As a beneficiary to an estate, you have the right to be able to rely on those administering that estate. And in many cases, this should include the services of an accountant. Why? Here are five areas in which they can help everyone involved.
1. Preparing Probate Accounting
Probate courts generally require estate executors (or personal representatives) to provide inventory and accounting statements for the estate. Small estates may not have much data to provide, but larger estates and those in existence longer can have many transactions, expenses, income, and creditors.
2. Creating Independent Records
Most executors are somehow involved in the estate beyond their role as executor. Unfortunately, this can lead to two distinct problems. The first is that they may take advantage of their authority and make ill-advised or outright abusive moves with its money. The second is that not all executors—especially if chosen from among family or friends—are skilled in accounting or as thorough as necessary.
Outside accountants help with both scenarios. They have no skin in the game, as it were, and they are trained specifically in estate accounting issues and methods.
3. Explaining Complex Elements
Did your loved one leave behind complex assets or obligations? Is there a business, royalties, income-producing assets, foreign assets or obligations, or things like cryptocurrency? Then you need to understand the financial aspects of things which may be far beyond your experience. The accountant will guide you through administration of those estate assets as well as what to do with them as an heir.
4. Completing Estate Taxes
Tax issues for estates and decedents can be complicated. Assets and debts of the decedent are often different from those of the estate. Both the individual and the estate must often complete tax forms reporting separate items.
In addition, the estate may need to complete multiple income tax forms both for the state and the IRS. Elements in estate taxation, such as lifetime exclusions for gift tax and inheritance taxes, are unique to this type of return. You also must meet tax deadlines or someone could be held personally liable for taxes. Unless someone involved does these returns on a regular basis, help is vital.
5. Responding to Inquiries
If the IRS, state tax agency, or a creditor wants to investigate any aspect of the estate, can the executor and/or beneficiaries handle the matter? Even the most well-intentioned and diligent layperson would likely benefit from a trained accounting professional if the estate is questioned.
Could you, your fellow heirs, and the estate executor use outside help with your financial challenges? Find out by meeting with an experienced accountant in your state today.
Share28 August 2023
Accounting is the absolute most important element of running a business. If you mess up the bookkeeping even the slightest bit, the entire business could be in trouble. I know how costly a small bookkeeping error can be. About three years ago, I made a seemingly small mistake in the financial records for my business and the next year when I filed my taxes, things were very bad for me. What would have required a small tax payment had suddenly turned into a big tax bill and quite a headache. Since then, I have worked with an accountant and things have been better.