CPA & Accountant

What an accountant can do

An accountant may help organize estate financial records, prepare required tax returns, identify income and deductible expenses, review transactions, and help the executor maintain the accounting needed during administration.

Estate and trust taxation can differ from an individual's ordinary tax situation. Experience with estate and fiduciary matters can therefore be particularly useful.

More than one tax return may be involved

Depending on the circumstances, there may be a final individual income-tax return for the person who died as well as tax filings associated with the estate or a trust. Estate, inheritance, or other tax considerations may also arise.

Which filings apply depends on the facts of the estate. An accountant or estate attorney can help determine what is actually required rather than assuming every estate follows the same tax process.

Good records matter

Executors should keep clear records of money received and paid during administration. Bank statements, invoices, receipts, property expenses, professional fees, sale records, and distributions may all become important for accounting and tax purposes.

When an accountant can be especially helpful

• The estate continues to receive income after death.
• Real estate, investments, or other significant assets are sold.
• The estate or a trust may require its own tax return.
• The decedent's prior tax records are incomplete or complicated.
• Beneficiaries are receiving distributions with possible tax consequences.
• The executor needs help organizing or reconciling estate finances.
• Tax deadlines or filing requirements are uncertain.

Accountant and attorney are different roles

Accountants and estate attorneys often work together, but their roles are different. The accountant generally focuses on financial records, accounting, and tax preparation, while the attorney provides legal advice about the estate, fiduciary responsibilities, and interpretation of applicable documents and law.

Quick Reference

• Keep estate finances separate and well documented.
• Preserve tax returns and financial records from prior years.
• Track income received after death.
• Keep receipts and records for estate expenses.
• Ask which tax filings and deadlines actually apply.
• Look for an accountant familiar with estate and fiduciary matters when the estate is complex.

Helpful Tip

Good accounting begins long before a tax return is prepared. Keeping organized records from the beginning can make tax preparation, beneficiary reporting, and the eventual closing of the estate much easier.