Income Deduction of Estate Planning Fees

With April 15th approaching, it reminds us of the need to file our income tax returns. When preparing estate planning documents, clients often ask, "are these estate planning fees deductible?"

The cost to do a simple Will, Power of Attorney and Medical Directive are personal expenses and not deductible. However, a portion of the cost to prepare a comprehensive estate plan, involving a revocable trust to avoid probate and a marital and credit trust to reduce or eliminate estate taxes, is deductible.

How do you distinguish between the personal expense allocable to the non-deductible planning and the deductible expense attributable to the tax planning and the property preservation? It depends on each case and the fee charged, but it is likely 60% to 75% of the total fee is deductible. These fees are analogous to advisory fees paid to a financial planner. Of course, how this applies to your own tax return and the 2% miscellaneous deduction rule, is for you and your CPA to sought out.

Read more discussion of estate planning topics affecting Virginia residents and U.S. citizens at Dedon on Estate Planning.

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