Can you deduct the fees you pay for estate planning work?
A column in the Albuquerque Journal suggests that it may be possible.
A reader wrote to the columnist saying that he and his wife had paid $3,095 for an update to their estate plan. It contained a trust for their kids as well as advance directives and guardian choices. The reader wanted to know if any of that fee could be deducted. The reader also noted that their estate’s worth might be increased in the future and that their tax burden might grow.
The columnist responded that, yes, they probably can deduct, but that there is a burden of proof issue that needed to be satisfied. While he said there is no deduction allowed for fees paid for purely personal advice, the law does permit a deduction for any fees paid for the collection, determination or refund of any tax due.
He said this has been broadly interpreted to include advice with respect to the avoidance of future taxes.
Most the work described by the reader appears to concern personal issues, but any work having to do with how future estate taxes might affect the couple and how they could structure their affairs to have the flexibility to deal with future changes in tax law as well as the growth of their estate would be deductible.
The issue is determining how much of the work was for which purpose. It would require an itemized bill, he said.
If any of the fee was used for business planning, the fees could be allowed as ordinary business expenses, he noted.
If you have questions about estate planning, feel free to call us for a consultation at (626) 696-3145.
