Imagine spending thirty years building a thriving CPA practice, carefully nurturing client relationships, and gradually expanding your service offerings. Your child has worked in the practice for nearly a decade, effectively managing key accounts and earning the trust of long-term clients. Now, as you consider your second marriage, you face a critical challenge: how do you balance your child’s future in the practice with providing for your new spouse and stepchildren?
For CPA practice owners, the stakes are particularly high. Not only must you consider personal assets and family dynamics, but also the future of your practice—often your most valuable asset. An incomplete estate plan, or worse, no plan at all, can fragment family relationships and diminish the legacy you’ve worked so hard to build.
The Unique Challenges of CPA Practice Owners in Blended Families
Fair Vs. Equal Inheritances
As a CPA, you understand better than most that “equal” doesn’t always mean “fair.” This principle becomes especially crucial when planning for blended families. You need to balance providing for a surviving spouse while securing inheritances for children from previous relationships. The complexity multiplies when some children are involved in your practice while others have chosen different career paths.
For instance, if one of your children has worked alongside you in your CPA practice, contributing to its growth and success, you might determine that fairness means allocating them a larger share of the business. Meanwhile, other children might receive different assets or compensation to achieve overall equality.
Practice Succession and Unintentional Disinheritances
A particular concern for CPA practice owners is the risk of unintentional disinheritance through business succession. Without careful planning, biological children who are practice successors could be disenfranchised if all assets, including the practice, pass first to a surviving spouse who later redirects them elsewhere.
Age Gaps and Practice Valuation
In blended families formed later in life, age differences between spouses can complicate practice transition planning. If your spouse is significantly younger, they might control practice assets for decades before your children receive their intended inheritance. This timing gap can affect practice valuation, client relationships, and eventual succession plans.
Wealth Disparities and Practice Equity
When there’s a substantial wealth disparity between spouses—common when one partner owns a successful practice—planning becomes even more critical. You’ll need to balance protecting a less-wealthy spouse while ensuring practice equity passes according to your wishes. This might involve granting specific, limited rights to the surviving spouse while preserving core practice assets for intended successors.
Challenges Facing CPA Practice Owners in Blended Families
Fair vs. Equal Inheritances
Balancing inheritance between practice-involved children and those who chose different paths
Practice Succession
Preventing unintentional disinheritance of biological children who are practice successors
Age Gaps & Timing
Managing practice transition when younger spouses might control assets for decades
Wealth Disparities
Balancing protection for less-wealthy spouse while preserving practice equity for intended successors
Without proper planning, these challenges can fragment family relationships and diminish your practice legacy.
Strategic Solutions for CPA Practice Owners
Professional Practice Trust Structures
For CPA practice owners, specialized trust structures can address both personal and professional inheritance concerns:
QTIP Trusts: Balancing Spouse Care with Practice Succession
QTIP trusts offer an elegant solution for CPA practice owners looking to protect both their spouse and their practice legacy. When you place your practice interests into a QTIP trust, you create a structure that provides your surviving spouse with ongoing income from the practice without giving them direct control over the business itself. This arrangement means your spouse can benefit from the practice’s profits during their lifetime, maintaining their standard of living, while the underlying practice equity remains protected for your chosen successors—typically children from a previous marriage who are already involved in the practice.
The flexibility of QTIP trusts also allows for sophisticated practice management arrangements. You can structure the trust to give your practice-involved children operational control immediately upon your death while still ensuring your spouse receives reliable income. For example, the trust could specify that your spouse receives a fixed percentage of practice profits annually while your successor children maintain day-to-day management and strategic decision-making authority. This approach helps prevent potential conflicts between your spouse and children over practice management decisions while ensuring both parties’ interests are protected.
Bypass Trusts: Preserving Practice Value Across Generations
For CPA practice owners with substantial estates, bypass trusts serve as powerful tools for both tax efficiency and practice control. When structured properly, a bypass trust allows you to shelter up to the full estate tax exemption amount (currently $13.99 million in 2025) from estate taxation at both your death and your spouse’s subsequent death. This can be particularly valuable for high-revenue practices where the combined value of the business and personal assets might otherwise trigger significant estate tax liability.
Beyond the tax advantages, bypass trusts offer remarkable flexibility in practice succession planning. You can design the trust to provide your spouse with access to practice income if needed while maintaining firm control over how the practice equity ultimately passes to your children. The trust can include specific provisions about practice management during the interim period, potentially allowing your children to take operational control of the practice while still providing certain protections for your spouse. This approach helps ensure that your practice—often your most valuable asset—remains intact and transitions according to your wishes, regardless of whether your spouse remarries or faces other life changes.
Strategic Trust Solutions for CPA Practice Owners
Qualified Terminable Interest Property Trust
- Provides income to surviving spouse for life
- Preserves principal for your children/practice successors
- Spouse benefits from practice profits without direct control
- Practice-involved children can maintain operational control
- Qualifies for marital deduction (no immediate estate tax)
Bypass Trust (Credit Shelter Trust)
- Shelters up to $13.99 million (2025) from estate taxes
- Assets bypass surviving spouse's taxable estate
- Spouse can receive income and limited principal
- Practice equity passes according to your specific wishes
- Protects assets if spouse remarries or faces other life changes
Trust structures can be tailored to your unique practice succession needs and family dynamics.
Life Insurance Strategies
Life insurance can serve multiple strategic purposes in your estate plan, particularly when structured through Irrevocable Life Insurance Trusts (ILITs). For practice owners with blended families, life insurance provides a powerful tool to create immediate liquidity for non-practice inheritors while allowing practice-involved beneficiaries to retain full business equity. This approach helps “equalize” inheritances without fragmenting your practice or forcing a sale to raise cash. For example, if one child has dedicated years to building the practice alongside you, life insurance proceeds can provide equivalent value to other children without diluting practice ownership.
Life insurance also plays a crucial role in funding buy-sell agreements, which are essential for smooth practice transitions. When structured properly, life insurance proceeds can provide the capital necessary for surviving partners or family members to purchase practice shares from a deceased owner’s estate at a predetermined price. This arrangement ensures that practice-involved heirs receive fair value for their inherited interest while maintaining the practice’s operational continuity. Moreover, by combining life insurance with an ILIT, you can keep the proceeds outside your taxable estate while still achieving your practice succession goals. The trust can be structured to provide ongoing benefits to your spouse while ensuring your children ultimately receive their intended inheritance, all while maintaining the practice’s integrity and client relationships.
Strategic Life Insurance Planning for Practice Succession
Irrevocable Life Insurance Trust (ILIT)
Equalize Inheritances
Provides liquid assets for non-practice heirs while practice-involved children retain business equity
Fund Buy-Sell Agreements
Provides capital for surviving partners to purchase practice shares at predetermined price
Estate Tax Efficiency
Keeps proceeds outside taxable estate while achieving practice succession goals
Result: Smooth practice transition, family harmony, and preserved legacy
Practice-Specific Planning Considerations
Estate planning for your CPA practice requires careful attention to elements that go far beyond typical business succession planning. Your practice’s value lies not just in its tangible assets but in its client relationships, staff expertise, and established protocols—all of which need protecting through properly structured buy-sell agreements and regular practice valuations. The regulatory requirements governing CPA practices add another layer of complexity, as any succession plan must ensure continuous compliance with state licensing requirements and professional standards during ownership transitions.
Equally crucial is developing a comprehensive transition strategy that preserves the practice’s value for your beneficiaries. This means implementing robust client transition protocols that maintain relationships across generations of leadership, creating staff retention programs that keep key employees engaged during ownership changes, and establishing clear management succession procedures. These elements must be carefully integrated into your estate plan to ensure your practice continues to thrive and maintain its value as it passes to your chosen successors.
Bringing It All Together
As retirement specialists who work extensively with CPA practice owners, we understand the unique complexities you face in estate planning. We can help ensure your plan protects both your practice legacy and family harmony. Contact us to review your current estate plan and explore strategies tailored to your specific situation.
