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What expenses are tax deductible when administering an estate

If you are chosen to be an executor for an estate, it is largely a great honor. However, there are a number of responsibilities to be undertaken with regard to a deceased’s property. Part of that is handling (or hiring someone to handle) the administration of the estate.  One of the questions that will come up for executors is whether some of their expenses in handling the estate are tax deductible. Also, executors may wonder if certain expenses may reduce the estate’s overall value for tax purposes.

With that, we will highlight a few costs that are tax deductible through this post. 

Attorney’s Fees – Where do a deceased’s debts go when they pass away? It is fairly common for creditors to initiate lawsuits against an estate to collect on unpaid debts. Because of this, if you must hire an attorney to defend the estate, these fees are tax deductible.  

 Administration Costs – A common duty for executors is to take all reasonable steps to preserve and distribute property of the estate. These steps may include arranging for appraisals, paying outstanding debts, as well as incurring court costs. All of these costs are potentially tax deductible

Executor’s Commissions – Last but certainly not least, the time and effort that an executor expends in making sure that the estate is properly distributed can justify a commission. Similar to  the fees for other professional services, the commission must be based on commonly accepted standards for estates of similar size and character to be considered tax deductible.

If you have additional questions about estate taxes, an experienced tax law attorney can advise you. 

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Law Offices of Robert T. Leonard, APC

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