Hire a CPA when Administering an Estate: 6 Reasons You Should

Table of Contents

• Key Takeaways
• Why a CPA Is Critical in Estate Administration
• Six Reasons to Hire a CPA When Administering an Estate
• Working with a CPA and Your Probate Attorney
• Related Resources
• FAQ
• How The Grossman Law Firm Can Help

Key Takeaways

• A CPA helps ensure compliance with California and federal tax laws during estate administration.
• Failing to meet filing deadlines or pay estate taxes can expose executors or trustees to personal liability.
• The CPA’s fees are typically paid from estate funds—not from the executor’s pocket.
• The Grossman Law Firm often works alongside CPAs to protect clients from tax mistakes and legal risk.

Why a CPA Is Critical in Estate Administration

Administering an estate involves more than distributing property to heirs. It includes managing tax filings, reporting income, valuing assets, and ensuring that all financial obligations are met before closing the estate.

At The Grossman Law Firm, we frequently assist executors and trustees in navigating probate and trust administration. One of the first steps we recommend is hiring a Certified Public Accountant (CPA) who is experienced in estate and trust taxation. A CPA plays an essential role in preventing costly errors that could delay distribution—or worse, lead to litigation.

Six Reasons to Hire a CPA When Administering an Estate

1. Estates and Trusts Have Complex Tax Obligations

California and federal tax laws require estates and trusts to file specific returns, including IRS Form 1041 (U.S. Income Tax Return for Estates and Trusts). Failing to comply with filing requirements can result in substantial penalties and interest. A CPA ensures that all deadlines are met and all necessary filings are accurate.

2. Income Rules Are Complicated

Trusts and estates can earn income from investments, property sales, or business interests. Determining how to report that income and who is responsible for paying the tax can be complex. A CPA understands the applicable fiduciary income tax rules and ensures that both the estate and its beneficiaries are treated correctly.

3. Asset Valuation Affects Taxes and Distributions

A significant part of administering an estate is determining the fair market value of assets at the date of death. Valuations directly affect estate tax liability and capital gains when assets are later sold. A CPA can coordinate appraisals and apply correct valuation methods to avoid disputes or IRS challenges.

4. A CPA Reduces the Risk of Personal Liability

Executors and trustees can face personal liability for failing to pay estate or trust taxes. By engaging a CPA early, you minimize the risk of missing tax deadlines or underpaying taxes—mistakes that could lead beneficiaries to accuse you of breaching your fiduciary duties.

5. A CPA Identifies Valuable Deductions and Credits

Experienced CPAs know how to locate and apply deductions, credits, and exemptions that reduce the estate’s tax burden. Without this expertise, executors may miss opportunities to save the estate significant amounts of money.

6. A CPA Can Handle IRS Inquiries Directly

If the IRS or California Franchise Tax Board questions a return, your CPA can communicate directly with the agency. Having a professional represent the estate during an audit or inquiry greatly increases the likelihood of a favorable resolution.

Working with a CPA and Your Probate Attorney

A CPA and a probate attorney serve different but complementary roles. The attorney ensures compliance with California Probate Code and court procedures, while the CPA manages the tax aspects of the estate.

At The Grossman Law Firm, Attorney Scott Grossman collaborates with CPAs to make sure clients:

• File all necessary tax returns on time
• Resolve outstanding tax issues before estate closure
• Accurately report distributions and final accounting to the court

The estate or trust typically pays the CPA’s fees, and this expense is considered a legitimate administrative cost. The benefits—protection, accuracy, and peace of mind—far outweigh the cost.

Related Resources

• Overview of California Probate Litigation
• California Probate Litigation Guide: From Will Creation to Final Resolution
• How to Get a Copy of a Will?
• Can’t Afford a Probate or Trust Attorney?

FAQ

Do all estates need a CPA?

While small estates may not require one, any estate with income-producing assets, real property, or complex finances benefits from CPA involvement.

Who pays for the CPA?

The CPA’s fees are paid by the estate or trust as part of its administrative expenses, not by the executor or trustee personally.

Can a probate attorney handle tax filings instead of a CPA?

Attorneys manage legal compliance, but tax law requires specialized accounting knowledge. It’s best to have both a probate attorney and a CPA working together.

What happens if the estate doesn’t file taxes?

Failure to file required returns can lead to IRS penalties, interest charges, or even litigation by beneficiaries for breach of fiduciary duty.

How The Grossman Law Firm Can Help

For over 20 years, The Grossman Law Firm has represented California executors, administrators, and beneficiaries in probate and trust litigation. We frequently work closely with CPAs to ensure that estates are administered correctly and all tax obligations are fulfilled.

If you’re serving as an executor or trustee and want to protect yourself from potential tax mistakes, we can help.

Call (888) 443-6590 or fill out our Get Help Now form.

Our Intake Specialists can evaluate your case to assess your situation at no cost to you. Qualifying cases will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.

Originally Published Sep 15, 2016