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After careful review of the COVID-19 environment, the law firm of Chayet & Danzo, LLC, will be conducting in-person appointments in our offices on a limited basis and with strict social distancing protocols.

During this time, our team will continue to diligently work remotely on all client matters and will maintain communication through email, telephone, and video conferencing. Our main office number, (303) 355-8500 will continue to be answered during our normal business hours of 8:00 a.m. to 5 p.m. Monday - Thursday and 8:00 a.m. to 4:00 p.m. on Fridays.

This decision to have limited appointments in-office while following strict social distancing protocols is in the best interest and health of our team, clients and community.

We will continue accepting new clients during this period as well as fully servicing our existing clients.

We wish you and your family continued health during these unique and challenging times.

Compassion, talent and dedication: guiding colorado families and Their Trusted Advisors During Times of Need

When are estate and trust administration expenses deductible?

Prior to the 2017 Tax Cuts And Jobs Act (TCJA) these administrative expenses generally fell into the miscellaneous itemized deduction bucket. The TCJA suspended miscellaneous deductions until Jan. 1, 2026. This had created uncertainty about whether an estate, a non-grantor trust or an individual beneficiary could still claim them in the interim.

In July, the IRS issued a notice clarifying its position on the topic. Estates and non-grantor trusts will still be able to deduct these expenses. A beneficiary, however, might not be able to deduct them after termination of an estate or trust.

What expenses might qualify for the deduction?

We won’t get into all the analysis about itemized versus above-the-line deductions, but will instead focus on categories of deductible expenses. They include:

  • Accountant or tax return preparer fees for estate and trust tax returns (IRS Form 1041)
  • Attorney fees, for example defending against an undue influence claim
  • Trustee fees (i.e., the yearly cost of professional trust management services)
  • Expenses associated with management and maintenance of property
  • A portion of investment advisory fees
  • Fees paid to a personal representative/fiduciary to administer the estate

Keep accurate records to support any of these potential deductions. Some may not be fully deductible, but can still offset income.

Why is there a limit on beneficiary deductions?

The IRS is still reviewing the treatment of deductions upon the termination of an estate or trust. Stay tuned for more information.

Here is what we do know from the July notice. A net-operating carryover or capital loss would likely be deductible to the beneficiary. Other types of losses, such as charitable contributions that exceed gross income, might not qualify, having fallen under miscellaneous deductions.

If appointed as a trustee or personal representative (executor) of an estate in Colorado, you can claim reasonable fees related to administering the trust or estate. While these might be deducted by the estate or trust, they are taxable ordinary income to you.

The federal estate tax threshold increased to $11,180,000 for 2018 and will be $11.4 million in 2019, but this does not erase federal estate and trust tax return reporting obligations. Administration of an estate or trust comes with costs and accurate record-keeping ensures that available deductions are used.

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Denver Office
650 S.Cherry St., Suite 710
Denver, CO 80246

Toll Free: 1-888-472-1088
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Edwards, CO 81632

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Suite 301
Aspen, CO 81611

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