Average Cost of a Will vs. Living Trust

Wills and living trusts are fundamental estate planning tools that dictate what happens to your assets when you’re gone. Both legal documents serve to distribute your assets, but they operate in distinct ways that can significantly impact your estate planning strategy. A will is a straightforward document that outlines how you wish your assets to be distributed after your death. It is subject to probate, a legal process that can be time-consuming and public. On the other hand, a living trust offers a more private and potentially quicker way to manage your estate, as it allows your assets to bypass the probate process.ars.

A financial advisor can guide you in the creation of a comprehensive estate plan that will see your wishes are followed after you’re gone.

The Difference Between a Living Trust vs. Will

Estate planning involves deciding how you want your assets to be divided after you’re no longer around, and then arranging for that to happen. As you enter the early planning stages, it’s important to know the difference between wills and living trusts, as well as their costs, to determine which option is best for your individual needs and situation.

A will is a legal document that not only covers what happens to your assets after you pass, but can encompass all sorts of issues, including how debts will be handled as well as non-financial issues such as naming guardians for minor children. Having a will allows you to specify and enforce your wishes rather than having your state’s inheritance laws or other laws decide what happens with your estate. A will can either be hand-written, custom-created with an online tool or template, or drawn up by an estate attorney.

Meanwhile, living trusts are legal entities. They’re created using trust documents and are then funded by the assets you’ll transfer into them during your lifetime. When you die, the trustee you selected will oversee the distribution of the assets you placed in the trust according to your instructions. Having a living trust lets the beneficiaries of your estate get their distributions of property and assets without first going through the lengthy and costly probate process.

The Cost of a Living Trust vs. Will

Wills and living trusts are important estate planning tools.

The National Council on Aging has estimated that the cost of a living trust can range anywhere from nothing to as much as $7,000, while a will can cost nothing up to $1,000. Your total cost depends in part on whether you have only a will or have both a will and a living trust as part of your estate plan. Whether you choose a do-it-yourself estate planning approach or hire an estate attorney is another factor. Where you live can also play a role in the cost.

Wills are much simpler than living trusts and also less expensive. You can create a will without spending any money by either hand-writing one or using a free downloadable template. You could choose to have your signature on the will witnessed and notarized, which could cost around $10 or $20. There are also paid, online will-drafting tools, which could cost you as little as $100. Even paying an estate attorney to draft your will is still likely to cost only $300 or so, although if you have a complicated estate that requires consultation with an attorney charging hourly fees, it could be much more.

Using a living trust as part of your estate plan can set you back a significantly larger sum. If you use a free online tool or downloadable template, you can set up a trust for no cost. However, you still have to transfer assets into the trust. This can cost anywhere from nothing, if you’re transferring a bank account, for example, to $100 to $200 for transferring ownership of a piece of real estate into the trust.

Because of their complexity, it’s more common to use an attorney to draft the documents and handle the funding of a living trust. This will cost you anywhere from $1,000 to, in the case of a complex estate with lots of assets and many beneficiaries, as much as $10,000 or more.

Cost Considerations of Estate Planning

Estate planning is a crucial process that helps protect your assets and ensure your wishes are carried out after you’re gone. While many people understand its importance, the costs associated with estate planning can sometimes be a deterrent. Understanding these expenses can help you budget appropriately and make informed decisions about your estate plan.

Attorney fees: Professional legal guidance is the cornerstone of effective estate planning. Attorneys typically charge either flat fees for standard documents (ranging from 300−300−1,500 for basic wills) or hourly rates (150−150−450 per hour) for more complex situations. The investment in qualified legal counsel can prevent costly mistakes and ensure your documents meet all legal requirements.
Document preparation costs: Beyond attorney fees, there are expenses for drafting and finalizing various documents like wills, trusts, powers of attorney and healthcare directives. These documents form the foundation of your estate plan and may require periodic updates as your life circumstances change, potentially incurring additional costs over time.
Court and filing fees: Certain estate planning documents must be filed with courts or government offices, incurring filing fees. Probate costs can be particularly significant, often ranging from 3-7% of your estate’s value, which is why many estate plans focus on strategies to minimize probate expenses.
Tax planning expenses: Consulting with tax professionals about estate, inheritance, and gift tax implications is an important cost consideration of estate planning. While these consultations add to your upfront costs, they can potentially save your heirs thousands in tax liabilities through the proper structuring of your estate.

While estate planning does involve various costs, it’s best viewed as an investment that provides peace of mind and financial protection for your loved ones. The expenses incurred now can significantly reduce complications, expenses, and stress for your beneficiaries in the future.

Bottom Line

A couple reviewing the cost of a living trust vs. will.

Living trusts and wills are used in many estate plans to direct the distribution of assets, settlement of debts, name guardians and otherwise allow you to decide in advance what will happen when you pass. Wills are less expensive than the two, and can be created at no cost. Living trusts, including crafting the documents and transferring the assets, will cost anywhere from nothing to, in some cases, several thousand dollars.

Estate Planning Tips

While creating an estate plan can cost money, it can cost more not to have an estate plan at all. A financial advisor can help you get started on your estate planning process. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
You may wonder about the possible impact of federal estate taxes when you start planning your estate but, as SmartAsset’s guide to federal estate taxes explains, these taxes don’t apply to most estates.