Your Attorney, Your CPA and Your Financial Advisor: Who Should Be Doing What in Your Estate Plan

Many estate plans involve three professionals: an attorney, a CPA and a financial advisor. The trouble starts in the gaps, where each assumes someone else handled a task. Joseph F. Leeson III trained and practiced as a CPA before he practiced law, with four years in tax accounting, so he has sat on both sides of that table. Here is a practical division of labor, and where plans most often break.

The short version

What the attorney does

The attorney drafts the documents that carry legal effect: your will, any revocable or irrevocable trust, your financial power of attorney and your health care documents. Our page on common estate planning documents explains what each one does.

The attorney is also the one person on the team who gives legal advice. That is a legal line, not turf protection. In Pennsylvania, anyone who practices law without being an attorney commits a misdemeanor of the third degree on a first violation (42 Pa.C.S. § 2524(a)). Good CPAs and advisors know that line. They will explain what a trust means for your taxes or portfolio, and send the drafting questions back to the lawyer.

After a death, the attorney usually guides the estate through the county Register of Wills, which has jurisdiction over the probate of wills and the grant of letters to a personal representative (20 Pa.C.S. § 901). The attorney also handles deeds. How your house is titled can decide whether it passes under your will, to a co-owner or to your trust.

What the CPA does

• The final Form 1040. The personal representative must file the decedent’s final income tax return for the year of death, plus any earlier returns not yet filed. For a calendar-year taxpayer it is generally due April 15 of the year after death (IRS Publication 559).
• The fiduciary return, Form 1041. The fiduciary of a domestic estate must file Form 1041 for a tax year in which the estate has gross income of $600 or more, or if a beneficiary is a nonresident alien (IRS Instructions for Form 1041).
• Basis records. Property inherited from a decedent generally takes a basis equal to its fair market value on the date of death (26 U.S.C. § 1014(a)). That number drives the capital gain when heirs later sell, so the CPA documents date-of-death values, usually from the advisor’s statements.

The Pennsylvania inheritance tax return, Form REV-1500, sits between the attorney and the CPA. For a Pennsylvania resident it is filed with the Register of Wills within nine months of death (72 P.S. § 9136). The tax becomes delinquent at nine months, and tax paid within three months of death earns a 5% discount (72 P.S. § 9142). Our guide to the REV-1500 return explains how that discount is calculated. In practice the return is often prepared with the attorney, who knows what passed to whom, while the CPA knows the numbers.

What the financial advisor does

Two of the advisor’s jobs matter most for the estate plan:

• Beneficiary designations. Keeping the named beneficiaries on IRAs, 401(k)s, annuities and investment accounts in line with the plan.
• Funding the trust. Retitling brokerage and bank accounts into the name of your revocable trust, or naming the trust as beneficiary where that is the design.

Both should follow written instructions that match your signed documents.

Where plans break

A beneficiary form overrides the will

An account that names its own beneficiary generally follows the form, not the will. The U.S. Supreme Court showed how strictly an employer retirement plan follows its own paperwork in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan (2009). The plan paid the decedent’s former wife, still the named beneficiary, even though she had given up the benefits in their divorce decree, and the Court held the administrator did its duty by paying in conformity with the plan documents.

The everyday version is quieter. A will leaves everything equally to three children, but the IRA, the largest asset, still names only the oldest child on a form filled out twenty years ago. Rewriting the will does not change the form.

The trust was signed but never funded

A revocable trust can only manage what it owns. If the house and the brokerage account are still in your own name at death, the trust document does not reach them. A pour-over will can leave those assets to the trust, and Pennsylvania allows a will to leave property to a trust even when the trust is revocable or unfunded (20 Pa.C.S. § 2515). But property that reaches the trust through the will has to pass through the estate first, which is often what the trust was meant to avoid. Our page on revocable trusts explains how they work.

Nobody owns the timeline

The trust is signed, and the attorney assumes the advisor will retitle the accounts. The advisor waits for paperwork that never arrives. The CPA learns about the trust at tax time. After a death, deadlines scatter the same way: the final 1040, the 1041, the REV-1500 and its three-month discount window all run on different clocks.

Agree at the first meeting who keeps the checklist. Ask for written confirmation when an account is retitled or a beneficiary form is changed. If you own a business, the overlap is larger, because entity documents, buy-sell agreements and ownership records touch all three advisors. Our page on estate planning for business owners covers that side.

What to bring to a planning meeting

• Your current will, trusts and powers of attorney, if you have them.
• Recent statements for every bank, brokerage and retirement account.
• The current beneficiary designation for each retirement account, annuity and life insurance policy.
• Deeds to any real estate.
• Your last two years of income tax returns.
• If you own a business: the entity documents and any buy-sell or operating agreement.
• Names and contact details for your CPA and financial advisor, and whether we may speak with them.

Frequently asked questions

Can my CPA or financial advisor draft my will or trust?

Your will and trust should come from your attorney. Practicing law without being an attorney is a crime in Pennsylvania (42 Pa.C.S. § 2524), so careful CPAs and advisors leave drafting and legal advice to the lawyer while staying part of the conversation.

Does my will control who gets my IRA?

Generally not. An account with a named beneficiary follows the beneficiary form, so check each form rather than relying on the will.

Does every estate have to file Form 1041?

No. A domestic estate files when it has gross income of $600 or more for the tax year, or a nonresident alien beneficiary (IRS Instructions for Form 1041).

Who is responsible for filing the REV-1500?

The personal representative must file it (72 P.S. § 9136(a)). Anyone who receives taxable property outside the estate, such as a trustee, must also file unless that property is on the personal representative’s return. In practice the attorney and the CPA often prepare it together.

How we work with families and business owners

We work with families and business owners in Bethlehem and across the Lehigh Valley, alongside the CPA and financial advisor you already have. The first conversation usually covers who does what, and what has fallen through the cracks. If you decide to go ahead, we give you a written fee proposal before any work begins.

Joseph F. Leeson III trained and practiced as a CPA before he practiced law, with four years in tax accounting. He holds a JD from Indiana University Maurer School of Law and an MBA in accounting from DeSales University. He was born and raised in Bethlehem, and practices at Leeson & Co. Read more about Joseph F. Leeson III.

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This post explains general principles of Pennsylvania and federal law and is not legal or tax advice for your situation. Filing thresholds and deadlines can change. Please speak to us before acting on anything here.

Sources

• Tax Reform Code of 1971, Article XXI, §§ 2136 and 2142 (72 P.S. §§ 9136, 9142)
• PA Department of Revenue, Inheritance Tax
• IRS, Instructions for Form 1041
• IRS Publication 559, Survivors, Executors, and Administrators
• 26 U.S.C. § 1014
• Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, No. 07-636 (U.S. 2009)
• 42 Pa.C.S. § 2524
• 20 Pa.C.S. § 901
• 20 Pa.C.S. § 2515