I have a tax question: Is the money you pay a lawyer to do a trust, tax deductable?

[demosincebirth]

I hope there is EA on this forum. I asked the lawyer and he said I have to ask my tax man. Another reason to dislike lawyers.

[TreasonousBastard]

1. But he's right.

[The Velveteen Ocelot]

2. The lawyer is right.

But if you don't like lawyers why don't you set up the trust yourself?

[demosincebirth]

3. You didn't answer my question.

[The Velveteen Ocelot]

4. I don't know the answer; I'm not a tax expert.

Just saying the lawyer was correct in advising you to talk to your tax accountant.

[Hoyt]

5. It depends. You can look it up. Here's a few answers.

http://finance.zacks.com/can-deduct-fees-setting-up-revocable-trust-taxes-11827.html
https://ttlc.intuit.com/questions/2589952-can-i-deduct-the-legal-costs-of-a-living-trust

Personally, I'd deduct them and see what happens. But that's not a recommendation.

[demosincebirth]

7. Thanks for the link, it helps.

[elleng]

6. 'Another reason to dislike lawyers,' because they tell you when they don't know an answer

and suggests finding an answer from an expert?

[demosincebirth]

8. This lawyer, all he does is trusts...and he doesn't know?

[Spitfire of ATJ]

14. He doesn't SAY....

Not for free.

[Sister to TxTowelie]

9. The fees we paid to a lawyer to set up a Special Needs Trust

(Supplemental Needs Trust) were not deductible. I doubt fees for a regular trust would be deductible.

[csziggy]

10. To be sure, check with your tax guy

But here is info from the IRS:

Legal Expenses

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax.

You can also deduct legal expenses that are:

Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business,

For tax advice related to a divorce, if the bill specifies how much is for tax advice and it is determined in a reasonable way, or

To collect taxable alimony.

You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F), on the appropriate schedule. You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). See Tax Preparation Fees , earlier.

<SNIP>

Personal Legal Expenses

You cannot deduct personal legal expenses such as those for the following.

Custody of children.

Breach of promise to marry suit.

Civil or criminal charges resulting from a personal relationship.

Damages for personal injury, except for certain unlawful discrimination and whistleblower claims.

Preparation of a title (or defense or perfection of a title).

Preparation of a will.

Property claims or property settlement in a divorce.

You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property.

http://www.irs.gov/publications/p17/ch28.html

Since they specifically indicate that you cannot deduct fees for preparation of a will, I suspect that applies to legal fees for creating a trust.

[demosincebirth]

11. Thanks.

[underahedgerow]

12. You could also hire a qualified paralegal to do the same job for half the money. Paralegals rock!

My best friend in LA does this and charges much less for her clients. She also does taxes, so she knows alllllll the ins and outs.

She also handles private party real estate transactions, she saved me thousands in realtor commissions.

[demosincebirth]

13. The last trust we had made, about twenty years ago, I hired a paralegal to do it. He done a good

job with it and only charged 250 bucks. I had to have it redone because of changing circumstances. Friends kept on telling me that I should go to an attorney to get it done right. So I did. Didn't see much difference except for the few changes I had him make. Had to pay upfront $2500 bucks. Friends mean well, but sometimes they are wrong when giving advice. I hope I never have to deal with lawyers again. By the way, his fee was $600 an hour. I understand, now, why some people have to hock their homes.

[mackerel]

17. Maybe you should have shopped around. The firm I work for

charges $950 and $150 for each additional property. Our associate charges $750 and $250 for each additional property. A paralegal is not an attorney and should not be doing Trusts by themselves. The tax laws have changed in CA & one slight mistake and you could loose everything and no recourse to sue because most paralegals don't have malpractice insurance. I worked with a paralegal who did a huge fuckup and actually gave very bad advice to one of our attorneys. Luckily another attorney caught the mistake before the damage was done.l

[1970andy]

15. I did our trust myself.

Just got a book at the library with a CD. It was a template, so I filled in the blanks. Filled in the other part. Not really hard if you have the time.

I was surprised though, that the library still had a book like that with a CD. A lot of times those books are stolen.

[demosincebirth]

16. A simple trust might be OK, but I had a lot of stipulations.