When Bad Situations Happen, Accountants To The Rescue!
The recent news of the Schwarzenegger-Shriver split is an epic example of the bad things that can happen in people’s lives. The public will never know the resolution of this dreadful situation involving high-profile clients and powerful adversarial attorneys. However, for other people going through bad situations, the accountant could be the unsung hero by strategizing a solution that’s positive for everyone.
Take divorce for example. “No one should look forward to divorce, but when it happens there are tax planning, financial planning, and asset protection ramifications. And there are strategies that accountants can employ to make the best of a bad situation,” says Arthur J. Werner, JD, MS Taxation. “For instance, there may be a strategy that enables one spouse to get more money while the other spouse gets better tax deductions, and the only loser is the IRS.” What about the anger and hurt that happens with divorce? When you explain the strategy, most people accept it, says Werner. “After all, why would anyone want to spite a spouse by paying more money?”
Accountants know about the law and compliance, and they usually report to clients on what happened the year before. But when the bad situations that inevitably happen to people, such as divorce, death, disability, a child who needs help, accountants are in a position to do much more. “The same tax law can be used proactively rather than wait to end of year and compare returns, and say 'too bad this happened but here’s the result.' What if we were to say instead, here’s the tax law and let’s strategize accordingly?” says Werner.
Everyone wins, including the accountant. “If we can take a bad situation and make something positive out of it, we are serving the client well,” says Werner. “And the billable hours are very nice too,” he adds.
Arthur Joseph Werner lectures extensively to certified public accountants, enrolled agents, insurance agents, and financial planners in the areas of estate planning, financial planning, and estate and gift taxation--and making the best of bad situations.