described in your trust. He doesn’t have to go to a court or even hire an attorney to settle the estate.
Your successor trustee might feel unsure about how to distribute your property according to your trust and want to have some counsel and advice. Often, the successor trustee will go to an attorney to review the trust document and learn how to proceed.
Let’s assume this happens. The attorney visits with the successor trustee and may prepare some transfer documents. The attorney charges a few hundred dollars for this service. (The average fee to review and help settle an estate with a trust is about $500. )
Now the total cost of your estate plan is $2,500. Compare this to using a will for your estate plan, which would cost $10,400. Again, it doesn’t take a CPA to figure out that a will actually costs four times more than a trust!
Most Likely to Be Contested, High Costs to Settle
Remember, of all legal documents, a will is the most likely to be contested. A will is also one of the most expensive legal documents because of the total costs to settle an estate. Make the most of your estate planning time and dollars, create a revocable living trust.
Copyright 2007, Legal Awareness Series, LLC
Visit http://www.StevenAllen.com for more tips and tools to keep and protect your assets. Steven W. Allen has been a practicing Estate Planning attorney for over 30 years, has authored four books and given over 750 presentations in several states on these subjects. Sign up for his newsletter, Secrets of Wealth Preservation to gain insights gleaned from thousands of clients. He has four books in print including his latest “You Can't Take It With You. . . So How Will You Leave It Behind. " Download 3 free chapters at www.EstatePlanningDr.com