Estate planning is never cheap. But when you look at the ultimate savings on the final estate tax bill, you will often see that it is a bargain.
QPRTs are not cheap either. This is the case for a variety of reasons. We will explain it all to you in this post.
Basic Costs and Fee Structure
Fees will usually cover:
- Initial review and consultation
- Drafting the trust document
- Calculating and opining on the gift value
- Filing the gift tax return
As you can see, the fees can quickly add up. The final QPRT cost can vary widely depending on the service level, the qualifications of who is structuring the trust and where the grantor resides. But a typical fee structure will start at a couple thousand dollars and could go as high as $10,000.
Here are some fees and costs I have seen over the years:
- $25,000 from the estate group of a Big 4 accounting firm.
- $3,000 from a local attorney. But he was not able to file the gift tax return and referred it to a CPA.
- $12,700 bill from a large law firm.
Fortunately, you won’t have to spend much on annual fees. That’s because there really is not much to administer once the trust is in place.
It is a grantor trust so the grantor can still claim the mortgage interest and real estate taxes. You may need to update the trust from time to time. You may also want CPA advice on the trust mechanics. But these fees should be nominal.
It will always pay to shop around. But it is tough to do a true cost comparison. That’s because there are so few providers in the marketplace. Most estate planners don’t go very far past simple wills and revocable trusts.
Also, experience level will vary widely. Many attorneys just establish basic revocable trusts and vanilla living wills. There are very few professionals who have the expertise to set up QPRTs and give technical guidance.
How Much Does a QPRT Cost?
As you can see, a QPRT will cost you a lot more than a basic revocable trust. But it serves a much different purpose.
A revocable trust will mostly just help to avoid probate. There isn’t any tax savings involved (contrary to what many believe).
But a QPRT can possibly save hundreds of thousands of dollars in estate tax. So what first seems expensive may at some point turn out to be a bargain.