Planning and executing an estate are complex and highly regulated processes. As a result, mistakes are common. As you start with estate planning, here are some practices to avoid.

What Are Some Estate Planning Mistakes?

1. Not Having a Plan

Arranging an estate isn’t just for wealthy people. Everyone should have a will, no matter their age, health condition, or financial situation.

The plan will get more complex as you accrue more assets and heirs, but even a simple will can maximize the value you pass on to your beneficiaries. As life events occur, such as getting married or having children, keep the plan updated with your attorney and accountant to reflect those changes.

2. Not Naming a Contingent Beneficiary

Failing to name a contingent beneficiary on your insurance policy or retirement account could mean that it will be sent to your estate by default. This leaves it subject to delays, creditors, and probate.

Have your accountant name these and update them with any life changes. For example, an IRA will not automatically change the beneficiary from your ex-spouse when divorced or remarried. If you name a contingent beneficiary, they’ll get a tax break called the stretch IRA, which allows them to draw out contributions throughout their own life expectancy.

3. Failing to Include Gifts

Gifts up to $14,000 per year per spouse can be excluded from estate tax. When including gifts in the plan, it creates significant tax savings for the recipient. If you have the financial means, ask your accountant to set up a gift for the maximum amount possible.

If you need a trusted CPA firm to help with estate planning, contact Bergamo Tax & Financial Services in Watertown, CT. Their thorough estate planning services are also available to the surrounding areas, including Middlebury, Waterbury, and Litchfield. They can also assist with other accounting services, such as tax preparation, business bookkeeping, and payroll. See their full list of offerings online or call (860) 274-1655 to schedule a consultation.