Are estate planning fees tax deductible?

On Behalf of | Oct 6, 2023 | Estate Planning

Creating an estate plan is not a legal necessity, but it is a practical obligation. Those with sizable personal resources need an estate plan in place to protect those assets and arrange for their distribution to others in the future. Those with dependent family members may need to make a very thorough plan if they hope to protect their children or other loved ones from foster placement and/or financial hardship if they die unexpectedly.

It is an investment in one’s future interests to sit down with an estate planning attorney and talk about concerns, priorities and wishes. Of course, this investment can give someone both legal protection and greater peace of mind as they go about their day-to-day life. People may hope to recoup as much of what they invest in estate planning as possible. Therefore, they may wonder whether it is possible to secure a tax deduction for the funds spent on the creation or revision of estate planning paperwork.

There was previously a deduction available

For decades, those putting together thorough estate plans have been able to retain receipts from their attorneys and then report those amounts when filing an income tax return. Unfortunately, those who currently want to draft a will or fund a trust will discover that those credits are not currently available.

The Tax Cuts and Jobs Act changed the tax rules for estate planning tax breaks. Those paying to have a legal professional put together or update an estate plan can no longer deduct those costs will filing an income tax return. However, provisions from the law will phase out at the end of 2025. There’s a good chance that future legal reform before then could also reinstate the prior tax deductions.

Procrastination may do more harm than good

Some people might tell themselves that they should wait to create or update a will, trust or other estate planning paperwork until the provisions of the Tax Cuts and Jobs Act are no longer in effect. However, they will have to accept the possibility that they might die without any estate planning documents on record as the trade-off for that tax credit.

With all of this said, it is important to remember that the loss of control over one’s legacy and the vulnerability of family members far outweigh the moderate tax benefits of having a write-off available for the costs associated with estate planning.