We recently were told the following story. Parents bought their son a car as a graduation gift (titled in parents’ names). When the parents called their auto insurance carrier and requested quotes, they learned it was much cheaper to obtain coverage in the parents’ name rather than in their son’s name. Son is driving the car with two female friends as passengers. Unfortunately, he failed to navigate a country road turn going 50-60 MPH and all three occupants were killed. The parents of the female passengers sued the parents of the driver for $6Million each. Needless to say the parents’ auto insurance did not provide this amount of coverage and the parents wound up selling their assets to cover the liability. The legal theory supposedly was that since the parents allowed their son to drive their car, they are legally responsible for his actions.
While we cannot comment on the accuracy of the legal issues of this story, we can attest that this story is not atypical. It is not uncommon that when faced with a financial decision, the decision is based on a single criteria – cost. This reminds us of the Fram oil filter commercial, where the slogan was “You can either pay us now (by having your oil filter changed regularly) or pay us later (when your engine fails due to lack of regular maintenance).”
How many of us would ask the insurance agent (or better yet the family attorney) as to whether the parents’ assets would be better protected if the car and insurance policy were in the names of the parents or the son?
How does this story apply to taxes? When considering using a CPA, the first question often asked is “How much do you charge?” Rather than being concerned about experience and expertise and the value to be received, the individual or business owner asks about pricing. In other words, the individual is making the assumption that all CPAs are of equal ability and that they deliver the same product or service. If you want to learn more about how you or your business could benefit from using an experienced CPA firm to handle your taxes, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation.
The peace of mind knowing that a tax return was prepared properly by using a tax professional for tax preparation is just one benefit of using a tax professional. Remember to work with your CPA during the calendar year if there are major life changing events or significant tax law changes that have occurred. An experienced tax professional keeps his clients informed of tax law changes, and tax planning strategies.
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