Certified Public Accountants Section

The CPA’s Role in Estate Planning

Certified Public Accountants (CPAs) are professionals, distinguished from other accountants by stringent licensing requirements. They must have a college degree or its equivalent, pass a rigorous national examination and meet certain experience requirements to qualify for a state license. After obtaining a license, CPAs are required to complete one hundred twenty (120) hours of continuing education every three years and submit representative financial statements for peer review every three years. In addition to meeting the profession’s technical requirements, CPAs are governed by a strict code of professional ethics, which stresses independence, integrity, objectivity, technical competence, and adherence to professional standards.

As a member of the estate planning team, the CPA not only brings his or her expertise in income, gift and estate taxes to the table, but also his or her expertise in business. The estate plan should encompass a number of life’s possibilities; such as marriage, divorce, children, college funding, retirement funding, long-term care and, of course, death. The estate plan may include some or all of a number of estate planning vehicles; such as a will, revocable trust, irrevocable trust, family limited partnership, general partnership or corporation. Each of the estate planning vehicles has its own set of tax rules and implications. The CPA assists the estate planning team by providing business advice and coordinating the tax rules and implications of each of the estate planning vehicles to the client’s advantage.

Often times, it is the CPA that works with the client to implement the day-to-day formalities of the estate plan designed by the estate planning team. For example, as part of the estate plan, a family limited partnership (FLP) or trust is created. In order for the FLP or trust to provide the tax benefits envisioned by the estate plan, the operation of the entity must be able to pass scrutiny by the Internal Revenue Service. The CPA is the estate planning team member who will work with the client to insure that the entity’s accounting is accurate and prepared in agreement with the entity’s legal documents.