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tchan63
New Member

I paid an attorney for estate planning and trust preparation in 2016. How do I report this in TurboTax premium?

 
1 Reply
HelenaC
New Member

I paid an attorney for estate planning and trust preparation in 2016. How do I report this in TurboTax premium?

In order to be deductible, the IRS requires that estate planning fees must be paid: 

(1) for the production or collection of income; 

(2) for the management, conservation or maintenance of property held for the production of income; or 

(3) in connection with the determination, collection or refund of any tax.

So how might this apply to estate planning fees? If, for example, the estate plan involves advice on the construction of income generating instruments, such as an income trust, or provides guidance on the use of property transfer methods to avoid Federal or State Estate or Inheritance tax, these would meet the IRS restrictions for the ability to deduct such expenses. Other examples might include investment advice for trusts held by the estate, trust tax preparation fees and account custodial fees while held by the estate

However, the billing invoice from the legal or accounting authority providing this advice would have to clearly identify these expenses as being for the current or future production of income or payment of current or future tax. Estate planning relating to the simple transfer of property or guardianship as is common with most wills, or the use of estate planning instruments such as powers of attorney, living wills or the writing of trusts to prevent estate assets from being encumbered inprobate, would be deemed personal expenses that would not be deductible.


To deduct certain legal fees related to taxable income: 

  • Type legal expenses, deduction in the search or find box, click search.
  • Click on Jump to legal expenses, deduction.
  • Continue with the onscreen questions.

Legal deductions are limited to 2% of your Adjusted Gross Income (AGI). Click on What is the 2% rule? for additional information.

Generally, you can't deduct fees paid for advice or help on personal matters or for things that don't produce taxable income. For example, you can't deduct fees for:

  • filing and winning a personal injury lawsuit or wrongful death action—the reason is that the money you win isn't taxable
  • settling a will or probate matter between your family members
  • help in closing the purchase of your home or resolving title issues or disputes (these fees are added to your home’s tax basis)
  • obtaining custody of a child
  • obtaining child support
  • name changes
  • legal defense in a civil lawsuit or criminal case that's not work-related—for example, attorney fees you pay to defend a drunk driving charge or against a neighbor's claim that your dog bit and injured her child. 

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