Estate planning is a set of legal, financial and accounting advisory services typically aimed at individual investors, investment family offices, business owners and high net-worth individuals. As such, most estate planners have law, accounting, and/or finance degrees and certifications. The estate planner works with individuals to formulate and implement a tax planning and charitable contributions strategy, and to realize their financial objectives.
Tax Planning, Contributions and Financial Maximization
Individuals, business owners, family offices and high net-worth investors who have accumulated wealth generally have an array of asset types. These include stocks, bonds, real estate, property or buildings and collectible items. There is a need for these individuals to execute transactions and set up entities that protect against any legal, financial or tax liability exposure. For instance, an individual can be taxed at different rates when drawing a salary, distribution or dividend from a corporation that he or she controls. Based on that individual's circumstances, there are optimal ways to structure a transaction such that a person can receive periodic cash flow at the lowest effective tax rates.
Death can result in large federal estate liabilities for the family, necessitating generational transfer strategies that can reduce, eliminate or postpone tax payments. For instance, a grandfather may encourage his grandchildren to seek college or advanced degrees and, therefore, transfer assets to an entity for the purpose of current or future education funding. That may be a much more tax-efficient move as opposed to dying, having those assets transfer to his son and, finally, having the same assets fund college when the beneficiaries are of college age. The latter may trigger multiple tax events that can severely limit the amount of funding available to the kids.
Secondly, an individual may wish to make charitable contributions to a variety of causes. Estate planners can work with the donor in order to reduce taxable income as a result of those contributions and/or formulate strategies that maximize the effect of those donations. Finally, some major estate planning providers integrate the practice with financial advisory and wealth management services aimed at maximizing investment returns for the individual based on that person's risk tolerance.
Knowledge And Education Needed For Certification
Wealth managers, trust officers, investment officers, lawyers, accountants, financial planners, trust officers and administrators have an interest in pursuing certifications. Estate planning is a complicated maze of federal and state laws, IRS rulings and judicial interpretation that affect how assets and income are treated for tax purposes based on a wide array of types of transactions, transfers, triggering events, individual profile (age, single or married, etc.) and entities. The constantly changing laws, judicial and political climate make estate planning a highly dynamic field in which advisors are engineering transactions that must hold water with authorities. Certain practices (and insights) can have a short shelf life.
Wealth management services – aimed at maximizing financial returns based on a risk profile – involve economic and financial sophistication that enables providers to tailor their solutions based on unique investor characteristics and life expectancy, goals and risk tolerance. Legalese is involved regarding fiduciary duties and responsibilities, and it is critical for advisors to understand expectations. Earning an estate planning certification also typically requires training courses on ethics, financial planning, tax law, compliance and the regulatory environment.
In addition to relevant college or advanced degrees and certifications (such as a MBA, MPA, JD, CPA and CFA), the specific, complex, and constantly-changing nature of the field necessitates up-to-date awareness. Doing so elevates the level of credibility and station of an advisor, which additionally helps in developing business. Given that estate planning typically involves strategies around large sums of money, earning relevant certifications is imperative.
Chartered Trust and Estate Planner (CTEP)
The American Academy of Financial Management is the certifying body for the Chartered Trust and Estate Planner designation. Earning a CTEP requires at least three years of experience in estate planning or trusts. Additionally, candidates must have:
- a degree (graduate or undergraduate) in finance, tax, accounting, financial services, law or a CPA, MBA, MS, Ph.D., or JD from an accredited school or organization
- five or more approved and related courses
- a certification training course
- annual continuing education requirements (varies)
Accredited Estate Planner (AEP)
The AEP designation is awarded by the National Association of Estate Planners & Councils. Candidates must:
- be licensed to practice law as an Attorney (Atty) or to practice as a Certified Public Accountant (CPA), or be currently designated as a Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP) or Certified Trust & Financial Advisor (CTFA)
- be engaged in estate planning activities as an attorney, an accountant, a life insurance professional, a financial planner or a trust officer
- have a minimum of five years of experience engaged in estate planning and estate planning activities
- complete two graduate courses through The American College
- have a minimum of 30 hours of continuing education during the previous 24 months, of which at least 15 hours must have been in estate planning.
Certified Trust and Financial Advisor (CTFA)
The CTFA is awarded by the American Bankers Association (ABA) in conjunction with the Institute of Certified Bankers. The requirements include:
- a minimum of three years experience in wealth management and completion of one approved wealth management training program
- letter of recommendation
- ethics statement
- completion of 45 credits of continuing education every three years
Related Wealth Management Advisory Certifications
There are a number of additional certifications to choose from including:
- Chartered Wealth Manager
- Chartered Asset Manager
- Chartered Portfolio Manager
- Chartered Compliance Officer
The Bottom Line
Becoming an estate planner can be difficult, and may take a breath of knowledge, including law, accounting and finance. As seen, there are many ways that one can get involved and a number of different certifications that someone can obtain in order to join this challenging field.
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