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Are Estate Planning Fees Tax-Deductible? What You Need to Know
Planning for what happens after we pass away isn’t always fun to think about, but it’s necessary. Estate planning helps people protect their property, care for loved ones, and avoid messy legal problems. However, these services come at a cost. Paying for a lawyer, tax expert, or financial advisor can get expensive, leaving many to wonder if estate planning fees can be written off on their tax return.
Not long ago, some of these costs were tax-deductible. But with changes in United States law under the Tax Cuts and Jobs Act (TCJA), the rules have shifted. Now, many taxpayers aren’t sure what applies and what doesn’t.
So, are estate planning fees still tax-deductible? This article will break down current IRS rules, past deductions, possible future changes, and smart ways to handle these costs.
What Is Estate Planning?
Estate planning is the process of organizing your legal documents and assets so your wishes are followed after you die. It includes preparing:
- Wills and trusts
- Power of attorney
- Advance healthcare directives
These papers tell your family and the government how to handle your property, money, and medical care.
Common Estate Planning Expenses
Estate planning can include several services that may result in large bills, such as:
- Lawyer or attorney’s fees for drafting wills and trusts
- Trust management or income trust setup costs
- Advice on tax and probate rules
- Preparing IRS tax forms related to your estate
Why It Matters
Without an estate plan, the Federal government of the United States and local courts will decide how to split your things. This can lead to:
- Long delays
- Extra court costs
- Higher taxes
- Your belongings not going where you wanted
Good planning saves time, money, and stress for your family.
Were Estate Planning Fees Ever Tax-Deductible?
Pre-2018 Rules
Before 2018, some estate planning expenses could be deducted as miscellaneous itemized deductions if they were more than 2% of your adjusted gross income (AGI).
Deductions were allowed for:
- Tax advice
- Setting up income-producing trusts
- Preparing tax forms for your estate
However, personal expenses—like basic wills or naming a guardian for your child—weren’t deductible.
Impact of the TCJA (2018–2025)
When the Tax Cuts and Jobs Act started in 2018, it suspended most miscellaneous deductions. That means:
- Estate planning fees for personal matters became non-deductible
- Only certain business-related planning (like succession plans) remained deductible
This law will remain in effect until at least the end of 2025, unless Congress changes it.
Current IRS Rules: 2025 Update
General Rule
Today, most people cannot deduct estate planning fees on their income tax forms. These are now considered personal expenses by the Internal Revenue Service (IRS).
Exceptions Where Deductions May Still Apply
There are some special cases where tax deductions are allowed:
- Managing income-producing property – If your plan helps handle rental homes, investments, or other assets that generate income, the fees may be deductible.
- Tax advice and prep work – If you’re paying for help with estate tax returns or other IRS forms, those services may still count.
- Business succession plans – Fees related to passing on a business may be deductible under corporate finance or business law rules.
Key Limitations
- If deductions return after 2025, they may again fall under the 2% AGI rule
- You must itemize your deductions; if you use the standard deduction, these costs won’t apply
Potential Future Changes
TCJA Sunset Provision (End of 2025)
The TCJA was not meant to be permanent. If Congress doesn’t act, many of its tax changes—like the end of miscellaneous deductions—will expire after 2025.
This means:
- Estate planning fees could become deductible again
- Political shifts will impact what parts of the tax code are restored
- Debates about the economy, public finance, and government finances may shape what happens next
Planning Ahead
Because the law might change, it may be wise to:
- Wait until 2026 to pay for large estate planning projects if the rules become more favorable
- Ask a Certified Public Accountant (CPA) or tax advisor about the latest updates.
Keeping up with public policy and economic law changes can help you make better financial choices.
Strategies to Offset Costs
Even if you can’t deduct your estate planning fees right now, there are ways to reduce the impact on your wallet.
Leverage Tax-Advantaged Tools
Some tools can offer tax advantages:
- Use a charitable trust or donor-advised fund for giving while reducing your taxable income
- Make yearly gifts using the annual gift tax exclusion ($16,000 per person in 2023)
These actions can also lower your estate tax later on.
Business Owners
If you own a business, you may:
- Count some estate planning costs as a business expense
- Use corporate strategies to reduce income taxes and improve tax efficiency
Document Everything
Keep detailed records of:
- What the fees cover
- How they relate to your investments, property, or business
- Invoices from your lawyer, tax consultant, or financial advisor
If deductions return, having proof may help you save on your tax return.
Conclusion
In short, estate planning fees are mostly not tax-deductible under current United States law, thanks to the Tax Cuts and Jobs Act. However, if your planning involves a business, tax preparation, or income-producing assets, you may still qualify for some write-offs.
As we get closer to 2026, changes in public policy or a new tax law could bring back more deductions. For now, planning smartly, using tax-friendly tools, and keeping clear records is the best strategy.
For professional help managing your taxes and estate planning, reach out to BIT Accounting. Their team can help you understand the latest rules and make smart choices for your future.
FAQs
1: What are estate planning fees?
They are payments made to lawyers, tax professionals, or advisors for services like writing wills, creating trusts, and planning asset transfers.
2: Are estate planning fees tax-deductible in 2025?
Most are not, unless they relate to business ownership, income trusts, or tax preparation. The full deduction rules may return after 2025.
3: Can I deduct legal fees for creating a trust?
Only if the trust handles income-producing property or if it’s part of a business plan. Otherwise, it’s considered a personal expense.
4: What is the 2% AGI rule?
It’s a rule that lets you deduct certain costs only if they go over 2% of your adjusted gross income. It was removed by the TCJA but may return in 2026.
5: Should I wait until 2026 to do estate planning?
Not necessarily. It depends on your needs. But if you’re planning large expenses, it might be worth checking the tax rules first.
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