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What Are the Most Common Estate Planning Mistakes to Avoid?

What Are the Most Common Estate Planning Mistakes to Avoid?

When creating a financial plan, many say that estate planning is one of their least favorite topics. Of course, no one likes to think about their death so it makes sense that there may be a fair share of mistakes made when drafting an estate plan. At Maggi Tax, we can help you avoid the three most common mistakes. Read on to learn more.

The first essential step to ensure that your estate is distributed correctly is to work with a tax professional, as no amount of discomfort or awkwardness should prevent you from avoiding estate planning in the first place. Estate law is ever-changing and complex and working with an expert is critical, even if only a simple will is needed, professionals can ensure that no obligatory requirements are overlooked, and all vital assets are protected.

Do you plan on gifting stock? Income tax ramifications for assets can vary from when they are given and sold. For example, gifting a stock worth $400 to your nephew that you bought for $100 can leave him liable for a $300 gain, should he sell the stock. However, if the stock transfers upon death, the cost will be “stepped-up” to the current $400 value, meaning your nephew will not be liable for taxable gains. Whew, no awkward family dinners after all.

You may be tempted to name one of your children as an estate beneficiary. But did you know that minors cannot take direct possession of an inheritance? If you pass away and the appointed child is still a minor, the estate could pass into guardianship. Avoid this by naming a custodian or trustee of your choice to manage the inheritance. And because an estate plan is a fluid document and family dynamics can change, take the time to update named beneficiaries so that they are represented accurately.

Would you like to learn more about estate planning? We are here to help! For over 30 years, Maggi Tax has guided Tampa Bay residents with all aspects of their financial well-being. Contact us here or call (727) 799-1701 to schedule your appointment today.



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