Is Estate Planning Tax Deductible in California?

As you take steps to protect your legacy and secure your family’s financial future through Estate Planning, you may be asking: Is Estate Planning tax deductible? Many California residents seek clarity on which costs, if any, can be offset through tax deductions, especially with changes to federal tax law.

While a comprehensive Estate Plan is an investment in your long-term financial security, understanding the current tax landscape and how it impacts deductibility is essential. In this blog, California Estate Planning attorney Ali Talai answers this question and discusses strategies to enhance your Estate Plan, including Asset Protection, to ensure your wealth remains protected for future generations.

Estate Planning Expenses

CA Estate Planning involves various expenses, from legal consultations to document preparation and filing fees. In California, these costs can be significant, particularly in major metropolitan areas where legal fees tend to run higher.

A comprehensive Estate Plan may include a Will, Trust, Power of Attorney, and tax-related planning, each with its own associated costs and potential tax implications. Given the investment, it’s natural to explore whether any of these costs are tax-deductible.

Why Estate Planning Fees Are Not Deductible

In recent years, the landscape of tax deductions for Estate Planning fees has changed significantly. Under the Tax Cuts and Jobs Act (TCJA) of 2017, many miscellaneous itemized deductions were suspended, impacting a wide range of expenses, including those associated with Estate Planning. Here are the key reasons why Estate Planning fees are currently not deductible:

Suspension of Miscellaneous Itemized Deductions: The TCJA introduced a suspension of miscellaneous itemized deductions from 2018 through 2025. This category included various expenses that were previously deductible, such as legal fees, tax preparation fees, and financial advisory fees related to Estate Planning.
Characterization of Expenses: The IRS classifies most Estate Planning fees as personal expenses. Unlike business expenses, which can often be deducted under Internal Revenue Code Section 162, personal expenses do not typically qualify for deductions. This classification means that even if the fees are related to financial planning or tax strategy, they are not eligible for deduction under current tax law.
Limitations on Prior Deductions: Even prior to the TCJA, the deductibility of Estate Planning expenses was limited. For example, deductions for miscellaneous expenses were only available to the extent they exceeded 2% of a taxpayer’s adjusted gross income (AGI). This often made it difficult for many individuals to benefit from these deductions, even before the TCJA made them unavailable altogether.
Impact of Legislative Changes: Unless Congress enacts new legislation, the suspension of these deductions remains in effect until at least 2025.

However, the current non-deductibility of Estate Planning fees should not deter you from seeking professional assistance. Rather, it emphasizes the importance of comprehensive financial planning and strategy, focusing on the long-term benefits of Estate Planning rather than short-term tax advantages.

Key Strategies to Enhance Your Estate Plan

Given today’s tax landscape, building an effective Estate Plan requires strategies that maximize your tax benefits while keeping your future intentions intact. Here are some valuable strategies to enhance your Estate Planning approach in light of current tax laws:

Utilize Estate and Gift Tax Exemptions: With higher exemption limits available under current tax law, strategic lifetime gifting can reduce the taxable portion of your Estate. This approach may lower the value subject to Estate taxes, leaving more for your heirs.
Incorporate Charitable Giving: Charitable contributions can play a dual role in your Estate Plan, supporting causes you care about while potentially reducing your taxable Estate. This strategy may offer tax benefits now and in the future.
Explore Tax-Advantaged Trusts and Investment Vehicles: Trusts and other tax-efficient options can help you manage how your assets are taxed during your lifetime and upon transfer. Choosing the right structures for your assets can protect their value and limit tax exposure.

Strengthen Your Estate Plan with Asset Protection

While Estate Planning fees may not be deductible, incorporating Asset Protection strategies can provide significant value and security within your Estate Plan. Legal structures such as limited liability companies (LLCs) and Irrevocable Trusts offer ways to shield your assets from potential creditors and legal claims. By transferring certain assets into these structures, you can separate personal wealth from business risks and protect valuable properties for your intended beneficiaries.

Additional tools, including retirement accounts and umbrella insurance policies, add another layer of protection, helping to safeguard your financial legacy against unforeseen circumstances. To explore the best Asset Protection strategies for your Estate, consult a California Estate Planning attorney. Discover additional Asset Protection strategies in our blog: “How Can I Protect My Assets in California?”

Get Started with Clear, Flat-Fee Estate Planning

With most Estate Planning fees currently non-deductible, creating an effective Estate Plan may seem less advantageous—but this couldn’t be further from the truth. Working with a California Estate Planning attorney ensures that your Estate Plan is designed not only to protect your family’s financial future but also to incorporate effective asset protection strategies for long-term security.

At Talai Law Offices, attorney Ali Talai and our team provide clear, flat-fee Estate Planning services tailored to your unique needs. We help you make strategic choices to safeguard your assets, support charitable giving, and meet your long-term goals.

If you’re ready to build a comprehensive Estate Plan that protects your legacy and secures your assets, contact Talai Law Offices today instead of searching online for an “Estate Planning attorney near me.” Call us at (818) 285-2850(818) 285-2850 or complete our secure online form to schedule your consultation.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.

Talai Law Offices, Inc.
6300 Canoga Ave Suite 550
Woodland Hills, CA 91367
(818) 285-2850(818) 285-2850
https://talailaw.com/