No, estate planning fees were tax deductible in the past, but not anymore although some legal fees that was used for estate planning can be deducted on your taxes as long as they are related to income-generating assets. The IRS considers these fees to be personal expenses, and therefore, they are not eligible for a deduction on your federal taxes. Estate planning involves organizing individual’s property and assets for distribution to beneficiaries after death. It involves the drafting of legal documents like living wills and durable powers of attorney as well as trusts.
Key Takeaways:
- Understanding the tax deductibility of estate planning fees can significantly impact financial planning.
- Generally, estate planning fees are not tax deductible, but there are exceptions related to the creation or maintenance of income-generating assets.
- It’s important to differentiate between personal estate planning services and those that may qualify for tax deductions under specific circumstances.
When it comes to state taxes, Georgia follows federal guidelines for income tax purposes. So, in Georgia, as in many other states, estate planning fees are typically not tax-deductible on your state income tax return either. The Georgia Department of Revenue generally conforms to the Internal Revenue Code (IRC), and since the IRS does not allow deductions for estate planning fees, Georgia tax laws are likely to mirror this stance.
It’s not only the wealthy that should invest in estate planning. Without a legal document in place, handling a deceased person’s affairs will have a long-lasting and expensive effect on surviving families. Even more so, the recent IRS tax changes have made it more difficult if not impossible to continue to deduct many services associated with estate administration.
Estate Planning Fees That Are Considered Miscellaneous Deductions
The IRS provides the following examples of fees that can be considered as miscellaneous deductions:
- Accounting Fees
- Investment Advisory Fees
- Tax Preparation Fees
- Legal Fees from an income-generating asset
Will These Tax Provisions Change?
The Tax Cuts and Jobs Act includes a number of measures that will expire at the end of 2025.
It’s also uncertain which provisions, if any, will be renewed or a political shift in Washington could reintroduce some tax breaks for estate planning costs.
While most estate planning fees are not deductible on your taxes, understanding the exceptions—especially for fees related to income-generating assets—can help you better manage the financial aspects of your estate plan. Accurate record-keeping and consultation with tax professionals can ensure you maximize any available tax benefits.
Get Help Today with Hurban Law, LLC in Lawrenceville, GA
While estate planning fees themselves are generally not tax-deductible in Georgia, it’s crucial to understand the broader implications of your estate planning and how they may impact your overall financial situation. Tax laws can change, and various strategies can be employed to minimize your tax liability, so it’s essential to consult with a qualified tax professional or attorney to ensure you’re making the most informed decisions for your unique circumstances. We will offer you the support and guidance you need at Hurban Law.
