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Estate Planning and the CPA


Estate planning conversations are difficult. They require a thoughtful consideration of death and tough decisions about money – two subjects that people are often unprepared to talk about. CPAs may have the technical knowledge to guide clients through the estate planning conversation, but the emotional side of the conversation has many professionals stumped. Here are some ideas on how to navigate this tricky terrain.

  • Invite clients to have the conversation.

    Don’t just assume that your clients have a will and an estate plan.

    Depending on the survey that you look at, between 55 and 65 percent of Americans don’t have a will. The consequences of dying without a will are serious and can cause significant expenses and delays for the bereaved family. Even after the probate process is completed, there is no guarantee that the probate-mandated distribution will represent your clients’ final wishes – unless those wishes have been made official.

    Your clients may not have gotten around to it. They may not think that creating a will is urgent. They may even mistakenly believe that they don’t need one. Ask the question and invite them to have a conversation about it. When working with a married couple, it’s best to have the husband and the wife discuss estate planning together in the first session. Children and extended family can be involved after the initial conversation.

  • Get to know all relevant parties.

    Draw the family tree and get to know all relevant players. Is inheritance expected? Are there any contemptuous relationships to be aware of?

  • Divide all assets into monetary and non-monetary.

    People often think of their estate as a collection of their bank accounts. However, belongings come in all shapes and sizes. Be sure to discuss bank and investment accounts, pensions, real estate, and other property.

    Identify heirlooms and family legacy assets, as those items can be challenging to transition equitably. If a vacation home has been in the family for 120 years, splitting it between three adult children may prove difficult, particularly if one child wants to keep the home and live in it, while the other two would rather see it sold.

    In this age of technology, it is also important to talk to your clients about their digital assets. There are digital assets with financial value such as cryptocurrency, balances in digital wallets and platforms like PayPal, and domain names. There are also sentimental digital assets such as social media sites, personal websites, videos, and photos. Legally, digital property is the same as any other property in that its ownership can be passed along. However, the specific laws surrounding it are still evolving. Talk to your clients about whether they have significant digital assets and bring in an attorney that specializes in this area of the law if needed.

  • Identify differences in opinion.

    Ask questions around any possible disagreement that may exist as to how assets should be divided. If there are different opinions, list everyone’s preferences and try to find an equitable solution. Perhaps the child who wants to keep the family home can buy out the other two siblings over the course of several years.

  • Consider the family business.

    Succession planning for both ownership and management transition is of critical importance for family business owners. Oftentimes, the business represents a significant concentration of their overall wealth, as well as a potential source of income in retirement.

    Walk the client through his or her vision for the company in the long run. Do they wish to keep family ownership of the company or sell it to a third party? Keep in mind that implementing business succession takes time no matter which course the current owner chooses. Internal ownership transfer requires an alignment of financial resources and time to groom the successor to ensure a successful transition. The process of finding an external buyer, agreeing on valuation, and negotiating payout terms presents its own challenges. In short, the sooner you begin, the greater are your chances of success.

  • Choose the trustee wisely.

    The choice of trustee or executor is an important one. Many people list their long-time family friend or a trusted business associate as a default executor. However, that person may or may not be the best choice for the job. Administering an estate can be a time-consuming job that requires business and diplomatic savvy. The best practice is to choose the most qualified person, not necessarily the one your client likes best.

  • Get everything documented.

    Walk your clients through making their final wishes and plans official. Many CPAs create Life Planning Binders for their client families to organize all the critical documents in one place. Whether you prepare a paper binder or provide an online document vault, giving the client’s family a clear place to store essential papers can add significant value and peace of mind.

  • Encourage clients to revisit the planning documents every three to five years.

    Even the most carefully crafted will and an estate plan must be revisited every three to five years to make sure it remains relevant. Life brings about changes. Divorce, new marriage, children’s marriage or divorce, and birth or death of children and grandchildren may all require edits and re-consideration.

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This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.