Are Estate Planning Fees Tax Deductible? The Short Answer
For most individuals, estate planning fees are no longer deductible on your personal federal tax return. The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the miscellaneous itemized deduction that previously allowed taxpayers to write off estate planning attorney fees and related costs. However, certain estate planning fees may still be deductible depending on how they are structured, who pays them, and what services they cover.
What Changed After the Tax Cuts and Jobs Act of 2017
Before 2018, individuals could deduct estate planning fees as a miscellaneous itemized deduction on Schedule A, subject to a 2% AGI floor. The TCJA eliminated this category entirely for tax years 2018 through 2025.
This suspension is currently set to expire after December 31, 2025, meaning Congress could restore the deduction, extend the suspension, or make the change permanent.
Estate Planning Fees That May Still Be Deductible
1. Trust Administration Fees
Fees related to the administration of an irrevocable trust may still be deductible on the trust's own income tax return (Form 1041). Under Section 67(e), these expenses were not affected by the TCJA suspension.
2. Tax Preparation and Tax Advice Fees
When your estate planning engagement includes work specifically related to tax planning or tax return preparation, that portion of the fee may be deductible. Ask your attorney to itemize their invoices so tax-related services are clearly separated.
3. Business-Related Estate Planning
If your estate planning involves business succession planning, buy-sell agreements, or restructuring ownership, some fees may be deductible as ordinary business expenses under Section 162.
4. Estate and Trust Income Tax Return Preparation
Fees paid for Form 706 and Form 1041 preparation are generally deductible on the respective returns, as the TCJA suspension does not apply.
State-Level Deductions
Several states did not conform to the TCJA's elimination of miscellaneous itemized deductions. States that have historically allowed broader deductions include California, New York, Minnesota, and New Jersey. Check with a tax professional in your state.
How to Maximize Your Deductions
Request Itemized Billing
Always ask for detailed, itemized invoices broken out by service type.
Use Trust Funds to Pay Trust-Related Expenses
Have the trust pay those fees directly to support the deduction on the trust's tax return.
Keep Impeccable Records
Maintain organized records including itemized invoices, engagement letters, proof of payment, and correspondence that clarifies services provided.
Plan Wisely, Save Where You Can
At Archangel Trust, we help individuals and families build estate plans that are not only legally sound but also tax-efficient. Visit us at archangeltrust.com to start the conversation.
Disclaimer: This article is for educational purposes only and does not constitute tax, legal, or financial advice. Please consult a qualified tax professional for advice specific to your situation.