5 minute read

4 Ways an Estate Accountant Can Assist You

Navigating the process of preparing and filing estate tax returns is a complicated task. Learn how an estate accountant can help you with this guide.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

Navigating the complexities of estate taxes is a daunting task for many. However, getting the help of an estate accountant can help simplify the process in a significant way. 

An estate accountant provides expertise in preparing and filing taxes while guiding you through the labyrinth of regulations, deadlines, and paperwork. This guide outlines four key ways an estate accountant can provide invaluable assistance in managing your estate taxes, thereby making a strong case for their involvement. Trust & Will explores how hiring an expert can bring peace of mind in what could otherwise be an overwhelming process.

What Does an Estate Accountant Do?

An estate accountant, often referred to as a trust or fiduciary accountant, performs a vital role in both estate planning and post-death administration. They are experienced in dealing with complex financial situations related to estates and trusts, providing a range of services that goes beyond just tax filing. They are responsible for the preparation and filing of estate tax returns, ensuring compliance with federal and state tax laws. In doing so, they help avoid potential tax penalties and the likelihood of audits, thereby ensuring a seamless estate administration process.

The value an estate accountant brings to the table is multifaceted. They can provide invaluable strategic advice on tax planning, which is crucial given that estate tax liabilities can be heavy. They understand the implications of various decisions on the estate's tax liability and can advise on the best ways to minimize taxes. By doing so, they can help in preserving the estate's assets to the maximum extent possible, ultimately ensuring that beneficiaries can receive their fair share.

Estate accounts can also assist in making sure assets are distributed in a way that is fair and accurate, while also being in line with the wishes of your loved one. They also prepare final accountings, which detail all financial transactions that occurred during the estate administration process. This provides a clear, transparent record, ensuring that all parties involved are kept informed and any potential disputes are minimized.

An estate accountant can bring their expertise and insight to effectively manage the financial complexities of estate planning and administration, providing peace of mind to the concerned parties.

How Can an Estate Accountant Help You?

An estate accountant is more than just a tax preparer; they can serve as  your financial guide through the maze of estate administration. Understanding tax laws, financial transactions, and asset distributions can be that much easier. If you don’t have much experience in estate administration, they can help make your life so much easier through a process that is often thought of as daunting and time-consuming.

1. Stay on top of all the paperwork that comes with settling an estate

The paperwork associated with settling an estate can be overwhelming, particularly during a time of grief. It includes a long laundry-list of tasks such as filing the Will, notifying Beneficiaries, valuing the estate, settling outstanding debts, and distributing assets. Navigating through this process alone can be challenging and time-consuming, but an estate accountant can help by streamlining it all.

An estate accountant is in charge of organizing and managing the estate’s financial records. They ensure that the relevant tax returns are filed correctly and on time, reducing the risk of errors that could lead to penalties or further complications. They can also help in preparing the final accounting, providing a clear and transparent record of all the financial transactions that took place in the estate. This record can be crucial in preventing or resolving any disputes that may arise among the beneficiaries.

In addition, an estate accountant can support you by providing tailored financial advice. They can offer ways to navigate tax laws and regulations, as well as how to minimize the estate's tax liability. Their expertise can help preserve the estate's assets as much as possible, ensuring that Beneficiaries receive their fair share. Having this professional guidance can provide peace of mind during an otherwise difficult time.

2. Prepare and file estate tax forms with proven expertise

It’s easy to mess up estate tax returns, but unfortunately any errors can lead to audits and eventually penalties. Estate accountants can help you avoid exactly that. 

These professionals keep themselves on top of  the ever-changing tax laws, ensuring that the estate complies with all the legal and tax obligations. They are experts at  identifying deductions, credits, or exemptions that the estate may qualify for, which can substantially reduce the estate's overall tax liability. This is particularly beneficial for high-value estates that are subject to federal estate tax.

The type of support an estate accountant provides goes beyond compliance. They can also play a strategic role in the administration of an estate, helping you make informed decisions that can preserve the estate's value. For instance, they can advise on timing distributions to beneficiaries to optimize tax efficiency or counsel on handling claims against the estate. Additionally, they can provide guidance on resolving complex issues such as how to distribute the estate's assets equitably among the beneficiaries when there are illiquid assets involved.

With the support of an estate accountant, you can navigate the estate settlement process with confidence, knowing that the financial and tax aspects are managed competently. This assurance allows you to focus on other important tasks and decisions, reducing the stress and burden during a challenging time. You can’t always put a dollar value on having a sense of control during an emotionally challenging period. 

3. Advise on and implement strategies to minimize estate taxes

An estate accountant can actively work towards minimizing estate taxes, preserving the estate's value for its beneficiaries. They are equipped with the knowledge and skills to develop effective strategies. For example, they can suggest the creation of  Trusts, making charitable donations, or gifting assets during one's lifetime, as these are often exempt or partly exempt from taxes. Remember that each estate’s circumstances are unique, and the strategies used should be tailored to its specific needs and desired objectives.

Their expertise also includes the ever-changing tax laws and how these changes can impact an estate. They can ensure the estate remains compliant while benefiting from any changes or opportunities that the new laws present.

4. Assist both estate executors and beneficiaries with inheritance tax returns

Inheritance tax returns can be complex and intricate, requiring a detailed understanding of tax laws and the estate itself. An  estate accountant can provide invaluable support in this area, ensuring that all legal requirements are met while minimizing potential tax liabilities. They work closely with both estate Executors and Beneficiaries to prepare and file the necessary tax returns. With their intricate knowledge of financial systems and tax laws, they can help prevent errors that might lead to audits or penalties, offering peace of mind during a stressful time.

Estate accountants are equipped to handle the nuances of inheritance taxes, which can differ based on the state laws and the specifics of the estate. For instance, they can provide guidance on exemptions, deductions, and credits that can be leveraged to reduce the inheritance tax burden. They also advise on time-sensitive matters like the deadlines for filing returns and paying taxes, ensuring that all tasks are completed promptly to avoid penalties.

By demystifying the taxation process, these specialized accountants can help Executors and Beneficiaries understand their rights and responsibilities. Their expertise can also help mitigate potential disputes among beneficiaries over inheritance distribution. 

Learn More About the Estate Tax Returns

This guide outlined the vital role estate accountants can play in the administration of an estate. They have a specialized skill set when it comes to guiding you through the estate taxation process. 

Equipped with in-depth knowledge of financial systems and tax laws, estate accountants ensure that all legal requirements are met while minimizing potential tax liabilities. They also provide timely advice on inheritance taxes, exemptions, deductions, credits, and crucial deadlines. In essence, they offer invaluable expertise and reassurance during a challenging time by preventing disputes over inheritance distribution and potential penalties. 

For a more detailed understanding of the tax obligations related to estate administration, make sure to read our guide, "When is an Estate Tax Return Required?"

At Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning and settlement  options today!

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