How Much Does a Trust in Tampa Cost to Administer After I’m Gone?

Many families consider trusts in Tampa, especially when one considers the complexity and costs associated with probate in Florida. However, trusts can also be complex and expensive. A resident might only consider the costs associated with establishing a trust, but one must also consider the cost of running or “administering” the trust after death. These costs may fall on your family. If you’d like to learn more about trusts, consider a consultation with a Tampa estate planning attorney.

Trust Administration Fees Depend on the Value of the Trust Assets

Trust companies almost always calculate annual fees as a percentage of total trust assets. The exact percentage depends on the company you choose, although you can expect to pay a relatively low sum for a small trust worth $500,000 to $1 million. Note that many trust companies have minimum account requirements, effectively ensuring that the company will always receive management fees of at least a few thousand dollars per year.

Does My Family Need to Pay Trust Administration Fees After I’m Gone?

Your family does not need to pay trust administration fees directly out of their own pockets. Instead, the trust company will simply take the fees out of the trust assets. With this approach, your family will not have to worry about paying these fees. However, this inevitably reduces the assets they would otherwise receive through planned distributions. As a result, it is fair to say that your beneficiaries “pay” these fees indirectly.

Fees Can Add Up Based on the Complexity of the Trust

The “baseline” fee might “only” be 1-2% of the trust assets, but additional fees can start to add up depending on the complex requirements of the trust in question. For example, the trustee might face a complex transaction or transfer that requires the assistance of lawyers and other professionals. The trustee may have the right to pay for these legal fees using the trust assets, and this could further diminish the value of the trust. As always, grantors need to weigh these costs against the net benefits of the trust’s features and abilities.

Trusts Can Continue to Increase in Value Despite Administration Costs

While paying 1-2% or higher in administration fees might seem like a burden for your loved ones. However, it is important to consider the growth potential of your trust funds as well. For example, you might put $1 million into a trust for your beneficiaries. If the administration costs are 1% per year, this would equate to about $10,000 per year.

However, you might put your trust assets into a relatively straightforward investment, such as an S&P 500 ETF. Since the average annual return for an S&P 500 ETF is about 10.5%, this would cause your trust assets to increase in value by $105,000 each year. When you subtract the administration fees, your trust would still grow by $95,000 per year. In other words, your beneficiaries may not risk “losing” any money in this scenario.

Can a Seminole Estate Planning Lawyer Help With Trusts? 

The cost of administering a trust is only one factor worth considering as you approach estate planning in New Port Richey. You also need to consider the cost of not establishing a trust. In addition, it is worth noting that there are various types of trusts to choose from, all with varying fees and complexities. Assess your options with greater accuracy during a consultation with the Tampa estate planning lawyers at Knudsen Law today.

Sources:

 investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp#:~:text=The%20S%26P%20500%20is%20a%20market%20capitalization%2Dweighted%20index%20of,real%20return%20drops%20to%206.69%25.

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/0736.html