Practical estate administration tips.

• Author: McGowen, Larry W.

Unlike many audit and tax services, estate administration does not start from a prior-year's blueprint. To minimize time, maximize client satisfaction and enhance profitability, a highly organized set of systems and procedures to provide estate administration services is invaluable.

Estate administration should be handled only by individuals with extensive specialized training and experience. Although they may be assisted by other tax, audit or accounting service staff on limited aspects of an engagement, they should prepare and review Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, and undertake many related functions, or supervise such activities.

Tips

Every tax adviser should have an estate "roaster forms" directory in a computer database (accessible by all staff, if applicable). Reusable forms should include the following:

1. A spreadsheet for administering estate engagements, to monitor status, deadlines and critical steps.

2. An engagement letter.

3. A consent form to request and obtain confidential information from third parties and releasing, third parties from liability for complying with such a request.

4. Initial document request. These should be customized based on an initial review of a client's income tax file, permanent file and other documents.

5. A spreadsheet table of contents for a client's workpapers. For larger engagements, a numbering system should be used to locate each workpaper. The actual workpaper files are assembled using colored divider pages between each section noted in the contents page, to locate information easily.

6. A spreadsheet copy of a table of contents page that precedes the numbered exhibits attached to each estate return. The exhibits expected to be used in every engagement should be shown first (e.g., death certificate, will, request for prompt determination and discharge and revocable trust). The remainder of the farms should be customized to suit each client, for attachments such as appraisals, life insurance statements, etc.

7. A copy of the firm's internal estate tax return preparation /review checklist. A good starting point is the AICPA Tax Division's checklist, modified to the state in which the practice is concentrated.

8. A one-page document titled "Request for Determination of Tax and Discharge of Personal Representatives and Trustees" for any revocable trusts under Regs. Sec. 20.2204-1 and -2. This should be attached to all estate returns, as it shortens tim...