Chapter 21: Working With Financial Advisors and Accountants

The rest of the professional team

Estate planning is not solo work, and it is not even two-person work (client and attorney). A full estate planning effort usually involves three or four professionals: an attorney (Chapters 19-20), a CPA (for taxes), often a financial advisor (for investments and strategy), and sometimes an appraiser, insurance specialist, or realtor.

This chapter is about the two professionals besides the attorney that most estates need: the financial advisor and the CPA.

What the CPA does in estate work

A CPA specializing in estate and trust taxation does several things an attorney and a general accountant do not:

Before death:

• Income tax planning integrated with estate goals.
• Projections of estate tax liability.
• Strategy for minimizing lifetime income tax while optimizing estate outcomes.
• Analyzing Roth conversion opportunities.
• Structuring charitable giving for maximum tax benefit.

During estate administration:

• Final individual income tax return (Form 1040) for the decedent.
• Estate income tax returns (Form 1041).
• Estate tax returns (Form 706) if required.
• Gift tax returns (Form 709) if needed.
• Coordinating with state tax authorities.
• Handling IRS audits or inquiries.

After distribution:

• Advising heirs on how to handle inherited assets (step-up basis, inherited IRA rules, etc.).
• Helping heirs understand their own tax positions post-inheritance.

Who you want

Not every CPA is a good choice for estate work. You specifically want someone experienced with:

• Form 1041 (fiduciary income tax) filings.
• Step-up basis calculations.
• Inherited IRA distribution planning.
• Coordination with estate planning attorneys.

Credentials that help:

• Standard CPA license.
• Personal Financial Specialist (PFS) credential (AICPA).
• Experience with specific estate and trust work (not a generalist).

Questions to ask:

• How many 1041s did you file last year?
• What's your experience with [your specific situation — e.g., large IRA, trust distributions, small business]?
• Do you work regularly with estate planning attorneys? Which ones?
• What are your fees for estate administration tax work?

Fee expectations

Standard engagement fees:

• Final 1040 for deceased: $300-$1,000.
• Estate 1041: $500-$3,000 depending on complexity.
• Estate tax return 706: $2,500-$10,000 (rare — only for large estates).
• Ongoing 1041s if the estate stays open: $500-$2,000 per year.
• Hourly rate for advisory work: $150-$400/hour.

These are generally paid by the estate, not by you personally.

What the financial advisor does

A financial advisor (investment advisor, wealth manager, CFP) plays a distinct role from the attorney and CPA:

Before death:

• Manages the investment portfolio with long-term goals.
• Coordinates beneficiary designations on accounts they manage.
• Models retirement cash flow and succession scenarios.
• Implements strategies the attorney/CPA recommend (funding trusts, executing Roth conversions, etc.).
• Life insurance analysis — does the policy support the estate plan?
• Long-term care planning.

During estate administration:

• Helps executors understand the decedent's holdings.
• Advises on asset transitions (retitling, inherited IRA setup, etc.).
• Often becomes the advisor to the surviving spouse.

After distribution:

• Advises heirs (if they become clients) on managing inheritance.
• Coordinates with the attorney and CPA on post-distribution planning.

Who you want

Financial advisors come in many flavors, and not all are equally appropriate:

Fiduciary Registered Investment Advisors (RIAs) have a legal duty to act in your best interest. Generally the preferred choice for complex estate work.

Fee-only planners charge for advice without earning commissions on products. Aligns incentives well.

Commission-based advisors earn money when you buy products. Potential conflict of interest.

Fee-based advisors combine both. Be clear about how they're compensated.

Certified Financial Planner (CFP) is the gold-standard credential. Suggests education and ethics commitment.

Chartered Financial Analyst (CFA) is more focused on investment analysis than planning.

Chartered Financial Consultant (ChFC) similar to CFP.

For estate planning, a fiduciary fee-only CFP is often the best fit. But good advisors exist in other categories; what matters most is whether they have specific estate experience.

Questions to ask:

• Are you a fiduciary (by legal obligation, not marketing claim)?
• How are you compensated? Any commissions, fees, or kickbacks?
• How many clients do you have with estate planning situations similar to mine?
• How do you coordinate with estate attorneys and CPAs?
• What's your approach to inherited accounts (IRAs, etc.) for clients?
• What happens to my account if you retire or the firm is acquired?

Fee expectations

Investment management (AUM-based): 0.5%-1.25% of assets managed per year. Often tiered (lower percentage at higher balances).

Hourly advisory: $200-$500/hour.

Flat-fee planning: $1,500-$10,000 for comprehensive plans depending on complexity.

Commission-based products: Built into the product; often not transparent. A warning sign if they can't explain clearly.

When you need each (and when you don't)

CPA is essential if:

• You're administering an estate that owes any tax return (essentially all of them).
• The estate is large enough to trigger estate tax considerations.
• You have inherited IRA distribution decisions.
• You're doing substantial charitable giving.
• You're the executor and not equipped to DIY the tax filings.

CPA is probably unnecessary if:

• You're just doing standard personal tax returns and have no estate complexity.

Financial advisor is helpful if:

• You have significant investments (over $500K is a rough threshold where professional management pays off).
• You face complex strategy decisions (Roth conversions, annuity considerations, insurance coordination).
• You want integrated planning across retirement, estate, and tax.
• You or your spouse lack financial confidence and want professional support.

Financial advisor is probably unnecessary if:

• You have small retirement accounts and are comfortable with index funds.
• You're a DIY investor with the temperament and knowledge for it.

The team coordination problem

The three primary professionals (attorney, CPA, financial advisor) must work together. They often don't.

Symptoms of poor coordination:

• Attorney drafts a trust but doesn't tell the financial advisor, who doesn't retitle the accounts.
• Financial advisor recommends a Roth conversion without consulting the attorney, and it conflicts with the estate plan.
• CPA files taxes without understanding the trust structure, leading to unnecessary taxes.
• Each professional gives partial advice because they don't know what the others are doing.

How to fix coordination:

1. Make introductions. Ensure all three professionals know each other's names and contact info. Give them permission to talk to each other.

2. Share documents. Make sure each has relevant documents from the others — the CPA has the trust, the financial advisor has the will summary, etc.

3. Annual coordination meeting. Once a year, ideally, all three should coordinate on your situation. Can be a conference call. Takes an hour.

4. Designate a quarterback. Usually either the attorney or the financial advisor serves as the primary coordinator — the first-point-of-contact for major decisions.

5. Be explicit about major changes. When your situation changes, inform all three. Don't assume information flows automatically.

A well-coordinated team can save your estate tens of thousands in avoidable taxes and mistakes. An uncoordinated team often costs more than the sum of its fees.

The family office model

For high-net-worth families (typically $10M+ in assets), an "integrated" approach sometimes makes sense. A family office is a single firm (or internal family team) that coordinates all professionals and handles all financial matters for the family.

Services typical of family offices:

• Investment management.
• Estate and trust administration.
• Tax planning and compliance.
• Bill pay and financial administration.
• Insurance coordination.
• Philanthropic planning.

Costs are high ($500K+/year for dedicated staffing; less for "multi-family offices" serving multiple families). Only economic for very large estates.

For families below the family-office threshold, the coordination-among-independent-professionals approach described above is the right model.

Working with professionals during a death

When a death occurs, you'll engage professionals in roughly this order:

Week 1-2:

• Funeral home (logistics and initial paperwork).
• Attorney (to begin probate or trust administration).

Week 2-4:

• CPA (to begin tax planning and prepare to file returns).
• Financial advisor (if assets need coordination).
• Realtor (if there's real estate to eventually sell).

Month 2-6:

• Appraiser for significant assets.
• Insurance agent for claims and transitions.
• Investment advisor for heir-side planning if heirs are transitioning assets.

Month 6-18:

• Ongoing engagement with attorney, CPA, and financial advisor through estate administration.

Communicate about costs upfront with each professional. Understand who's paying (estate vs. beneficiaries individually). Most professional fees in estate administration are paid by the estate, reducing what beneficiaries receive, but this is usually appropriate.

Personal versus estate representation

A subtle but important distinction: who is the professional representing?

For the executor:

• The attorney represents the estate, not the executor personally.
• The CPA typically prepares estate tax returns, representing the estate.
• The financial advisor may be advising the estate on asset transitions.

For individual beneficiaries:

• Beneficiaries may engage their own attorneys, CPAs, or advisors for their personal interests.
• These professionals represent the beneficiary, not the estate.
• Useful if the beneficiary has concerns about estate administration or needs personal tax planning for inherited assets.

In contested estates, beneficiaries often need their own representation separate from the executor's. In cooperative estates, a single team can often serve everyone with clear disclosures.

Red flags in professional recommendations

Watch for these signs that a professional recommendation is not in your best interest:

1. Urgent product sales. A financial advisor who "urgently" wants you to buy an annuity, insurance, or other commission-generating product.

2. Unusual tax strategies without backing. If a CPA is recommending aggressive tax positions, ask for the authority — published IRS guidance, court cases, or IRS private letter rulings.

3. Conflicts of interest. A professional recommending you use their spouse, partner, or firm for other services.

4. Excessive fee creep. Fees that grow over time without corresponding value.

5. Opaque accounting. If you can't understand what fees you're being charged, something is wrong.

6. Pressure on elderly or vulnerable clients. Elder financial abuse often comes from professionals. Be vigilant.

7. Reluctance to coordinate with other professionals. A good professional welcomes coordination; a bad one avoids it.

How to evaluate a financial advisor

Beyond the questions above, specific ways to evaluate:

Check their regulatory record:

• BrokerCheck (FINRA) for broker-dealers.
• SEC Investment Adviser Public Disclosure for RIAs.
• Any complaints or regulatory actions should be investigated.

Understand their investment philosophy:

• Do they believe in active or passive management?
• What's their approach to risk?
• How do they handle market downturns?
• Does it match your temperament?

Ask about client retention:

• How many clients have left in the last 3 years?
• Why do clients typically leave?

Check fee transparency:

• Are all fees disclosed clearly?
• Can you get a written fee schedule?
• Are there any hidden commissions or kickbacks?

Test their responsiveness:

• During the sales process, how quickly do they respond?
• This predicts the ongoing relationship.

How to evaluate a CPA

Beyond the questions above:

Check their regulatory record:

• State Board of Accountancy for licensing verification.
• PCAOB for any public company audit issues.

Understand their specialty:

• What percentage of their work is estate/trust?
• What's the largest estate they've handled?

Ask about IRS experience:

• Have they represented clients in estate audits?
• What's their approach to aggressive vs. conservative positions?

Confirm they actually do the work:

• Will a partner or a junior associate prepare your returns?
• What review process exists?

The transition: post-death professional team

When a parent dies, the surviving family often inherits relationships with the deceased's professionals:

• The deceased's attorney may become the estate administration attorney.
• The deceased's financial advisor may become the surviving spouse's advisor.
• The deceased's CPA may become the estate's CPA.

This transition isn't automatic. Sometimes it's appropriate, sometimes not.

When inheritance of professionals makes sense:

• They know the family's history and context.
• They have documents and records that matter.
• The relationship was positive.
• The survivors trust them.

When to change professionals:

• The advisor doesn't fit the surviving spouse's needs.
• There are conflicts of interest (e.g., advisor invested the deceased in products that benefited the advisor more than the family).
• The surviving family wants a fresh start.
• The professional retires or changes situation.

If changing, do it thoughtfully. Thank the existing professional, transfer records properly, and make sure the new professional has continuity.

Integration with the estate plan itself

A sophisticated estate plan integrates the work of the attorney, CPA, and financial advisor:

The attorney creates the structure: wills, trusts, POAs.

The financial advisor funds the structure: retitling accounts, updating beneficiary designations, funding trusts, coordinating insurance.

The CPA optimizes the tax picture: advising on strategies that fit the structure, preparing returns that reflect the plan.

When the three professionals know what the others are doing, the whole is worth more than the sum of parts. When they don't, the estate plan exists on paper but doesn't actually work.

What to do this week

If you don't have a full professional team:

1. Assess which professionals you need based on your situation.
2. Get referrals for the missing ones.
3. Interview and engage at least an attorney and a CPA experienced in estate work.
4. Consider a financial advisor if your assets warrant it.

If you have professionals but they're not coordinated:

1. Introduce them to each other. Give explicit permission to communicate.
2. Schedule an annual coordination meeting.
3. Designate a quarterback.
4. Share all documents with all three.

If you're administering an estate:

1. Engage attorney and CPA within the first 30 days.
2. Clarify each professional's scope and fees.
3. Establish a communication cadence for updates and decisions.

Next chapter: mediation. The often-underused option that can save families tens of thousands in legal fees and decades of conflict. When to use it, how to find good mediators, and what to expect.