Legal fees deceased estate and wills

are legal fees paid to lodge probate administer an estate (not to fight a dispute) tax deductible? If so on whose tax return?

Are legal fees paid to a lawyer to prepare a will tax deductible?

 

How do either relate to the production of assessable income?

No.

 

Some estate legal and tax fees can become a element of the costbase of inherited assets. This is quite often overlooked by legal and tax advisers.

ATO says

Expenditure incurred by a legal personal representative
As a beneficiary, you can include in your cost base (and reduced cost base) any expenditure the legal personal representative would have been able to include in their cost base if they had sold the asset instead of distributing it to you. You can include the expenditure on the date they incurred it.

For example, if an executor incurs costs in confirming the validity of the deceased’s will, these costs form part of the cost base of the estate’s assets.

Example: Transfer of an asset from the executor to a beneficiary

Maria died on 13 October 2000 leaving two assets – a parcel of 2,000 shares in Bounderby Ltd and a vacant block of land. Giovanni was appointed executor of the estate (the legal personal representative).

When the assets were transferred to Giovanni as legal personal representative, he disregarded any capital gain or loss. Giovanni sold the shares to pay Maria's outstanding debts. As the shares were not transferred to a beneficiary, any capital gain or loss on this disposal must be included in the tax return for Maria's deceased estate.

When all debts and tax had been paid, Giovanni transferred the land to Maria's beneficiary, Antonio, and paid the conveyancing fee of $5,000. As the land was transferred to a beneficiary, any capital gain or loss to date is disregarded. The first element of Antonio's cost base is taken as Maria's cost base on the date of her death. Antonio is also entitled to include in his cost base the $5,000 Giovanni spent on the conveyancing.​