Many people who want to set up a living trust consider hiring a living trust attorney. Hiring a living trust lawyer might cost from $1,200 to $2,000, which does not guarantee you high-quality service. You can utilize do-it-yourself books or software to solve easy problems for roughly $60. Even if you have a simple trust, you should consult with an attorney. An attorney can evaluate the trust you established or advise you on state-specific legislation.
Before you ask whether you need a lawyer to create a trust, you should first understand what trust is and consider whether you even need one.
What Is a Trust?
Trusts allow people to choose how their property will be allocated when they die while still having some control over it while they are alive. Depending on your assets and family status, establishing a trust can be straightforward or difficult.
Trusts are frequently misunderstood. A trust is not a document, but in order to create one, you must first prepare a trust document. It is a legal partnership in which one person controls assets for the benefit of another.
A trust, like a will, is a mechanism to ensure that your property is given to your loved ones in accordance with your preferences. Unlike a will, can begin operating as soon as it is signed and funded.
Should I Establish a Trust?
Everyone does not require trust. If you are single, do not have children, rent your home or apartment, and do not have large assets, you most likely do not require trust.
A trust is a good tool to employ if you have minor children, a special needs child, or large assets.
Typical grounds for trust include:
- Avoiding the probate process, as well as the accompanying costs and time
- Keeping assets safe for children until they are old enough to own them
- Getting rid of or lowering estate taxes
- Being more adaptable than a will
- Managing assets when the settlor is unable to do so
- Keeping finances out of the public eye in probate court
Most people do not have to be concerned about estate taxes. Few states levy estate or inheritance taxes, and the federal government only levies such taxes on estates with substantial holdings. However, because Congress changes the estate tax laws on a regular basis, you should find out what the current estate tax exemption is before establishing your trust.
Having a trust does not automatically result in lower estate taxes. To prevent or lessen your estate tax burden, you will need an irrevocable trust with the proper conditions. If you believe your net worth is approaching the estate tax exemption, you should speak with an estate planning attorney.
Is It Possible to Create Your Own Living Trust?
It is feasible to create your own trust document in various scenarios. When creating your own trust document, make sure to include the following:
Check your state’s laws to see if there are any trust requirements. Each state has its own criteria for what the trust must include, how it must be signed and witnessed, and whether certain assets must be transferred into the trust with the assistance of an attorney.
Fill out the form. A handwritten trust document may be valid if properly signed and performed, but a typed document is always clear and easy to read.
Maintain a straightforward approach. The more fundamental your trust, the better. Include little more than the bare minimum of information necessary by the state.
Ownership should be transferred. Once the agreement is completed, you must transfer ownership of your assets to the trust for it to take effect. If you skip this step, your trust will have no effect.
When Should You Hire a Trust Attorney?
There are several circumstances in which consulting with a living trust attorney for assistance with the creation of your trust makes sense.
#1. Your trust is conditional.
It’s not commonplace to include trust terms that govern when and how assets are dispersed. For example, a condition could be that your grandchildren complete college before receiving their inheritance, or that your beneficiaries acquire portions of the trust at particular ages.
#2. You’re not sure what to include in your trust and what to include in your will.
Wills and trusts have benefits and drawbacks. If you are unsure what is best for you, an estate attorney can explain your alternatives and assist you in making a decision.
#3. You’ll have to pay estate tax.
The current federal estate tax exemption is $11.18 million. If your estate exceeds that sum, you will be required to pay estate taxes. Many states have estate taxes as well, so check your state’s regulations to see if you’ll repay the state. In these cases, you will need the assistance of an attorney to explore your alternatives and minimize the taxes your estate may owe.
#4. You are skipping generations.
Generation-skipping occurs when you want your trust to distribute assets to grandkids or other relatives who are 37.5 years younger than you. If the transfer exceeds $11.4 million per person, it triggers a federal tax known as the Generation-Skipping Transfer Tax (GSTT). This tax is imposed at a flat rate of 40%. In this case, you should consult with an attorney to figure out how to avoid or reduce this draconian tax.
#5. One or more of your recipients has special needs or receives government support.
In this case, there are certain sorts of trusts you can set up to meet their needs, and a family trust lawyer can assist you in doing so.
#6. You have a substantial sum of life insurance.
The estate tax applies to life insurance. If you have a big amount of life insurance, you can set up a special trust to protect the cash from estate tax. An attorney can help you set up this particular trust.
#7. You require assistance in moving assets.
If you’re unsure how to lawfully transfer your assets into the trust, a will and trust attorney can assist you in doing so appropriately so that your trust can take effect.
What is the Role of a Trust Attorney?
The word “trust attorney” does not relate to a trustworthy lawyer (although this is an important characteristic to have in your attorney). A trust attorney or lawyer is an estate planning professional who can assist you in drafting the appropriate documents to establish a trust for your estate.
Unlike a will, a trust allows your remaining family members to escape the probate procedure after your death. Trusts, in reality, are kept private and off the public record. It can incorporate provisions to reduce estate taxes, allowing your loved ones to receive a larger portion of what you meant to leave them. Trusts are extremely valuable for those with significant estates.
The disadvantage of trusts is that they can be costly and difficult documents to draft and ensure their legitimacy. While you can create your own trust, a trust attorney will go beyond the fundamentals and go further into your specific situation to assist you to begin thinking about how you want your estate divided, who you want to receive it, and when you want it dispersed. If you have special needs children, whether they are young or adults, trust conditions that safeguard and care for them will be reviewed. Discussions may also center on how to keep control of your fortune and preserve your legacy from creditors or recipients who may misappropriate their inheritance.
A trust attorney can also help you comprehend the many forms of trust. Aside from revocable and irrevocable trusts, other documents to examine include credit shelter trusts, charitable remainder trusts, generation-skipping trusts, and many others.
The Appointment of a Professional Fiduciary
If you do not have someone in your life whom you feel comfortable appointing as a trustee of your trust, you can appoint a professional fiduciary to handle the specifics of trust management while you are alive and incapacitated, as well as the distribution of your assets after your death.
Because of the scale of the work, the legal intricacies, and the desire to avoid family disagreements, many people prefer to delegate this major obligation to a professional rather than a family member or trusted friend.
Administration of Trust
A trust attorney can help a fiduciary, whether an individual or a professional, handle the entire scope of trust administration after your death, including:
- Notifying all beneficiaries, as well as government agencies and other organizations, of the individual’s death. This includes the Social Security Administration, the Department of Health and Human Services, Veterans Affairs, life/health insurance firms, mortgage companies, banks, credit card companies, and so on.
- Management of the complete trust estate, including property value assessments, balancing all existing debts/bills, reporting gains and losses, submitting taxes, and so on.
- All assets are distributed to the beneficiaries.
- Compliance with all state and federal trust laws
- Litigation responsibilities if the trust is challenged
How Do I Determine Whether I Need a Trust Attorney?
It’s a good idea to have a trust made or evaluated by a trust attorney if you’re creating one. Here are some reasons why you might wish to establish a trust:
- You do not want your family to go through the probate process.
- You’re attempting to reduce your estate taxes.
- You are not required to name a guardian for a minor or to specify your last intentions (for these, you need to create a will)
- You want to control when your heirs receive their fortune.
What Does a Trust Attorney Fees?
The fees for a trust attorney are determined by the service performed. Your attorney may charge an hourly rate or a set fee to just create or evaluate a trust. A trust attorney typically charges by the hour to act as a trustee. Rates will vary based on where you live, so make sure to agree on a fee with your attorney ahead of time.
What Can I Expect When I Work with a Trust Attorney?
Creating a trust ensures that your belongings go to the correct location, whether you’re still alive or not. You may be confident that what you decide will be implemented if you engage a trust lawyer because, even if there is a dispute, your trust should hold up in court.
A trust cannot contain your last intentions or details on who will be the guardian of your child if you die, so you may still need to write a will to cover all of your bases.
Creating a Trust? With the assistance of an attorney, ensure that it is valid.
Although learning about living trusts and other forms of financial planning is beneficial, you should not expect to become an expert in the field overnight. A lawyer can utilize their legal expertise and experience in estate planning to assist you in establishing financial arrangements that match your specific needs. Contact a local estate planning attorney to find out how they can assist you with your living trust difficulties.
Trust Attorney FAQs
How much does it cost to set up a trust?
A trust with simple investment assets, such as stocks, managed funds, or real estate, may cost between $1,500 and $2,500 a year, whereas a larger and more complex trust with more assets may cost between $3,000 and $5,000 per year.
Why does a trustee need an attorney?
An attorney can assist you in avoiding potential liabilities by informing you when your acts may be deemed negligent, fraudulent, or in bad faith. Many of the time-consuming obligations of being a trustee can be handled by a trust lawyer, relieving you of most of the strain associated with the post.
Can a trust own property?
A trust, unlike a person or a corporation, is not a legal entity that can possess property. This is due to the fact that a “trust” is just a relationship between the legal owner (the trustee) and the beneficial owners (the beneficiaries).