Cost of Setting Up a Trust
A trust may require money to set up. A grantor can create a trust without professional help -- for example, by using an online legal documentation service. If the grantor has many assets and is seeking to set up a complex trust, legal services may be required. The cost of legal services can vary depending on the location and hours required to set up the trust.
Funding a Trust
Transferring property into a trust is known as funding the trust. Every trust must have property for the trust to have a purpose. A trust does not have to be funded immediately after it is created, and it does not have to be funded all at once. A grantor can add property to a trust gradually. Property that is not retitled to a trust will be subject to probate when the grantor dies. Property within the trust does not have to go through the probate process, unlike the property named in a will. Property the grantor intends to be in the trust but does not actually re-title to the trust or name in the trust is subject to probate.
Which Assets to Transfer to a Trust
A grantor can add many types of property to a trust, including bank accounts, real estate, personal items, brokerage accounts, expensive jewelry, and valuable collections. Any property with a title should be retitled in the name of the trust. For example, if John Smith created a living trust, he can title his car in the name of his trust, "John Smith Trust, Trustee John Smith." Assets that already have a named beneficiary, such as life insurance and retirement accounts, do not need to be added to a trust. Those assets will avoid probate because they will automatically transfer to the named beneficiary.
A grantor or trustee can terminate a trust if the value of property in the trust does not justify the costs of administration. A trust may require work from an accountant or a lawyer, which may be costly. In the Uniform Trust Code -- which is a uniform set of laws regarding trusts adopted by nearly half the states -- a trust can be terminated for being uneconomical if the value of property in the trust is less than $100,000. States that have not adopted the Uniform Trust Code may still have a law applying to termination of uneconomic trusts. Grantors may want to keep this in mind when deciding whether to set up a trust and the value of property to put in the trust.