Q: My husband died recently. My lawyer's bill for settling the estate was $4,683, which I paid.
In making out my income-tax return this March, I put that amount down as a deduction. A friend who helps me prepare my taxes said I could not use it as a deduction from my income because the lawyer's bill for settling an estate is not deductible from income. Which of us was right?
A: Lawyer's fees for estate settlement are generally not deductible on income-tax returns, so, technically speaking, your friend was correct. However, there are two places where that fee might be deductible: on the estate tax return (form 706) or the estate income-tax return (form 1041).
If your husband willed everything to you, there was probably no estate tax paid because of the marital deduction. However, the lawyer's fee can reduce the tax on income earned from the
estate before its settlement.
I suggest you talk to a professional tax-return preparer and if necessary file an amended form 1041.
Q: Ten years ago, I had a will drawn up. I was not very pleased with the lawyer who drafted it. Now I want to update the will with my new lawyer.
My question: Do I have to let my previous lawyer know that I'm changing my will with the help of another lawyer?
A: Absolutely not! All wills should contain wording similar to: "I revoke all wills and codicils previously made by me." This phrase will cancel any previous wills and make the new one the only valid will. It will also eliminate the need to contact your old lawyer, since the new will replaces the old one.
Q: You recently wrote a column about a fraudulent credit-card charge. I had a similar problem. Although I followed your recommendations, it still took the issuer seven months to remove the disputed charge. However, it was not until I informed the bank that I had contacted the Federal Trade Commission and intended to file a complaint that the accumulated
finance charges were removed. I suggest that your reader do the same. By taking so long to resolve these problems and by computing finance charges based on the total previous month's balance, even when paid in full each month, the bank was in violation of the Fair Credit Billing Act.
A: Seven months is four months more than the 90 days allowed by law for the issuer to resolve the problem. But keep in mind that the clock only starts ticking upon receipt of your written notice. So, pretend telephones do not exist. Put everything in writing, and keep a copy of all correspondence.