Preparing for your death is not an easy thing. However, every responsible person must plans how their estate and property will split and get distributed amongst the surviving family members. From planning for the funeral to set up last will and testimony, there are a lot of things one has to do. While the cost of writing a basic will is low, more detailed and complicated wills may cost up to $1,000 or more. People who hire estate attorney Virginia for will and estate planning often ask if the estate planning fees are tax-deductible or not. In this blog, we have answered some of the questions related to estate planning and tax.
Earlier, estate planning fees were exempt from taxes. But before delving deeper into estate planning cost and taxes, it’s essential to understand what estate is planning in general and why it is crucial that people draft their estate and will.
In simple terms, estate planning means arranging one’s assets and estate to be distributed to the beneficiaries designated by them. The process entails creating legal documents and directives, calculating the assets and estate, deciding the beneficiaries and property sharing percentage, and much more. One of the biggest misconceptions revolving around estate planning is that it’s only for people with high net worth. However, everyone should consider estate planning as it helps one to settle financial affairs even after passing away. Without properly created estate planning, your family may experience issues in handling the creditors and estate taxes. Moreover, new tax laws have made it difficult for people to receive a tax break on estate planning fees.
There are various facets to creating an enforceable estate will. However, the cost is one of the most crucial elements of any estate planning. One should keep in mind the cost of an estate litigation lawyer, tax accountants, and advisors, to name a few.
Previously, the Internal Revenue Services considered some estate planning fees as an itemized deduction. Now, the changes in the tax laws and acts have changed the scenario.
IRS Rules Changed
According to the miscellaneous deduction on Schedule A of the IRS code, specific fees and charges related to estate planning were qualified for an itemized deduction. Now, due to the change in the Tax Cuts and Jobs Act now, legal fees for estate planning are not eligible for a tax deduction. Until recently, IRS made estate tax planning fees deductible if a person incurred expenses to collect income, management, and maintenance of property producing income or tax planning.
While the Tax Cuts and Jobs Act will end by the year 2025, some estate planning tax deductions may revive before then.
If you had planned to deduct fees for tax advice, you would not be able to avail of the tax rebate. Tax deduction for pre-fee services for estate and tax preparation is not deductible anymore. Fees for services like the power of attorney, living will, or property transfer were not deductible even for the tax changes.…