conservatorship fees tax deductible

[sdtaxman]

I have a client that had a conservatorship set up (not a trust). This individuals assets are being managed by a bank trust officer. I am trying to determine if the $22,692 paid is a schedule a miscellaneous expense deduction subject to the 2% limitation. I believe it is. However, is all of it deductible? The bank department does pay some of the personal bills directly including health insurance, medical expenses, house payment, real estate taxes, monthly distribution to the individual, and some additional discretionary distributions to the individual for personal items. They also collect all income, negotiate rent contracts on real estate owned, pay real estate taxes, manage the cash assets by investing in various securities, etc. If not all of it is deductible I would sure entertain ideas of how you could allocate a portion of the fees.

Thanks for your help.

[Roland Slugg]

The taxpayer can deduct the portion of the conservator's fees that directly pertains to the collection of income, the preparation of tax returns and consultation regarding tax matters. All other fees, such as the payment of expenses, including tax-deductible expenses, are not deductible.

To determine the deductible amount will require a reasonable allocation, and the conservator may be able to furnish one upon request. In any case, the deductible portion will be subject to the 2% haircut for miscellaneous itemized deductions.

[Burke]

I have a client that had a conservatorship set up (not a trust). This individuals assets are being managed by a bank trust officer.
Thanks for your help.

You say it is not a trust, but it is being managed by a bank trust officer. Sure sounds like a trust to me. A bank trust dept would not be handling this unless there were some governing documents signed by the owner of the assets, or it would be in big trouble. And I would want to see a copy of them. I would inquire further as to this arrangement and the fees being charged. On the management of invested assets, for instance, they must be allocated between taxable and tax-exempt income. And they would be subject to 2% exclusion. Other fees may be charged off as fiduciary fees in another place.