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Are Estate Planning Fees or Estate Administration Fees Tax Deductible?

Estate planning is an investment in yourself and your loved ones, for now and the future. Estate planning comes with a wide range of costs including legal fees, accounting fees and appraisal fees. Are estate planning fees tax deductible? In general, estate planning fees are not allowable deductions on your personal income tax return.

If you choose to hire an attorney to assist you with estate planning, you should ask for a breakdown of the fees they charge you. While you will not receive any deductions, it is still important to understand what the fees are and why they are being charged. Some attorneys will charge an hourly fee for their work, while others will have a flat fee for individual estate planning services.

On the other hand, if attorney fees are incurred related to the administration of an estate, or the administration of a trust, the attorney fees likely can be deducted on the estate’s or trust’s income tax return. The estate/trust, rather than the individual, can deduct fees as a miscellaneous itemized deduction. The deduction of attorney fees is not a blanket deduction. Other requirements may exist and a personal representative or trustee should consult with their CPA or tax advisor regarding the extent to which the fees may be deducted.

The deductibility of fees can be complex and confusing. If you have questions about the cost of estate planning, the cost of managing your estate or how these fees will impact your tax status, it is important to consult with a tax professional and estate planning attorney. Doing so ensures that you follow all applicable tax laws, saving you money and headaches in the future.