Are Legal Fees for Preparing a Will Tax-Deductible?

By Tom Streissguth

The Internal Revenue Service allows you to deduct attorney’s fees you pay for tax-related work. When the work involves drafting, reviewing or correcting a will, the fees charged may or may not be tax-deductible. It all depends on the nature of the work and how the attorney bills you for it. When in doubt, consult an experienced tax attorney or professional accountant.

IRS Rules

Generally, attorney’s fees are not tax-deductible. However, the IRS makes an exception for fees related to the collection or the payment of taxes, or in an effort to obtain a tax refund. An attorney's -- or another preparer's -- fees for preparing a tax return, for example, are deductible, as is advice given for that return. Fees charged in defending you in a tax audit or in representing you before the IRS are likewise deductible.

Deductible Fees

When preparing your will, an attorney may be called on to advise you on tax matters. The estate tax levied by the IRS, for example, may be the subject of advice on how to shelter money in a trust in order to lessen or avoid the tax. In addition, the fee for advice on the tax features of an investment to be passed to an heir can also be deducted.

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Statements

The attorney can assist you in this matter by drawing up an itemized fee statement that clearly lists the tax-related advice and work the attorney did, the time involved and the hourly fee. You can use this statement to prove that you received tax-related advice if your deduction for the fee is questioned by the IRS.

Probate

Be aware that if the will is contested or subject to a probate hearing, your attorney’s work will not be tax-deductible. In this case, the work is concerned with the will in general, not specifically with the tax implications of the will. Settlement, mediation, hearings, court filings and other probate matters relate to the provisions of the will and bequests to the heirs, and do not directly involved tax questions or the IRS. As a result, attorney fees related to this work are not tax-deductible.

Itemized Deductions

You claim attorney’s fees as an itemized deduction on Schedule A of Form 1040. The IRS imposes a limit on miscellaneous deductions; you can only claim expenses that exceed 2 percent of your adjusted gross income, which you calculated on Line 38 of your return. If you take the standard deduction, you cannot deduct attorney’s fees.

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References

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