Estate Investment Advisory Fees May Be Subject to 2 Percent Floor

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IRS re-proposes rules that say the portion of a bundled fee incurred by estates or trusts that is attributable to investment advice and related services will be subject to the 2 percent floor for miscellaneous itemized deductions. At the same time, the rules (REG-128224-06) say some excess advisory fees will be allowed to avoid the floor. The re-proposed rules say that if an investment advisory fee is more than the fee generally charged to an individual investor, and the excess is attributable to an unusual investment objective of the trust or estate, “or to specialized balancing of the interest of various parties, so that a reasonable comparison with individual investors would be improper,” then the excess is not subject to the 2 percent floor.

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