You may have heard of estate planning and figured it wasn’t for you. Maybe you thought you were too young or not wealthy enough to bother. The truth is everyone should have an estate plan. This important set of documents gives you a say in what happens to your possessions after you’re gone and provides other helpful ways to steward your affairs. Continue reading as we explore why an estate plan is so important and how a Certified Public Accountant (CPA) can help with yours.
What Is an Estate?
The word “estate” may conjure up images of expansive properties and mansions. But in this case, the word has a much broader meaning. Your estate comprises the sum of your possessions, including everything you own, your house, vehicles, bank accounts, investments, and life insurance policies. All these assets must be distributed to people or organizations upon your death.
What Is an Estate Plan?
An estate plan is a set of documents outlining what will happen to your estate after you’re gone, and in some cases, while you’re still alive. A will is the most well-known aspect of this plan, but other documents include trusts, powers of attorney, and life insurance plans.
Why Do I Need an Estate Plan?
Maintain Control Over Your Assets
An estate plan ensures you have control over who your assets go to. If you die without a will, the courts will undergo a lengthy process to determine how your estate should be divided up. This can lead to your money and possessions going to people you didn’t want to share in your inheritance.
Avoid Unintended Outcomes
And even if your assets go to the people you had in mind, the legal process may draw out indefinitely, preventing your loved ones from receiving funds when they need them most. When you set up an estate plan, you’ll designate beneficiaries to ensure the people you care about receive their inheritance without delays.
Minimize Stress and Uncertainty for Your Loved Ones
Estate plans can remove guesswork for loved ones they might otherwise face without an estate plan. Without clear instructions, family members and friends may be left making difficult decisions about your assets. This plan will give them the guidance they need.
How Can an Accountant Help?
One of the key functions of an estate plan is to minimize taxation of your estate upon your death. With their broad range of experiences and vast financial knowledge, accountants can tell you how every decision you make in your estate plan will affect taxes.
With an accountant’s help, you can make the most tax-efficient decisions to ensure your heirs receive as much of your hard-earned money as possible. One such strategy is to create a trust, which transfers assets from your estate to a trustee.
These assets are exempt from estate taxes and are passed directly to your beneficiaries. A CPA can also estimate the future value of your estate, using their market knowledge to predict increases or decreases in value. With their financial expertise, the aid of an accountant is invaluable when crafting an estate plan.
Estate Planning CPA vs Lawyer: What’s the Difference?
While both professionals play a vital part in the estate planning process, the roles of a CPA and lawyer can be quite different. An estate planning CPA focuses on the financial side of your estate, so asset valuation and strategies to reduce tax burden. In other words, a CPA will seek to optimize the estate plan’s financial outcomes.
An estate planning lawyer, on the other hand, focuses on drafting and executing the legal documents. They will put together wills, trusts, and powers of attorney, and they ensure plans comply with state laws and accurately reflect your wishes.
Contact Barton, Walter & Krier
The Certified Public Accountants at BWK have a wealth of experience from “Big Four” firms and excel in delivering innovative, personalized solutions for our clients. We specialize in estate planning and wealth transfer, helping you make the most of your inheritance for the ones you care about. Learn more about our estate planning services and contact us today!