The process of estate planning in Connecticut can be challenging. Hearing people’s stories of how the government took a large portion of people’s inheritance under the excuse of taxes can be scary to think about. You’ve created a nice nest egg for your family’s future generations, and you want to ensure that they get as much of that money as possible.
Understanding all the taxes involved
Most people falsely believe that inheritance tax is the only type of tax a person has to pay on an inheritance. The reality is that heirs have to pay more than just inheritance tax. Your heirs will be responsible for paying federal income tax, and some states actually have their own estate taxes as well that they may have to pay for. Therefore, when you’re planning your estate, it’s important to take these other taxes into consideration so that you don’t leave a hefty tax bill for your loved ones after you pass.
Always have your beneficiaries named
One of the most important things that you can do to ensure that your family members get the assets that they’re entitled to is to make sure that you have a beneficiary listed for each account. There are a number of assets that are not actually dispersed through a traditional will. These include accounts like life insurance policies and retirement funds. These are only dispersed to a named beneficiary and, if there isn’t one, the account goes to probate court.
If you’re one of the many people that falsely believe that estate planning is only necessary for those in the top 1% of financial wealth, you need to change your thinking. Estate planning is a necessary process for those in all areas of the financial wealth scale. By implementing tax reduction strategies, you can help to ensure that more of your assets stay within the hands of your beneficiaries once you pass.