26 May What does it cost to create a trust?
Q. My spouse and I have mulled a trust. Can anyone provide a ballpark cost for setting one up?
A. There are too many variables to give you a solid answer without knowing more about the kind of trust you want and why you want it.
The New Jersey Rules of Professional Conduct require attorney fees to be reasonable, considering factors including the time and labor required, the novelty and difficulty of the issues involved, and the skill requisite to perform the services, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.
So, she said, attorneys in New Jersey will charge for estate planning services by the hour or a flat fee, considering the various factors. The fees are not based on the total value of the assets in the trust.
She said you should ask about and understand the fee arrangement with the attorney before retaining the attorney. And once you engage the attorney, the attorney must provide you with a written engagement letter explaining how the fee for services is determined.
Let’s look at why this is complex, especially if you’re talking about a trust.
A trust should be created to fit the specific needs of the settlor, or the person who creates the trust, and beneficiaries, those who benefit from the trust.
Romania said a revocable trust can be easily amended or terminated as unforeseen circumstances arise, but an irrevocable trust is more difficult to amend or terminate and therefore must be prepared to allow for unforeseen circumstances and flexibility.
“A testamentary trust created in your will, and thus effective upon death for the benefit of a surviving spouse or minor children, is a typical estate planning provision,” she said. “For that reason it may be less costly to establish than an intervivos trust — a trust created and effective during your lifetime — for a specific purpose or with more particular provisions.”
For example, she said, trusts to protect beneficiaries obtaining governmental assistance require precise language prepared by attorneys with knowledge in this area of the law, so special needs trusts tend to be more costly to have prepared.
“For these reasons it is difficult to give even a `ballpark’ cost without knowing additional specifics,” Romania said. “But experienced estate planning attorneys will be able to give you such a ballpark estimate once you provide some general information and before you engage their services.”
Be sure to speak to several attorneys to find the best fit.
Email your questions to moc.p1606889144leHye1606889144noMJN1606889144@ksA1606889144.
This post was first published in May 2017.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.