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Are Estate Planning Fees Tax Deductible?

Are Estate Planning Fees Tax Deductible?

Are Estate Planning Fees Tax Deductible?

There are some legal fees that qualify for a tax deduction, but it primarily depends on the type of legal services you require. Today, many legal fees are considered to be personal expenses, so it is important to know which ones are tax deductible and which ones are not. Estate planning fees recently joined the non-tax deductible legal fees. 

Estate planning is the term covering the arranging of one’s assets and property for distribution to beneficiaries upon one’s death. This includes the creation of legal documents such as one’s wills, trusts, and power of attorney. Estate planning is necessary for everyone, not only the rich. If a plan is not in place at the time of one’s death, settling one’s affairs could leave a long-lasting and costly impact on their loved ones. 

However, due to recent tax changes, it is now harder than ever to deduct estate planning fees from one’s taxes. Estate planning fees were previously eligible for a tax deduction under IRS rules for miscellaneous deductions. However, the Tax Cuts and Jobs Act has recently changed this. 

Until the Tax Cuts and Jobs Act, the IRS allowed legal fees for estate tax planning services to be tax deductible if they sustained the production of income, maintenance of the income-producing property or tax advice. However, the creation of a will, medical directive, power of attorney, custody of children and property claims are not eligible for tax deductions, despite being estate planning fees. 

There are other legal services that did fall into the miscellaneous category as well. These included farm income and expenses, tax advice relating to divorce, property rent, collection of taxable alimony, or even performing or maintaining one’s job. 

Due to the introduction of the Tax Cuts and Jobs Act, these miscellaneous deductions are suspended until 2026. At this moment, it is unknown which provisions will be extended. However, there are still a few types of legal expenses that can be written off. These fees include those for preparing tax returns for estates or trusts, defending against allegations of undue influence, trustee fees, costs associated with managing and maintaining real estate, investment advisory fees, and personal representative fees for handling estate administration.

The beneficiaries of a trust or estate also have limitations concerning the tax deductions they can receive. A majority of these conditions are still under review by the IRS. However, beneficiaries may request tax deductions concerning financial loss or charity contributions. 

At Meystayer Law Firm, we can help you claim all the tax deductions to which you are entitled. If you are seeking legal help, contact us today and speak to one of our legal representatives. Together, we will work to ensure you receive the deductions you are entitled to.

No representation is made that the quality of legal services performed is greater than the quality of legal services performed by other lawyers

This article does not create an attorney-client relationship. I am licensed to practice law in Mississippi and have based the information presented on US laws. This article is legal information and is for entertainment and informational purposes only and should not be seen as legal advice. You should consult with an attorney before you rely on this information. Any information provided in this blog is accurate and true to the best of my knowledge, but that there may be omissions, errors or mistakes.

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