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How to Hire a Tax Professional for Your Estate or Trust

In the process of administering the estate or trust, you may find that the tax and accounting requirements are beyond what you’re happy or comfortable doing. If this describes you, having a tax professional, like a Certified Public Accountant (CPA) or an Enrolled Agent (EA) on your team, can help ensure that the trust or estate is always in compliance with tax and accounting rules.

You’re not alone if you’re not sure of the difference between a CPA and an EA. CPAs are qualified in all areas of public accounting, including taxation and auditing. EAs, on the other hand, specialize only in taxation.

Because public accounting rules don’t apply to trusts and estates, both EAs and CPAs, if experienced in this type of work, can competently perform any of the accounting functions required, such as account preparation or figuring out how much, and what, property will roll from the estate to the trust after the estate terminates and trusts assume ownership of the decedent’s assets.

Whether you choose a CPA or an EA, both are subject to rigorous regulation and are required to participate annually in continuing education. Provided the person you choose has experience with trusts and/or estates, either is well qualified to assist you.

Where to look for estate tax professionals

No single place exists for finding CPAs or EAs. If you’re searching for a CPA, you can check with the state board of accountancy in the state where you want to hire one, or with that state’s CPA professional association. You can locate EAs through their national professional organization, the National Association of Enrolled Agents (NAEA), or through their state or regional organizations.

In addition to assessing state licensing boards and state and federal professional organizations, you may also request referrals from family, friends, and other professionals, such as attorneys or investment advisors, who may keep lists of CPAs and EAs with whom they’ve dealt with in the past.

It’s common practice for CPAs or EAs to have you sign an engagement letter when you hire them, which outlines the scope of the work to be done, who is responsible for obtaining necessary information, and the level of review they will use to determine the accuracy of that info.

Hiring an accounting pro who will provide you with the service you need is really no different from hiring an attorney — you need to know that your work styles complement each other and that you won’t drive each other nuts during administration. You should ask any CPA or EA you’re considering employing the same questions you ask the attorney. Don’t hesitate to add any others you may think of.

Payment options for tax professionals

CPAs and EAs typically charge for their services, based on the number of hours worked or the number and type of tax forms prepared. In the case of a trust or estate, most bill on an hourly basis. Costs such as photocopying, postage, and deliveries are often additional, although individual accountants may cover these incidental costs by charging slightly more per hour.

Accountants’ hourly fees are usually less than attorneys’, but they’re still in the same ballpark. Be prepared — you don’t to suffer from sticker shock.

Be sure to establish not only the hourly rate but also what it includes prior to having a tax professional prepare any work for you. It’s awful, both for you and your accountant, to have an initially positive relationship sour upon receipt of that first bill, purely on the basis of a misunderstanding.

Accountants often have subordinates perform many of the tasks you’ve assigned to them, with Mr. or Ms. Big supervising the project and retaining the responsibility for its timely and accurate completion. Remember, the employee who actually performs the work is probably quite expert. As an added bonus, because the person doing most of the project is charging you less per hour , this practice is much more economical for you.

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