What is the Cost of a Living Trust in Maryland?

A living trust can be an excellent way to manage your assets.  With a living trust, you keep administration rights and benefits of your property, but you give title of the property over to the trust so someone else can step in and get the assets if you become incapacitated or pass away.

In general, living trusts are somewhat inexpensive to set up in Maryland, but they can have a sizeable initial investment.  The initial cost of hiring a lawyer and paying all fees to set up a trust is usually a few thousand dollars.  The actual paperwork fees are usually quite cheap, but it is important to have a lawyer set up your trust to avoid challenges and legal mistakes that can arise when you try to enact a trust on your own.  The cost of administering a trust is usually cheap because you will usually be the trustee as long as you are still alive.

For help setting up a living trust, call our Maryland trust and estate lawyers today at Rice, Murtha & Psoras at (410) 694-7291.

What is a Living Trust in Maryland?

Before we go into the details of how much a living trust costs, it is important to understand what exactly a living trust is.

A trust is an ownership setup where the rights to own, manage, and benefit from the property are divided among different parties.  In this setup, a “grantor” gives title to the trust, the right to manage the property to the “trustee,” and incomes from or benefits of the trust property to the “beneficiaries.”

Trusts can be revocable or irrevocable, with the grantor reserving the right to end or modify a revocable trust at any time.  Irrevocable trusts permanently separate the grantor from the assets so the legal owner is the trust and not the grantor.

A “living trust” usually refers to a revocable trust where the grantor is also the trustee and the beneficiary of the trust.  This allows them to list a contingent or successor trustee who can take over the operation of their assets if they pass away or become unable to manage their assets.  They can also set up contingent beneficiaries who receive the benefits if they die.

The goal here is usually to avoid the cost of putting assets through a will and probate, which can cost a lot more money in many cases.

The Cost of Setting Up a Living Trust in Maryland

A trust is created by signing papers that establish the trust.  As such, the actual cost of the trust is quite low, but the legal fees associated with having a Maryland trust and estate attorney write the documents and set up a trust can range from $1,000 to a few thousand dollars, depending on a few factors.

First, the complexity of the trust is going to be an important factor.  Very simple trusts are not difficult to set up, and it can be simple enough for a lawyer to draw up the paperwork.  However, as trusts contain more assets, more beneficiaries, and more complex rules about contingencies, the documents become more complex.  Truly unique situations might require legal research to determine how best to set up your trust.

Keep in mind, however, that living trusts are usually revocable trusts, which are often simpler to write.  Even so, every living trust requires a lawyer’s full attention to make sure it covers your intent and has the power to function as an alternative to a will.

Second, you will need to find a trustee to use.  With most living trusts, you will be the trustee when you first start the trust.  However, you will likely want to set up a backup trustee who will take over if you become incapacitated or pass away while the trust is in effect.  Professional trustees require fees, sometimes including a fee to set up the paperwork.  Naming a friend or loved one would usually be cheaper or free.

Lastly, the actual cost of sitting down and signing the paperwork will usually involve some simple fees with your attorney and notaries.  You may also have to pay fees to have titles changed and re-registered, such as the titles and deeds for a house or car put into the trust.

The Cost of Administering a Living Trust in Maryland

The law is pretty basic on how much a living trust costs to administer, and the only real expectation is that the administration fee paid to the trustee is “reasonable.”  Again, how much your trustee needs to be paid will depend on how complex the administration of the estate is.  That is all based on what assets are in the estate, how many beneficiaries need to be paid, and what work must be done for upkeep.

As long as you are the trustee, you will not need to pay yourself any administration fees.  You probably will not have to pay a loved one, either  This is often why these trusts are used: the cost of administering the trust is incredibly low and is often cheaper than the fees and taxes that would be paid if the assets were transferred through a will instead.

When it comes time to use a backup or successor trustee, they might need a reasonable administration fee, which you can negotiate and include in the terms of the trust documents.

Are Living Trusts Cheaper than Wills in Maryland?

The point of using a living trust is to avoid costs and fees you would face by putting your assets through a will in probate court.  With a will, you pay your lawyer to write and administer the will, but you will also have to pay estate taxes and administration fees in many cases.  In the end, you will have already passed, so you will not be there to pay these fees.  Still, they will reduce how much your loved ones receive.

A living trust is often a cheaper option, but there may be other estate planning methods available to reduce the cost of passing on your inheritance, too.  Our lawyers can help you weigh options and make the right decision for your situation.

Call Our Maryland Trust and Estate Lawyers Today

Call (410) 694-7291 today for a free case review with Rice, Murtha & Psoras’ Baltimore trust and estate lawyers.