It’s a commonly harbored misconception that an estate plan is only necessary for the rich or individuals with significant assets. While the truth is that just about every individual must create an estate plan as soon as possible for them. Owing to this misconception, so many of us end up either overlooking the assets we actually possess or falsely estimating its true value.

Let’s discuss the basics of Estate planning first. Estate planning can be divided into two verticals:

  • Premortem, or “traditional” Estate Planning: Traditional planning involves asset transfer techniques that signifies the method that will be used to transfer assets at death. The choices are not mutually exclusive and include the use of wills and the related probate process, living trusts, joint tenancy, life insurance, pension plans, etc. Premortem planning also focuses on minimizing estate taxes to desired extent that best serves the clients’ goals. Traditional planning also involves liquidity planning.
  • Post-mortem Estate Planning: This largely involves administration and trust funding consideration activities such as how to achieve the goals of plans while attempting to simplify the situation. Because the estate tax laws are complex and continually changing, there may be ways to interpret the controlling documents with the laws at the time of death that may differ from signed documents.

Historically, a significant portion of estate tax returns were prepared by the law firms handling probate cases owing to the complex nature of the analysis of tax laws. But there is more to the analysis than merely counting the declining number of returns and taxable estates. In both the methods, there can be a potential to reduce estate taxes with the help of smart planning techniques. And that is when a certified public accountant can prove to be absolutely vital for you. 

Having someone with an understanding of the tax changes alone does not prepare you for the estate planning process has changed. It also needs a thorough knowledge of other factors, such as demographics and changing financial market perceptions that can radically impact your estate valuations. A trained CPA comes with a unique background that allows them to efficiently serve estate related needs while adding value to your situations as a “gatekeeper”.

PSR CPA is one of the few public accounting firms who truly get that estate planning is among the most critical steps in your life as it impacts the generations to come. Reach us if you want to know how we work towards understanding what you want to accomplish, anticipate problems and concerns to best deliver solutions.

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