Many taxpayers develop a long-term relationship with their accountant – one that can stretch out for decades. In that time, the accountant may essentially take ownership of their client’s financial information. That’s a big responsibility with potentially big financial ramifications, so the natural question is – what do people do when their accountant suddenly retires or dies?

The Primary Concern When Your Accountant Dies or Retires: Where Are Your Tax Documents?

The situation is usually less complicated if the accountant is retiring. If they’ve done their job properly, they’ll be able to hand over all essential documentation without issue.

If your accountant passes away, though, that’s a different story. You’ll need to track down necessary documentation, potentially without assistance.

There’s one sure way to avoid any complications here – maintain your own tax records. Ideally, anything and everything you might send to an accountant – keep a copy of it. If your accountant does die, you’ll have a backup ready for tax time. Hopefully, you’ll be able to access their work papers, too, if they were actively working on a project, like tax preparation.

What Documentation Should Taxpayers Keep?

The short answer is – anything that could be relevant to your taxes or financial interests. That’s a broad definition, but for people with complicated tax pictures – like those who own or inherit a business – lawsuits and major disputes are common.

At the least, we recommend keeping records for the following:

• Any income and tax-related information, including previous tax returns, W-2s and any 1099s
• Any receipts for a long-term asset, like a home
• Divorce decrees
• Records of any wills and trusts
• Any history of correspondence with the IRS
• Bank and credit card statements
• Receipts for any major expenses
• Paid medical bills

How long should taxpayers hold on to the above documentation? Most tax-related information should be maintained for at least seven years, though we recommend holding on to it a few years longer if your taxes are more complicated. Owning a business or drawing income from a large estate are two examples.

Also, keep in mind that if your partner or spouse has their own accountant, there could be complications if their accountant dies. By maintaining your own financial records, you’ll be protected should there be future disputes regarding your shared financial lives.

What Should Individuals Do To Track Down Important Documentation When Their Accountant Is No Longer Available?

If your accountant has died, retired, or fled the country and you don’t have important documentation on hand, there are potential solutions.

First, consider who your accountant worked with. Many accountants work in a small or medium-sized firm, and coworkers can help with record acquisition. At these firms, if an accountant does pass away, their book of business – and accompanying work papers – are transferred to another accountant at the firm. If you prefer an accountant outside of the firm, they should be willing to help get you the documentation you need.

If your accountant was working solo, they may have an administrative assistant who can help with records. If they didn’t have an administrative assistant, then perhaps their spouse or a family member can point to where work records are kept.

Many accountants have moved to digitizing client records. Ideally, an accountant would create a digital copy of everything you hand them, and then immediately return the physical copy for your own records. If something does happen and there are digital records, these can easily be organized for your new accountant.

What to Keep in Mind When Looking For a New Accountant

If your accountant has retired or died, you’ll need to find a new one. Where should you start?

First, rely on recommendations from people who are already familiar with your financial situation. That could be your banker, your insurance professional, your financial planner – these professionals are best qualified to provide a recommendation and have the most insight into your finances.

If all else fails, there are a few industry agencies that can provide support. Chief among them is the Texas Society of CPAs.

When searching for an accountant, keep the following in mind:

• Accountants vary in the services they offer – Accountants all have their specialties and preferences where accounting services are concerned. Some are better equipped for estate planning assistance while others are more familiar with government benefits, and still others are specialized in business taxes.

Keep this concept of specialization in mind when matching a prospective accountant to your financial situation.

• Accountants also vary in their billing practices – Accountants also arrange their billing methods differently. Some may charge flat fees for certain services, while others may charge by the hour or by task.
• There are labor shortfalls in accounting, so service delays are common for new clients – Like many industries post-Covid, accounting is experiencing labor shortages. In the next 15 years, 75 percent of current CPAs are expected to retire.

As time goes on, a decreasing number of accountants will be responsible for a greater amount of work. This is already causing issues, as service delays are widespread for people switching to a new accountant. One example of this playing out – your new accountant may request to file an extension on your taxes to ensure there’s time for every client.

The take-home point is this – every accountant is different, so there’s no single best fit for every individual. It ultimately comes down to personal preference.

If Your Accountant Has Retired or Died, It’s Time to Get Your Records in Order

In the world of accounting, comprehensive record-keeping is critical, for tax preparation, asset tracking, and a variety of other reasons.

If your accountant has recently retired or died, securing high-priority documentation should be the first step. Once that’s handled your new accountant can take over tax preparation, planning, and bookkeeping services.