Estate planning is an important process to undertake to protect your family’s wealth for future generations. Trusts are a common tool that grantors utilize to ensure their assets are properly managed both while they are alive and in the event of their death. Different estate planning fees may apply when setting up a trust, and it is beneficial to understand if these costs can be deducted from your taxes.
Can I Deduct the Cost of Creating a Trust From My Taxes?
Estate planning fees may include attorneys’ fees and filing fees from transferring assets. The costs associated with creating a trust may be deducted from taxes only if the trust is income-producing. A trust is considered income-producing if it holds assets that generate consistent revenue over time. Whether or not your trust is income-producing depends on what assets are used to fund the trust and if those assets make money.
Which Assets Are Funding the Trust?
If assets like houses and cars are the only items in a trust, then the trust is not income-producing because those assets do not generate revenue. However, if assets like stocks from a business are included in the trust, then the trust would be considered income-producing, and the fees from creating the trust will be tax deductible.
In summary, the costs of creating a trust can be tax deductible depending on which assets are funding the trust. It is best to consult with an experienced attorney for estate planning to protect your wealth from unnecessary fees and taxes.
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