Academic journal article Journal of Accountancy

Top Estate Planning Mistakes for Practitioners to Avoid

Academic journal article Journal of Accountancy

Top Estate Planning Mistakes for Practitioners to Avoid

Article excerpt

Because the adviser is held to a high standard, the consequences of a mistake can be as severe to the accountant as those visited on the client, particularly when the client becomes aware of the lost opportunity.

Common Errors

1. Failure to plan in time. Many clients who are not at all hesitant about saving income taxes shy away from any estate planning, often as a way of avoiding the reality of their own mortality. Broaching the subject of estate planning is often what the client needs to address the issues. Clients need to be reminded that they incur needless taxes not because they plan to fail, but because they fail to plan.

2. Failure to monitor after a plan is put in place. Estate planning is not a cookie-cutter procedure, and the client's objectives are likely to change in response to changes in familial relationships and economic circumstances. As a client has grandchildren, as children marry and divorce, as disease or illness becomes a new reality, an earlier plan may no longer meet the goals of the situation. Inheritances, successes in business, appreciation in investment assets, and increased retirement benefits may also combine to present different planning situations even when the family circumstances remain steady.

3. Failure to educate the client sufficiently to enable the plan to operate in fact the way it should. This is particularly necessary in areas where the law is uncertain or undergoing change. Recent developments in family limited partnerships is a classic example of a situation in which a client who is given limitations on the amount of benefit that can be retained in the partnership would have fared better. …

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