Once the trust instrument has been drafted, the trust can be dormant, ready to go into operation after the death of the testator (the person who directs the creation of the trust). An inter vivos trust may come to life at the moment it is created. Either can be run by one or more wise friends of the person(s) for whom it has been created or by whom it was created. The friends may not know the finer points of trust law or accounting and they don't need to. A financial planner can help to make investment decisions or to set investment policy. The trust company can then simply be the custodian of securities, usually at a fee that is a small fraction of what it charges when it wears the hats of a fiduciary with the highest responsibility for its actions, investor, custodian and paymaster.
Once its governance has been established, the trust can use its ability to invest and distribute assets with a flexibility that is impossible if a lump sum of money or property is just given to a person or to an institution. Thus the trust may hold money for the benefit of a growing group of grandchildren who may not even be alive at the time of the establishment of the trust. It may pay income carefully to a person who has a poor record of money management, or it can pay for the education of several children according to their means and needs.
Trust company fees vary a great deal, depending on the kinds of investments a trust company has to handle and what has to be done for the beneficiaries. One major trust company charges 0.6% of per year on the first $250,000 of assets under administration, 0.5% of the next $250,000, and 0.4% on the balance. The minimum fee is $2,500 per year. There are additional fees for income collection that amount to 6% of the sums collected by cashing bond coupons or tracking stock dividends. There are still other fees for tax accounting, out of pocket costs and any real estate commissions that have to be paid. Put it all together and a trust with $500,000 capital can wind up paying $10,000 a year in management fees. Paying 2% per year for trust administration may seem modest enough, but in a period when GICs pay less than 4% and stock dividends average less than 2%, the trust company's fee winds up taking somewhere between half and all the income the trust receives.
Drafting a will and establishing a trust should be done by a lawyer who specializes in this branch of law. Lawyers' fees are discretionary and often negotiable. Many testamentary trusts are drafted by lawyers in conjunction with wills that they prepare.