What's Your Number? An Accounting Blog
About Me
What's Your Number? An Accounting Blog

Keeping track of income and expenses is essential, even if you don't own a business. And if you do own a business, things get even more complicated. There are paychecks to issue, taxes to track, and subcontractors to pay out. All of these details are a whole lot less challenging when you hire an accountant to oversee them. However, it is still important to know a little bit about accounting yourself. Dig into the articles on this website, and you'll gain a better understanding of accounting principles, what services accountants really offer, and the benefits of hiring these professionals to assist with your finances.

What's Your Number? An Accounting Blog

Estate Planning? 5 Ways Accountants Help With Division of Assets

Dianne Graham

Are you working on your estate plan? If so, do you have an accountant on your planning team? Anyone with more than one heir should consider working with a certified public accountant when preparing asset distributions and divisions. Why? Here are five ways they will help with this key part of your estate plan. 

1. Determining Asset Values. Before you divide assets, you need to know what they're worth. An accountant is an independent and unbiased party who can help you research and assign proper values you can rely on. They avoid emotional connections to assets. And they can help figure out how to value unusual assets like business interests or intangibles. 

2. Understanding Tax Consequences. The tax implications of many assets can affect the final value each heir receives. Consider a person who owns two retirement accounts both worth $100,000. If one is a traditional IRA and one a Roth IRA, one account will be subject to taxes at withdrawal while the other isn't. One heir could receive up to $37,000 less than the other. Tax planning must be considered. 

3. Managing Depreciation and Appreciation. Any appreciated assets will change in actual value between when you do estate planning and when the heir accesses their value through a future sale. Depreciation or appreciation can be tricky to include when trying to create an equal value for different heirs. A piece of real estate may appreciate in value randomly but have a high base cost for tax purposes. On the other hand, an appreciated stock may rise in value at a steady rate and have a low initial tax basis. Both assets will end up providing very different results.

4. Preparing Heirs. As your estate plan comes together, you may decide that your heirs could use some help with the transition or with their own planning. By establishing a relationship with your accountant throughout the process, you have created a strong ally for your future heirs. That CPA can help them understand their assets, complete asset transfers, formulate their own plans for the money or assets, and do their own estate planning after you're gone. 

5. Designing Trusts. Trusts are a great way to manage complex assets (like a business interest or complex portfolio) or to manage the assets for some heirs. But a trust is a complex legal entity that requires the help of trained professionals to set up and manage. Your accountant will assist with choosing the right trust, avoiding tax effects, and selecting assets. They may even be available for active management duties when you're gone. 

Could your estate planning benefit from any of these forms of assistance regarding the distribution of assets? If so, start by meeting with a certified public accountant. Together, you will come up with a plan that provides the fairness you want and your heirs the money they need.