Estate Plans: Can You Ask Clients These Eight Questions?

businesswoman sitting across desk from woman and manDifficult conversations: It’s tough to talk about wealth transfer, but it’s vital.

By Anthony Glomski
The Personal CFO

Many accomplished entrepreneurs are looking beyond their own financial needs. They want to ensure that their heirs, parents, children and grandchildren are well taken care of in accordance with their wishes – with minimal difficulty and cost.

MORE: Enhance Wealth by Mitigating Taxes | Your Client’s Instincts Are Wrong | Preserving Wealth Is a Different Mindset | Three Approaches to Investment Consulting | Cashing Out: Your Business Clients’ Five Big Issues
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According to Vanguard, more than half of affluent Americans say they are highly concerned about their kids’ (and grandkids’) financial situations. And yet, too many successful entrepreneurs have outdated estate plans or charitable giving plans that are not in sync with their current life circumstances and needs.
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Accelerate Your Success by Becoming a Thought Leader

Distinguish yourself from the competition by being the go-to pro. 

By Russ Alan Prince

Accounting services are commoditized. However, this does not mean that all accountants can deliver the same level of expertise, but it does mean that better accountants can provide better expertise. What is more telling is that clients—both individual and corporate clients—are usually unable to discern the quality of the accounting services they receive. For most clients, it can be tough to differentiate between accountants when it comes to filing tax forms or providing tax advice.

 

MORE: What Level of Advice Do Entrepreneurs Need? | Three Approaches to Investment Consulting | The Role of the Personal CFO | Three Components of Collaborative Wealth Management | Cashing Out: Your Business Clients’ Five Big Issues
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For higher-margin practices, the competition for clients is intense. For example, one of the most significant growth areas for accounting firms is having a family office practice. The wealthy—especially the ultra-wealthy—are regularly choosing to work with family office practices over other providers. Furthermore, the profitability of a well-run accounting firm’s family office practice is significantly better than most other practice areas. With so many accountants positioning themselves to provide family office services, even with exploding demand, some will seriously underperform.

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The Goldmine at Your Fingertips

Competition is intensifying, but proper service to one client base could be all you need.

By Russ Alan Prince

In many ways, the accounting industry is under pressure. For example, fee compression is an issue for many accounting firms. More savvy and cost-sensitive clients are looking for a “bargain.” At the same time, competition for many of the services some accounting firms provide is intensifying. Tax consulting, for instance, is being done by wealth managers, lawyers and even some life coaches.

MORE: What Level of Advice Do Entrepreneurs Need? | Three Approaches to Investment Consulting | The Role of the Personal CFO | Three Components of Collaborative Wealth Management | Cashing Out: Your Business Clients’ Five Big Issues
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While many accounting firms are under pressure because of increased competition and more demanding clients, there are certain types of clients that prove exceedingly profitable. READ MORE →

Why Accountants Fail at Wealth Management

Due to one reason. And it’s a big one.Troubled businessman AdobeStock_73444359 1000w copy.jpeg

By Russ Alan Prince

A growing percentage of accounting firms have wealth management practices by one name or another. Most of these practices provide investment management services, life insurance, or both.

MORE: What Level of Advice Do Entrepreneurs Need? | Three Approaches to Investment Consulting | The Role of the Personal CFO | Three Components of Collaborative Wealth Management | Cashing Out: Your Business Clients’ Five Big Issues
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But an estimated 75% to 90% of these wealth management practices are severely underperforming.

The reason why is both simple and difficult.

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A Woman Named Wanda Leaves an IRA Nightmare

Why estate planners may now need to re-think an uncountable number of revocable trusts in at least 30 jurisdictions.

By Seymour Goldberg, CPA, MBA (Taxation), JD
The Practitioner’s Guide to the IRA Distribution Rules under the SECURE Act

A Kansas court case may make it necessary to redo many IRA trusts and change them from revocable trusts to irrevocable trusts, affecting an untold number of estate plans in at least 30 jurisdictions. The case revolves around a woman named Wand and a $93,314.48 promissory note to a bank.

Wanda was living in a retirement home and getting by on Medicaid when she died in 2003, leaving an estate that owed more than it owned. Wanda’s IRA accounts were set up to be payable to her revocable trust. But the court ruled that, because the estate’s assets were inadequate, the bank could seize Wanda’s IRA accounts.

MORE: Why You Really Need a Protective TrustIRS Updates Pub. 590B on IRA DistributionsIRS Pledges to Fix SECURE Act 10-Year RMD Rule

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So, from an asset protection point of view, it may be worthwhile to use an irrevocable standalone trust, instead of a revocable standalone trust, as the beneficiary of an IRA account. This may be especially true in jurisdictions that have adopted versions of the Uniform Trust Code.

The reason this case is so important is that during an IRA owner’s lifetime, IRA accounts are protected from creditors, except the IRS, of course. But there has never been a case prior to the Kansas case in which the deceased IRA owner’s creditors – other than the IRS – could collect from a beneficiary of a deceased IRA owner’s IRA account unless the beneficiary the IRA account of the deceased IRA owner was his or her estate.

Since many attorneys in the U.S. use revocable trusts in estate planning and not irrevocable trusts, there may be many revocable trusts that have been selected as the IRA owner’s beneficiary of his or her IRA account. Based on the Kansas case, it may be necessary to review an uncountable number of trusts and change them from revocable to irrevocable trusts.

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TAX ALERT: IRS Updates Pub. 590B on IRA Distributions

But is it really the final fix for the SECURE Act 10-Year RMD Rule?

By Seymour Goldberg

The IRS has issued an updated version of Publication 590-B, Distributions from Individual Retirement Arrangements.

And the IRS says the new version is to be used in preparing 2020 returns.

MORE: TAX ALERT: IRS Pledges to Fix SECURE Act 10-Year RMD Rule

Watch this space for a deeper dive.

Meanwhile, here are the highlights:

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TAX ALERT: IRS Pledges to Fix SECURE Act 10-Year RMD Rule

Click here for full PDF (65 pages)

The IRS teases new update on IRA beneficiary distribution rules.

Update: IRS Admits Mistake. Official Revision Imminent

By Seymour Goldberg, CPA, MBA (Taxation), JD
Special for CPA Trendlines

Many practitioners are waiting for the Department of the Treasury to issue proposed regulations under the Secure Act that cover the required minimum distribution rules that apply to IRA beneficiaries commencing in 2021.

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The distribution rules regarding an IRA owner are not a big deal, but the distribution rules regarding an IRA beneficiary or an IRA trust are a big deal.

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Family Feud Isn’t Just a Game Show

Jason P. Trenton
Jason P. Trenton: How to avoid family feuds.

Why you need an estate administrator pro.

By Anthony Glomski and Russ Alan Prince
Your $5-Million High-Net-Worth Practice

Being named executor of an estate places many legal and fiduciary responsibilities on that person. An executor is entrusted with settling the decedent’s affairs, arranging for the payment of any income and estate taxes, and distributing the assets of the decedent’s estate. In most cases, people choose a loved one or family member to serve as executor.

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“Unfortunately, I have seen executors neglect their fiduciary duties during the estate administration period, which has exposed the decedent’s estate to unnecessary legal expenses, tax liability, and family feuds,” said Jason Trenton, a top trust and estate attorney in the Los Angeles office of Venable LLP’s Tax and Wealth Planning Practice.
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