Are Estate Planning Fees Tax Deductible? What You Need to Know

Good estate planning gives you control over what happens to everything you’ve built. However, the costs, such as attorney fees, trust documents, and professional advice, can be substantial. Many taxpayers wonder if these necessary expenses can be written off. The question has now been settled by the One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025.

The short answer for most individuals is definitive: no, personal estate planning fees are not deductible.

To understand today’s rules, you need a clear look at both outcomes of the OBBBA: first, personal estate planning deductions are eliminated; second, the estate tax exemption for high-net-worth families is now larger and permanent. This guide clarifies the tax rules for planning costs and how the new law can benefit long-term tax strategies.

For high-net-worth individuals, understanding estate planning deductions is just one piece of a comprehensive tax strategy. Learn more about other advanced tax planning strategies in our guide to High Net Worth Tax Planning: Advanced Strategies

🛑 Are Personal Estate Planning Fees Deductible? The Permanent Answer

For decades, the deductibility of personal estate planning was limited but theoretically possible. That minor window has now been shut for good.

The Basic Rule: Why Personal Expenses Aren’t Deductible

The Internal Revenue Service (IRS) has consistently viewed the core costs of preparing an estate plan as personal expenses that benefit you and your heirs, just like the cost of organizing your personal files isn’t deductible. They are essential for managing your private life and wealth, but do not qualify as “ordinary and necessary” expenses for producing income.  

What is definitely NOT deductible on your personal income tax return:

• Writing or updating your will.
• Creating a revocable living trust for personal assets.
• Setting up powers of attorney or healthcare directives.
• General estate planning attorney fees.
• Probate costs (these are paid later by the estate, not the individual).

The Impact of the One Big Beautiful Bill Act

The Tax Cuts and Jobs Act (TCJA) of 2017 suspended miscellaneous itemized deductions, the only category where certain estate planning costs (specifically those related to tax advice or investment management) could previously be deducted. This suspension was set to expire at the end of 2025.

The OBBBA, signed in July 2025, made this suspension permanent.

By making this elimination permanent, the OBBBA confirms you cannot deduct the cost of your personal estate plan. Even when these deductions existed, few taxpayers benefited. Expenses had to exceed 2% of adjusted gross income and surpass the standard deduction, making them impractical for most.

✅ The Exceptions: When Estate Planning CAN Be Tax Deductible

While personal estate planning deductions have been eliminated, some expenses related to estate and trust management may still qualify for deductions in specific, limited scenarios.

1. Business Succession Planning

If estate planning expenses directly relate to business succession, they may be deductible as ordinary and necessary business expenses on the business tax return (e.g., Schedule C, Form 1065, or Form 1120).

Examples that may qualify:

• Creating a buy-sell agreement between business partners.
• Legal fees for business entity restructuring as part of a succession plan.
• Trust planning specifically for business assets.

Document that the expense is directly related to business operations, not merely a personal wealth transfer, and it may be deductible as ordinary and necessary business expenses.

Proper documentation is crucial for showing expenses directly related to business operations, rather than personal wealth transfer.

2. Trust and Estate Administration Fees

After a trust is funded or an estate is opened, the entity may deduct ongoing professional fees for income production or asset management.

• Trust/Estate Tax Return (Form 1041): An estate or an irrevocable trust that must file its own tax return (Form 1041) can deduct administration expenses if the expense is incurred for the production of income or the management of the entity’s assets. This includes executor, appraisal, attorney, and accountant fees for managing the estate’s income-producing property.
• Trusts may deduct fees paid to advisors for managing an income-generating portfolio.

3. Charitable Planning

If your planning involves setting up complex charitable vehicles, such as a Charitable Remainder Trust (CRT) or Charitable Lead Trust (CLT), the portion of legal fees specifically attributable to the charitable component might be considered a charitable contribution. However, this is a highly complex and gray area that demands careful documentation and consultation with an attorney or tax professional.

📈 Estate Planning Fees vs. Estate Tax Savings: The Real Value

While the deduction of planning costs is a minor disappointment, the news regarding the federal estate tax is overwhelmingly positive for wealthy families. The OBBBA permanently resolved the primary source of uncertainty in high-net-worth estate planning.

The Federal Estate Tax Exemption Jumps to $15 Million

The OBBBA made the current high federal estate, gift, and Generation-Skipping Transfer (GST) tax exemption permanent and increased it.

• 2025 Exemption: $13.99 million per person.
• Starting January 1, 2026, the exemption will increase to $15 million per person (and $30 million for married couples), indexed annually for inflation.

This change repeals the scheduled “sunset” provision of the TCJA, which would have automatically cut the exemption in half (to approximately $7 million per person) in 2026. This massive increase and permanency mean that far fewer families will ever face federal estate taxes, providing clarity and confidence for long-term wealth transfer strategies.

State Estate Taxes Still Matter

The federal changes don’t affect state estate or inheritance taxes. Several states maintain their own systems:

• Pennsylvania has an inheritance tax (not an estate tax) with rates based on your relationship to the deceased: 0% for spouses, 4.5% for children/grandchildren, 12% for siblings, and 15% for others. Unlike the federal estate tax, it applies to estates of any size. Most assets are taxable, including retirement accounts and financial accounts, though life insurance with named beneficiaries is exempt. PA taxes all intangible assets (bank accounts, investments, IRAs) of PA residents regardless of where they’re held, but only taxes real estate physically located in Pennsylvania. Out-of-state real estate is exempt from Pennsylvania’s inheritance tax. Pay within 3 months of death for a 5% discount.
• New York has an estate tax exemption of $7.16 million per person for 2025
• Connecticut matches the federal exemption ($13.99 million in 2025, expected to rise to $15 million in 2026)

If you live in a state with estate or inheritance taxes, proper planning remains crucial even if your estate falls below the federal exemption.

🔑 A Practical Guide to Estate Planning Decisions

Given that deductibility is mostly off the table for personal plans, focus on the much greater value that planning provides.

1. Don’t Let Deductibility Drive Decisions

The value of a proper estate plan, avoiding the high costs and time delays of probate, protecting your family from conflict, naming guardians for minor children, and ensuring your assets go precisely where you intend, far exceeds the cost of the legal fees, deductible or not. A $3,000 investment in a proper plan could save your heirs tens of thousands in probate costs, court fees, and potential litigation.

2. Document, Document, Document

If you believe any of your fees fall into the deductible business or trust categories, you must prepare:

• Itemized Bills: Insist that your attorney or advisor break down their invoice by service type. Request separate line items for business succession planning vs. personal will drafting.
• Detailed Records: Document how each expense specifically relates to the income-producing activity (e.g., “Legal fees for updating trust documents holding income-producing rental properties”).
• Consult a Tax Advisor: Always run any claimed deduction by your CPA or tax professional, as they are best positioned to navigate the complex line between personal and income-related expenses.

3. No More “Use It or Lose It” Pressure

Since the One Big Beautiful Bill Act permanently increased the lifetime gift and estate tax exemptions, the urgency to make large gifts before the end of 2025 has disappeared. The sunset provision, which would have halved the exemptions, has been removed.

However, “permanent” in tax law is a relative term. Future legislation could change everything. While there’s less immediate pressure, individuals and families who want to take advantage of the current exemption amounts should still act thoughtfully. A change in congressional control could lead to rollbacks of these provisions.

Bottom Line

The bad news: Personal estate planning expenses are definitely not deductible, and this is now permanent law.

The good news: The federal estate tax exemption jumped to $15 million per person ($30 million for couples) in 2026, and far fewer families will face federal estate taxes.

Don’t let the lack of deductibility stop you from creating a solid plan. The cost of NOT having proper estate planning—family disputes, probate expenses, assets going to unintended beneficiaries—is far greater than the upfront investment.

Good estate planning is like preventive healthcare for your financial life. You’re paying now to avoid much bigger problems later. And with the new, higher exemptions, more families than ever can pass their wealth to the next generation tax-free.

This article provides general information current as of November 2025 and shouldn’t be considered legal or tax advice. Estate and tax laws are complex and vary depending on the situation. Consult with qualified estate planning and tax professionals for guidance specific to your circumstances.