When you live in Connecticut and have assets you’d like to pass on to the next generation when you die, understanding how they are transferred is essential. While you can choose to use a will or trust for this purpose, there are other direct methods you should be aware of when planning your future, including beneficiary designations.
Using the probate process to distribute assets to beneficiaries
The legal process for distributing your assets via a will after you pass away is known as probate. It’s court-supervised and authenticates your last will. The process involves valuing your assets and distributing them to beneficiaries.
Avoiding the probate process
If your estate goes through the probate process to distribute assets, it can be lengthy and costly, which is why you may want to utilize a trust in your estate plan. Transferring your assets to chosen beneficiaries using a trust should be faster than going through probate. With this choice, you can also dictate specific rules regarding asset distribution. If you’re uncomfortable with a beneficiary receiving their inheritance outright when you die, you can set up specific stipulations using a trust.
401(k) accounts are passed directly to beneficiaries
You may have a few 401(k) accounts if you have more than one job. When this is the case, it’s essential to understand how a 401(k) account is passed on to your beneficiaries when you die. Typically, this asset goes directly to the beneficiary you named when the account was started, skipping the probate process. Assets owned through joint tenancy with rights of survivorship can also be directly given to your beneficiary. Understanding how these assets are passed to your heirs is essential. Doing so helps ensure you don’t make a costly mistake when setting up a trust.
Knowing how assets are transferred when you die can be critical. Otherwise, your wishes may not be met.