How to Hire a Tax Professional for Your Estate or Trust
As the administrator of an estate or trust, you may find that you need a tax professional to help you handle the taxes and accounting for the decedent’s assets. You may therefore choose to hire a Certified Public Accountant (CPA) or an Enrolled Agent (EA). Once you’ve found a CPA or an EA, you will likely sign an engagement letter. It is also wise to discuss up-front the tax professional’s payment expectations.
CPAs are qualified in all areas of public accounting, including taxation and auditing. EAs, on the other hand, specialize only in taxation. Both EAs and CPAs can 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.
How to find and hire a CPA or an EA
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. You can also check 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.
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. An engagement letter outlines the following:
The scope of the work to be done
Who is responsible for obtaining necessary information
The level of review to be used to determine the accuracy of the information obtained
How to discuss payment options with a CPA or an EA
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 CPAs and EAs bill on an hourly basis. Costs such as photocopying, postage, and deliveries are often additional. However, individual accountants may cover these incidental costs by charging slightly more per hour. Accountants’ hourly fees are usually slightly less than attorneys’.
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. Neither you nor your accountant would want to sour an initially positive relationship purely on the basis of a misunderstanding about payment.
Looking in your hometown for the tax professional you need to assist you in administering a trust or estate may not be the best choice. Because the estate must go through probate in the county in which the decedent lived when he or she died, choosing a CPA or EA licensed in that state is usually best.