Discussion Archives:Deductibility of legal expenses for setting of Special Needs Trust

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Discussion Forum Index --> Advanced Tax Questions --> Deductibility of legal expenses for setting of Special Needs Trust

Discussion Forum Index --> Tax Questions --> Deductibility of legal expenses for setting of Special Needs Trust

AsprgEACPA (talk|edits) said:

19 March 2011
Clients had to set up a Special Needs Trust for their disabled child. I know there is a proposed legislation allowing for a Tax credit up to $5,000. Under current law, are the legal expenses deductible? Any guidance would be greatly appreciated.

CathysTaxes (talk|edits) said:

22 March 2011
I just received this information in an email today. A bill is being sponsored for this. Here is a link for The Special Needs Tax Credit Act.


From the email:

Special Needs Tax Credit Bill H.R. 878 - March 2, 2011

US House of Representatives Congressman Ted Deutch (D-FL) today introduced the "Special Needs Tax Credit" Bill into Congress, designed to provide a refundable tax credit for the expense of establishing guardianship for an individual with disabilities 18 years of age or older.

Initiated in 2006 by Jaret L. Vogel, Director of the Special Needs Tax Credit Alliance, a Florida-based 501 (c)(4) nonprofit social welfare organization, the bill addresses the plight of families with a special needs family member, who need to become legal guardian of their child.

"When an individual with Autism, Down Syndrome, or other developmental disabilities turns 18, they are deemed to have all the legal responsibilities of an adult," Vogel said. "Like all other young adults, they are legally entitled to enter in contracts, make legal, financial and health care decisions. Some of these individuals may not have the judgment abilities to make such decisions, and need support from their parents to live in the adult world. For this reason, legal guardianship is the vehicle established to protect them and ensure sound life-choices."

Vogel continued, "the guardianship process may cost $3,000 to $5,000 or more, and many families simply cannot afford to enter into the process. Many of these families have endured extraordinary expenses already, for years of therapies, medications, supportive equipment, etc. Therein lies the "Catch-22;" the young adult cannot make his own decisions and the parents cannot afford to become guardian. All American citizens are guaranteed to enjoy Freedom of Speech and Equal Representation Under the Law. An adult with cognitive impairments who does not have a legal guardian is unfortunately excluded from these civil protections.

The Special Needs Tax Credit Bill is designed to make the guardianship process more affordable for more families. If the family can find the funds for legal expenses short-term, knowing it would be refunded, more persons who need a guardian would have one, and consequently less strain on the state court system to appoint a guardian ad litem, or emergency guardian, if none exists. Hence, a savings to the court system. Most importantly, more Americans would have a voice in their affairs, through a parent or loved one, and further expand Democracy, much like the Women's Suffragette Movement empowered women to have a voice in their affairs, over 90 years ago."

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