Designing an Estate Blueprint: 5 Questions to Ask Your Accountant

Estate Tax PlanningEstate tax services, or lack thereof, has been in the news quite often lately. Recent unfortunate celebrity deaths, such as Aretha Franklin and Prince, bring to light the questions that occur following the passing of a person without an estate plan in place.

“Where do I even begin?” Having worked in estate tax services for 30 years, it’s a question I often receive from my clients, family and friends who start their own estate plan or face becoming an estate executor, beneficiary or personal representative following a loved one’s passing. It’s a question that can be uncomfortable and overwhelming, but critical to answer and act on to ensure key tax implications are considered, and most importantly so that an estate plan is executed to the fullest of one’s wishes.

An estate plan is more than just a will or a trust, it’s truly a blueprint requiring careful coordination between legal documents and development of a strategy to ensure workable tax solutions are considered. If you find yourself encountering your own estate plan or managing an estate for a family member, you may be considering the following questions. I recommend closely discussing these items with your tax advisor.

  1. I have a will in place. What else do I need? A will is certainly an important document, but it only goes so far from a tax perspective. A will can go through a probate process, enabling a court to determine distribution of assets. It’s important to understand probate versus non-probate assets and tools such as a revocable living trust (RLT) depending on your specific situation. While your attorney considers all of the legal avenues of these documents, a trusted tax advisor ensures tax implications are considered.
  2. Do I need to consider assets like life insurance in my estate plan? Ensuring beneficiaries are properly named avoids issues like transfer-for-value rules violation, and avoids unnecessary income tax. In fact, creating a list of all assets – including digital assets like bitcoin or PayPal accounts — is critical.
  3. How will a family business be impacted by estate taxes? There are a number of strategies to consider with family businesses. Will the business stay in the family? Do you want to be compensated for your business? Do you have a Family LLC in place? Are you developing your estate plan, but not quite ready to retire and want to consider an “intentionally defective grantor trust” (IDGT)? Yes, I know I answered a question with more questions, but the point here is you have options.
  4. I have an estate plan in place. Should I review it considering changes to the 2018 tax laws or changes in my family such as divorce? In short, yes. An estate plan is not written in stone – it can and should be updated with major life changes including divorce, marriage, births and deaths. Also, keep in mind the 2018 annual gifting exclusion amount increased to $15,000 per individual.
  5. What role should my accountant have in estate planning? While you may be working with an attorney to develop a will or trust, an accountant’s role is to consider any issues that may occur due to estate tax and proactively develop strategies that limit tax liabilities. What exactly does this mean? At Lodovico & Associates, we serve as a “quarterback,” coordinating between and working closely with attorneys, financial planners and family members. We start by conducting a “fact-finding” interview to understand all of the assets and documents at hand and assess your tax liabilities. We also guide our clients through their responsibilities as executors or personal representatives, in addition to managing the filing of documents such as the PA Inheritance Tax Return and Final Federal and State Personal Income Tax Returns.

To learn more, call our trusted tax advisors or visit

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