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Deductibility of Estate Planning Legal Fees

See Greg Herman-Giddens' post on the North Carolina Estate Planning Blog:

Deductibility of Estate Planning Legal Fees which sets forth the general rule that all legal fees for estate planning are not deductible for income tax purposes. They are only deducible to the extent that they represent tax advice (that is fess in connection with the determination, collection, or refund of any tax).

On the other hand, if a revocable trust is funded with the taxpayer's income-producing property, the taxpayer should be able to deduct the legal, accounting and other expenses of creating the trust under §212(2) of the Internal Revenue Code as an expense incurred in the management and conservation of property. Another reason for using a revocable inter vivos trust is to avoid probate expenses with respect to the property used to fund the trust. This would also tend to support characterizing the transaction as one for the conservation and maintenance of property held for the production of income.

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Spencer Law Firm LLC
320 Race Ave
Lancaster, PA 17603

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