Considerations When Choosing Beneficiaries in Connecticut

If you are starting to consider your estate planning options, one question that naturally arises is who you intend to inherit your assets after you die. There are many considerations when choosing beneficiaries in Connecticut, including who to include, whether to exclude anyone, and how best to protect those most dependent upon you, that your estate planning attorney can help you work through.

How to Choose Beneficiaries

Choosing beneficiaries is highly personal, and can be very emotional or complex. Many people assume their closest family members will “get everything” when they die. But that does not have to be the case. In Connecticut, when you draft a Last Will and Testament or trust documents, you get to define who you want to inherit from your estate, and who you don’t.

Who Are Your Natural Beneficiaries (Next of Kin)?

A good place to start when choosing beneficiaries in Connecticut is your closest family members, often informally called “next of kin.” Under Connecticut’s intestate succession law, if you die without a will, your assets pass to your immediate family first, including your surviving spouse,your children, parents, and siblings. Their respective shares will depend on which of these survive you. If no immediate family survives you, then relatives further removed, such as aunts and uncles, may be in the line of succession. If there are no relatives, then your entire estate may “escheat” or revert to the State of Connecticut. However, your will or trust can add to, adjust, or even eliminate the shares received by most (but not all) of your closest family, so your estate plan truly reflects your wishes.

Choosing Beneficiaries Who Aren’t Related to You

It is very common to choose beneficiaries who are not related to you. Depending on your personal situation and family dynamics, you may want to leave assets to your:

• Step-children
• In-laws
• Close friends
• Business partners
• Godparents for your children
• Mentors or mentees

The items, property, and assets you leave these people may be as small as a meaningful keepsake, or as large as your entire estate. It is up to you how you divide your assets, and to whom they are distributed.

Don’t Forget Organizational Beneficiaries

Your beneficiaries do not have to be individuals, either. Many Connecticut residents leave money to churches, religious organizations, charities or other organizations. Doing this allows you to further causes important to you, and leave a legacy after you die. This could be a primary gift (often expressed as a flat dollar amount or a percentage of your assets). However, you can also name an organization as a contingent beneficiary, receiving all the assets left behind after your friends and family receive their shares.

Tips for Choosing Beneficiaries

In addition to creating a list of your intended beneficiaries, you should also consider how those beneficiaries will inherit, and from what sources. Depending on their age, financial maturity, and credit situation, there may be special steps you can take to protect your assets and their future.

Will Beneficiaries vs Beneficiary Designations on Accounts

Not all your assets must go through the Connecticut Probate process. In fact, an important part of estate planning isto reduce or even eliminate your probate estate to increase privacy, decrease court fees, and get their assets into their chosen beneficiaries’ hands faster. One way to do that is to complete beneficiary designations on your accounts including:

• Retirement accounts such as 401(k)s, 403(b)s, and IRAs.
• Life insurance policies
• Annuities
• Investment or brokerage accounts
• “Transfer on Death” accounts
• “Payable on Death” bank accounts
• Health Savings Accounts (HSAs)
• 529 College savings plans

You can use these beneficiary designations to ensure that your closest loved ones have access to funds right away, and reduce the size of your probate estate.

How to Designate Secondary Beneficiaries

It is important to include secondary beneficiaries in your will or trust. These are people who will take the place of your primary beneficiaries if something happens to them during your lifetime. Many Connecticut residents don’t regularly update their wills. If you have included a specific distribution to a beneficiary that is no longer living, you may lose control over where those assets go instead. Naming a secondary beneficiary provides a safety net, ensuring that your wishes are honored.

Using Trusts to Protect Vulnerable Beneficiaries

Connecticut law does not allow a minor beneficiary to receive funds directly. Instead, assets left to a minor (at the time of the decedent’s death) will be held in trust for them until they turn 18 years old. But it may not be in anyone’s best interest for young or vulnerable beneficiaries to receive their inheritance all at once. If a beneficiary is financially immature, has substantial creditors, or receives government assistance (due to special needs), it may be better to establish a trust for their benefit. This gives you more control, and protects both your assets and your beneficiaries’ benefits.

Things to Avoid When Choosing Beneficiaries

There are also some things you should avoid when choosing beneficiaries to reduce the chances of probate litigation between family members after your death.

Overlooking Spousal Shares

If you are married, you cannot completely disinherit your spouse under Connecticut law, except through a valid premarital or post-nuptial agreement. You can’t simply omit your spouse from your will. Your surviving spouse has the right to elect to take a “statutory share” of one third the value of all your property, even if your will awards that property to somebody else.

Accidental Exclusions vs Intentional Disinheritance

Other than your spouse, you can choose to disinherit family members who would receive inheritance under Connecticut intestate succession laws. Unfortunately, this often happens accidentally when people write their wills themselves, using online forms, relying on artificial intelligence, or without the help of an experienced estate planning attorney. If a child, grandchild, or other relative is born or brought into the family after your will is executed, he or she will only be included if your will describes your beneficiaries in classes (such as “all my children”), rather than as individuals. The better practice is to be inclusive with your awards, and specific if you intend to disinherit anyone.

Get Help Choosing Your Beneficiaries from an Experienced Estate Planning Attorney

When it comes time to choose your beneficiaries, you want the help of an experienced estate planning attorney. The probate attorney at Lawrence & Jurkiewicz, LLC represents clients in Hartford and Litchfield Counties. Attorney Edward Jurkiewicz can help you choose the right estate planning strategies to protect your beneficiaries and provide for their needs. Please call us at 860-626-1333 or contact us at your convenience to schedule a confidential consultation.