Newspaper article St Louis Post-Dispatch (MO)

Rules Are Complex for Estate-Planning Deductions

Newspaper article St Louis Post-Dispatch (MO)

Rules Are Complex for Estate-Planning Deductions

Article excerpt

Q. This year my wife and I did some extensive estate planning by creating revocable trusts and an irrevocable insurance trust.

Can we deduct the cost of the lawyer's fees on our income tax return for this year?

A. You may be able to take a deduction for part of the legal fees for your estate planning, although that is not assured. The rules are complex, but here is a brief explanation:

First, you may be able to take an income tax deduction for ordinary and necessary expenses paid this year for certain nonbusiness expenses. (If the expenses were paid by a business you own, the deduction would probably be taken by your business).

If you don't own your own business, you still may be able to take a deduction for some expenses, including some estate planning legal fees. This type of deduction is called a "miscellaneous itemized deduction."

In order to take this deduction, you must:

- Itemize deductions on your income tax return on Schedule A, rather than just taking the fixed standard deduction.

- Have miscellaneous itemized deductions that, when added together, are in excess of 2 percent of your adjusted gross income (line 31 on Form 1040.)

What are some examples of miscellaneous itemized deductions? They may include some legal fees, accounting fees, dues for professional organization memberships, the cost of a safe deposit box if you use it for storing certain stock certificates, and similar costs. …

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