If you are making an estate plan, you will need a CPA or accountant to advise you on the following types of issues:1. Will your estate be subject to estate taxes or inheritance taxes?2. If your estate will be subject to taxes, what estate planning strategies would help reduce the amount of your estate that will be taken by the government and leave more for your heirs or charity?3. Should you use a strategy of
gifts and gifting to begin passing some of your estate to your children or grandchildren during the current tax year? Whether you have already started making gifts or plan to in the future, a CPA can assist you in filing any Gift Tax Return that may be required.
4. If you own a business, rental property or several properties, what is the most tax efficient way to transfer these assets to your desired beneficiaries as part of your estate plan? An often overlooked area of estate planning is
business succession plans.5. If you have stocks, bonds or retirement accounts such as 401k accounts and IRAs, what steps should you take to maximize the amount that passes to your beneficiaries or charitable organizations? Due to new legislation such as The Secure Act, it is important to consult a CPA in 2020 because these changes may impact how you plan your estate. For an overview of steps to you can take to simplify your estate and financial plan, review our
financial planning section.
Questions to ask a CPA for Estate Planning
Before hiring a CPA or accountant to assist you with your estate plan, it is important to learn whether the individual has mastered the complex tax issues involved in estate planning. Many tax professionals have no exposure to estate planning issues and do not possess the expertise you need. When interviewing a prospective tax adviser, ask the following questions so you can evaluate his or her experience:1. How much experience do you have advising individuals with large estates on tax planning issues?2. How many clients have you helped with tax planning strategies to maximize the amount heirs will inherit or that can be donated to charity?3. What type of experience do you have with forming estate planning trusts for tax savings, legacy planning or charitable giving?4. How many clients have you assisted with business succession planning or sale of a business as part of estate planning?5. How much experience do you have with charitable gift annuities, donor advised funds, charitable trusts or other methods of
charitable giving?The answers to these five simple questions will reveal whether the tax professional is qualified to assist you with your estate plan. Reviewing these questions in advance will help you be more informed before speaking with an accountant.
Why You Need a CPA for Probate
If you are the executor of a will or have been appointed personal representative of an estate, you will need a CPA or accountant to advise on the following types of estate administration issues:1. Filing final tax returns due
for the decedent and the estate.2. Determining the amount of estate taxes or inheritance taxes that are owed.
3. Handling any tax issues related to the sale of any businesses, rental properties, real estate, investments or personal property owned by the estate.4. Administering any charitable bequests provided for in the decedentís will.5. Requesting an
Estate Tax Closing Letter from the IRS if a federal estate tax return is filed for decedent's estate.Although you can use a software program to file final tax returns, most executors and trustees find they have complex tax issues that require the expertise of an experienced tax professional. Due to recent legislative changes such as the Tax Cuts and Jobs Act, it is important to ensure you have the most up to date information about tax rates and deductions. For example, take a look at the
2020 Gifting Limits. A seasoned tax professional that deals with these issues on a daily basis is the best resource for tax advice.
Questions to Ask a CPA for Probate
Many CPA's and accountants work solely on income tax returns. If your tax adviser has never prepared final tax returns for an estate or has never assisted an executor with estate administration, he or she may not be able to provide the best guidance on your probate tax questions. When interviewing a prospective tax professional, ask the following questions so you can better evaluate his or her experience:1. How many tax returns have you prepared for a decedent or an estate? 2. What percentage of your practice deals with estate taxes, inheritance taxes, and estate administration?3. How many clients have you assisted with tax issues related to estate administration, probate or trusts?Be bold in asking any question you feel is relevant to the type of tax work you need done. Ask for references if you want them. Choosing someone without the right tax experience can lead to months or years of frustration and unnecessary expenses.
Why You Need a CPA for Trust Administration
Whether you made a trust as part of your estate plan or are the trustee responsible for trust administration, you will need a CPA or accountant to advise you on tax issues related to administering a trust. For example, you may have questions about how to file tax returns relating to income earned by the trust and property sold by the trust. You may also have questions about tax issues related to property transfers into the trust and distributions to beneficiaries of the trust.Before hiring a tax professional, ask detailed questions to determine if he or she is qualified to advise on trust administration. A key question is how many trust clients the tax professional has advised. You should also ask what percentage of his or her practice involves
How to Find a Tax Professional
To find an accountant, CPA or other tax professional to assist with your estate plan, trust, gift tax return, charitable giving, retirement account contributions, financial planning, generation-skipping transfer tax or estate tax strategy, one of the best online resources is the American Academy of Attorney CPAs. Your estate planning lawyer may be able to help you find a qualified tax adviser. You can also reach out to colleagues or family members who worked with an accountant or tax preparer recently to ask for a referral.When evaluating a tax professional, take time to thoroughly review their credentials, including certifications, licenses, and continuing education. Because there are many different areas of specialization within the accounting profession, you may want to look for a tax professional that focuses on the specific type of issues you need to address. An accountant that prepares basic annual income tax returns may not have the expertise required to deal with estate tax or gift tax issues that may be essential to Legacy Planning for your family. Even if you do not view yourself as having a large estate, there could be significant tax issues to consider.Copyright 2020 Pennyborn.com. ALL RIGHTS RESERVED.Updated February 4, 2020.
INFORMATION ON THIS SITE, INCLUDING ARTICLES, ESTATE PLANNING FORMS, AND THE ESTATE PLANNING BLOG, DOES NOT CONSTITUTE LEGAL, FINANCIAL OR TAX ADVICE. Pennyborn.com is not a law firm and is not a substitute for a lawyer. Your use of this site does not create an attorney-client relationship. Information on this site is for educational purposes only and may not be accurate, complete or up to date.
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