What’s the Cost to Put a House in a Trust?

Trust vs will: Which one is right for you?

If you’re thinking about putting your house into a trust, you might be wondering: Do I really need a trust, or would a will do the job just fine?

Great question — and the answer really depends on your goals.

A will is the most common estate planning tool out there. It lets you spell out who gets what after you pass away. Simple, straightforward, and familiar. But here’s the catch: anything that passes through a will goes through probate, which is a public legal process that can take months (or even longer) and often comes with court costs and legal fees.

A trust, on the other hand, can help you skip probate entirely. That means your house (and other assets you place in the trust) can pass directly to your beneficiaries without court involvement. That’s a big deal if you want to keep things private, avoid delays, and potentially reduce stress for your loved ones.

So how do you decide?

Here’s when a trust might make more sense:

• You want to avoid probate and keep your affairs private
• You own property in multiple states
• You’re planning for a more complex estate or long-term care
• You want to protect assets for children or dependents

And here’s when a will might be just fine:

• Your estate is simple and straightforward
• You’re okay with the probate process
• You’re just starting out and need something basic in place

At the end of the day, you don’t have to choose one or the other. In fact, many people use both — a trust to handle specific assets (like a home), and a will to cover everything else.

Not sure which route to take? It might be worth talking to an estate planning attorney who can walk you through your options based on your specific situation.

FAQs about putting a house in trust

Are there different types of trusts?

Yes, there are several types of trusts, each designed for specific purposes and situations. Key types include:

• Living trusts: Established during your lifetime to manage your assets and potentially bypass probate.
• Testamentary trusts: Created as part of a will and activated upon the trustor’s death.
• Revocable trusts: Can be altered or terminated by the trustor during their lifetime.
• Irrevocable trusts: Cannot be modified or revoked once established, offering benefits like asset protection and tax advantages.

Can you sell a house in a trust?

Yes, a house in a trust can be sold, but the process differs from a regular sale. The trustee, who holds legal title to the property, must manage the sale in accordance with the terms of the trust. The proceeds from the sale then become part of the trust’s assets and are managed for the benefit of the beneficiaries.

“The trust will be considered an asset, and when you sell an asset, there may be [capital] gains… how much was realized from the sale of the property,” Saadeh says. “If the property was purchased for $300,000, and sold for $400,000, that means $100,000 was made. There may be taxes on that $100,000. These questions [should be] fleshed out with an accountant.”

Does a trust help avoid paying taxes?

In some cases, a trust may be able to help you shield assets from certain taxes. For instance, an irrevocable trust may help avoid estate taxes by legally removing assets from the trustor’s taxable estate. However, trusts are subject to their own tax rules and rates, which can be complex. The IRS cautions that: “The transfer of assets to a trust will give the donor no additional tax benefit. Taxes must be paid on the income or assets held in trust, including the income generated by property held in trust.

To understand the specific tax implications, it is essential to consult with a tax advisor or attorney who specializes in estate planning.

What assets can go into a living trust?

A living trust can hold a wide variety of assets, including:

• Real estate: Properties owned by the trustor can be transferred into the trust.
• Bank accounts: Checking and savings accounts can be managed through the trust.
• Financial investments: Stocks, bonds, mutual funds, and other investment accounts.
• Insurance policies: Life insurance policies can be included, potentially helping to manage proceeds and beneficiaries.
• Tangible property: Art, jewelry, and other valuable personal items can also be part of a trust.

What factors affect the cost of setting up a trust?

Several factors can influence how much it costs to set up a trust. These include:

• Type of Trust: Revocable trusts are usually simpler and cheaper than irrevocable trusts.
• Attorney Fees: Legal costs can vary widely based on the attorney’s experience and your location.
• Estate Complexity: If you have multiple properties, business interests, or unique assets, expect higher costs.
• State and Local Fees: Some states, like California, have higher legal fees and recording costs.
• Customization Needs: A simple, template-based trust costs less than a highly customized one built for complex family or financial situations.

Are there ongoing costs after the trust is created?

Yes, there are usually ongoing costs to maintain and update your trust, such as:

• Amendments: Life changes like marriage, divorce, births, or deaths may require trust updates, which usually cost a few hundred dollars each.
• Trust Administration: After you pass away, your trustee may need legal help to administer the trust, which could involve legal or accounting fees.
• Property Transfers: If you buy new property later, you’ll need to update the trust, sometimes incurring additional recording or legal fees.

While creating a trust is often a one-time expense, it’s smart to budget for these occasional costs to keep your trust up-to-date and effective.

Should I set up a trust myself or hire an attorney?

You have two main options when setting up a trust: DIY or hiring an attorney.

If your situation is simple and you’re confident using legal software, a DIY trust might be enough. But if you own valuable assets, real estate in multiple states, or want to avoid future legal headaches, it’s usually safer to hire a qualified estate planning attorney.

Bottom line: Cost to put a house in a trust

The cost of putting your house in a trust can vary widely based on factors like the complexity of your estate and the specific requirements of your state. Generally, you can expect to pay between $1,000 and $3,000 for most trusts, though more complex situations may require additional investment.

While setting up a trust involves upfront costs, the potential benefits — such as avoiding probate, reducing estate taxes, and maintaining control over asset distribution — can far outweigh these initial expenses.

If you’re considering selling a home that’s currently in a trust, finding the right real estate agent is crucial. HomeLight’s Agent Match can connect you with experienced agents who specialize in handling such unique situations, ensuring a smooth and successful sale.

Editor’s note: This post is for educational purposes only, not legal advice. If you need assistance with estate planning, HomeLight encourages you to contact your own advisor.

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