tax deductibility of costs of setting up living revocable trust

As I recall the costs for setting up a living trust are deductible to the extent it involves tax planning. In the past I considered a good chunk of a trust for that purpose. But with the new higher lifetime exemption and portability of the marital deduction, using a trust for tax planning applies to very few people these days.

I disagree with your last sentence. There is no assurance whatsoever that either or both the higher lifetime exemption and portability of the marital deduction will remain in the tax code, given the propensity to fiddle with this and turn it into a political hot potato on a frequent bases.

My advise is always to do your estate/tax planning keeping in mind that things may change, and to the extent possible craft your plans to automatically take such changes into account.

Also, the portable marital exemption is lost when a surviving spouse remarries, so best to use it properly before it would be lost. And the time for doing that is not just before a remarriage.

And not all of us have spouses, FWIW. Are there implications for singles?

While revocable trusts are great for avoiding probate, they don't do much for saving taxes other than with respect to preserving the marital deduction.

You might be able to justify the deduction as for financial management, but in my opinion you really can't claim it for tax planning these days.

First, a suggestion -- it is not good practice to include part of your question in the subject line. Most people are just going to see the body of your question, which in this case wouldn't make much sense.

In addition to the other answers, there is the practical matter of how much tax benefit you would get, even if all of it is deductible. First, the expenses go into a section of Schedule A where only expenses over 2% of your AGI are counted, so you lose a big chunk of benefit right there. Then, depending on your overall income, your Schedule A deductions overall can be limited as well (I'm too lazy to look up if the Misc. Deductions section is subject to limits, I think it is). And finally, many folks don't benefit from filing Schedule A at all.

Marc,

I thought creating a meaningful subject line helped people decide if they wanted to read the post at all. What would you suggest as a better subject?

I understand the limits on Schedule A Misc deductions and I do qualify to file a Schedule A, so I understand things from that perspective, just not the legality of claiming this particular expense anywhere.

jo

========================================= MODERATOR'S COMMENT: A good subject line is important. But you should also include the same information in the body of the message.

What he meant was that you shouldn't put the question ONLY in the subject. The subject should be a summary, but the question should be in the text.

Ooops. I see what you mean. I normally do repeat the question, but this time it does look like an orphan post. Sorry.