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is estate planning tax deductible

Estate planning can be difficult because there are many tax rules that could cost you in the long run if you don’t know what to deduct. This article discusses reducing estate planning costs by deducting expenses when you file the taxes and give you general tips for saving money in the estate planning process. To go further, you can obtain the financial assistance you need to properly prepare your succession by contacting a Financial Advisor.

What are estate planning fees?

In most cases, the primary estate planning fees come from hiring a lawyer. Although you can find cheap templates and services online, they won’t be enough if you have heirs, sizable assets, or specific needs. Since most people creating an estate plan fit one or more of these categories, working with an estate lawyer will help answer your questions and concerns.

Lawyers can charge either a flat rate or an hourly rate. The rate may vary depending on the complexity of establishing the estate. At the low end, it can cost as little as $150 to $200. However, more complex cases require more work, which can cost up to $300 per hour.

It should be noted that there are indirect costs of estate planning, like the money you could lose by not using an experienced lawyer. These can be considered estate planning fees, but for the purposes of this article, we’re focusing on tangible fees that aren’t unique to your personal circumstances.

Are estate planning fees deductible?

Prior to 2017, certain estate planning expenses were deductible as itemized deductions. However, the Tax Cuts and Jobs Act amended the tax code by making it more difficult to deduct estate planning expenses. Also, since this law nearly doubled the standard deduction and reduced itemized deductions, most taxpayers will take the standard deduction when filing. As a result, fewer taxpayers will want to itemize their deductions and have estate planning expenses they would like to deduct.

The stipulations of the Tax Cuts and Jobs Act will expire by 2025. At that time, lawmakers will decide whether to renew or change the tax laws, which means the rules regarding itemized deductions may change in the future. If you plan to detail your deductions and will soon pay for estate planning services, you can consult a tax professional to find out if some of your estate planning fees are deductible.

What can you deduct for taxes?

is estate planning tax deductible

is estate planning tax deductible

There are many deductions you can take when filing taxes. Taking one of the following deductions can lower your taxable incomethus reducing what you may owe to the government.

  • Business expenses, including the use of your vehicle or home for business purposes

  • Property and property taxes

  • Charitable donations

  • Mortgage interest and moving expenses

  • Interest on student loans

  • Health savings accounts

  • IRA contributions

This is not an exhaustive list of tax deductions and there may be some available depending on your unique situation that are not as well used or not talked about. Talking to the right financial advisor or tax expert is the best way to unlock knowledge of all the potential tax deductions you might be interested in.

Other Ways to Save on Estate Planning Costs

There is no substitute for paying for careful consideration, qualified lawyer to establish your estate plan. They have a level of experience that you don’t and will usually know how to make your long-term estate plan a success. However, you can still cut costs with the following tips:

  • Discuss the costs first: Most attorneys offer a free consultation with no strings attached. Take this opportunity to explain your needs and inquire about costs. Usually, you will pay your attorney a flat rate or hourly rate. If the attorney charges an hourly rate, ask them to estimate how many hours your estate plan will take.

  • Prepare as much as possible: Although you meet with a lawyer to get more information, you can ensure the meeting is productive by understanding what a basic estate plan contains, what your needs are, and what documents you already have. For example, you may already have a will that does not need to be changed and you need to bring it to the attention of your lawyer.

  • Select the right lawyer: Do your homework by asking your family and other people you trust about estate planning lawyers. Reading reviews online will also give you an idea of ​​who will serve you best. Plus, free consultations can help determine if a specific attorney is right for you.

  • Put it in writing: After choosing a lawyer, get a written contract outlining what the lawyer will do for you and how much it will cost. You and your lawyer will sign the contract and you will both know what to expect during the process.

Takeaway meals

is estate planning tax deductible

is estate planning tax deductible

Current tax laws provide little incentive for taxpayers to itemize deductions and limit the expenses you can deduct. As a result, most taxpayers take the standard deduction, which negates the issue of deducting estate planning expenses. However, if you’re going to itemize your tax deductions and have questions about your estate planning expenses, it’s wise to speak with a financial advisor.

Learn more about estate planning and tax deductions

  • The complexity of the tax code makes detailing deductions a complex task that you may need the help of a financial advisor to navigate properly. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your advisors at no cost to decide which one is best for you. If you’re ready to find an advisor who can help you achieve your financial goals, start today.

  • Estate planning can be complicated and difficult to figure out on your own. If you’re just getting started, check out our ultimate estate planning guide to learn all about what you could do to prepare for the future.

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