Estate planning fees are generally not tax deductible when you pay them personally for things like a will, a revocable living trust, or powers of attorney. A 2025 law made that rule permanent for federal income tax purposes.1Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions Two situations still allow a deduction: fees tied to a business you own, and fees a trust or estate pays for its own administration.
Why Your Personal Fees Don’t Qualify
The tax code treats personal estate planning fees as miscellaneous itemized deductions. The Tax Cuts and Jobs Act of 2017 suspended that whole category starting in 2018, and the suspension was originally set to expire at the end of 2025. It didn’t. The One Big Beautiful Bill Act, signed in 2025, struck the expiration date. The statute now disallows any miscellaneous itemized deduction for tax years beginning after December 31, 2017, with no end date.1Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
If you or your advisor were counting on these deductions to reappear in 2026, that plan needs to change. They aren’t coming back.
Business Succession Planning Is Different
Fees your business pays for succession or ownership-transfer planning follow a separate rule. The tax code allows a deduction for all ordinary and necessary expenses of carrying on a trade or business.2Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses That’s a business deduction, not a miscellaneous itemized deduction, so the permanent suspension doesn’t reach it.
A business can deduct legal fees for drafting a buy-sell agreement, structuring the transfer of ownership interests, or reorganizing entities as part of a transition. What matters is the nature of the work, not who provides it. An attorney helping you decide who inherits your vacation home is doing personal estate planning. That same attorney helping your S-corporation plan a leadership handoff is providing a business service.
Mixed engagements are common, and only the business portion qualifies. If your estate planning attorney spends three hours on your buy-sell agreement and seven on your personal trust, three hours’ worth of fees are a candidate for a business deduction and the rest are not.
What a Trust or Estate Can Deduct
Trusts and decedents’ estates are separate taxpaying entities and file their own returns on Form 1041.3Internal Revenue Service. About Form 1041, U.S. Income Tax Return for Estates and Trusts Administration costs that wouldn’t have been incurred if the property weren’t held in a trust or estate are deducted in figuring the entity’s adjusted gross income, so they aren’t miscellaneous itemized deductions in the first place and the permanent suspension doesn’t apply.4Office of the Law Revision Counsel. 26 USC 67 – 2-Percent Floor on Miscellaneous Itemized Deductions – Section: (e)
Deductible administration costs include:
- Trustee or executor compensation for managing the trust or estate.
- Legal fees to interpret trust terms or defend the trust in litigation.
- Fees to prepare the entity’s Form 1041, the decedent’s final individual return, and any estate or generation-skipping transfer tax returns.
Gift tax return preparation is a notable exception. The IRS treats it as a cost individuals commonly incur whether or not property sits in a trust, so those fees are not deductible on Form 1041.5Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1
Splitting a Mixed Bill
Most engagements blend deductible and nondeductible work. One meeting covers your will, the next restructures a family business, a third advises an irrevocable trust. A single flat-fee invoice for all of that leaves you without anything to deduct, because the burden of substantiating an allocation between personal and business or fiduciary services is yours.6Internal Revenue Service. Burden of Proof
Ask for an itemized invoice at the start of the engagement. An invoice that breaks out hours and fees by task gives you the documentation the IRS expects. One that reads “estate planning services — $8,000” gives you nothing. A detailed breakdown reconstructed months later at your request looks weaker than one generated while the work was being done, so raise this before the engagement begins.
What Happens If You Deduct Something You Shouldn’t
Claiming a personal fee as a business expense or a trust administration cost invites scrutiny. A disallowed deduction means the tax you should have paid, plus interest compounding daily from the original due date of the return.7Internal Revenue Service. Revenue Ruling 2025-22 – Determination of Rate of Interest On top of that, a 20% accuracy-related penalty applies when the IRS finds a substantial understatement of tax, which for individuals means an understatement greater than $5,000 or 10% of the tax that should have been shown on the return, whichever is larger.8Internal Revenue Service. Accuracy-Related Penalty The itemized invoice is your defense.
State Returns May Follow Different Rules
Federal and state tax rules don’t always match. Most states link to federal definitions to some degree, but conformity varies. Some states adopt federal changes automatically; others freeze their conformity to a set date and must choose to follow new federal rules. A handful may still allow miscellaneous itemized deductions the federal code no longer permits. Before assuming your state return works the same way, check with a tax professional familiar with your state’s current rules.