What Is a Beneficiary in Estate Planning?

Learn what a beneficiary is, how they’re named, and why it’s critical to keep beneficiary designations up to date. Get estate planning guidance from an experienced attorney.

What Is a Beneficiary?

If you’re setting up an estate plan — or listed in someone else’s — you’ve probably come across the term beneficiary. But what does it really mean?

Put simply, a beneficiary is the person (or entity) who will receive money, property, or other assets from a will, trust, or financial account after someone passes away.

Common Types of Beneficiaries

Beneficiaries can be:

• Individuals – such as spouses, children, grandchildren, siblings, or friends.
• Organizations – including charities, religious institutions, or nonprofits.
• Trusts – you can name a trust itself as a beneficiary, especially for minor children or individuals with special needs.

You can name one or multiple beneficiaries, and even specify the percentage or type of asset each one should receive.

Where Are Beneficiaries Named?

Beneficiaries are typically named in:

• Wills – specifying who should receive assets after probate.
• Trusts – which allow assets to pass outside of probate.
• Life insurance policies
• Retirement accounts (401(k), IRA)
• Bank accounts or brokerage accounts with payable-on-death (POD) or transfer-on-death (TOD) designations

Important: Assets with named beneficiaries (like life insurance or IRAs) generally pass outside of your will and do not go through probate.

Primary vs. Contingent Beneficiaries

You can name:

• Primary beneficiaries – the first in line to receive the asset.
• Contingent (or secondary) beneficiaries – who inherit only if the primary beneficiary has died or is otherwise ineligible.

Example: You name your spouse as the primary beneficiary of your life insurance and your children as contingent beneficiaries.

Why Beneficiary Designations Matter

Keeping beneficiary designations current is just as important as having a will or trust. Here’s why:

• They override your will. If your will says one thing but your retirement account lists a different person, the account designation wins.
• They can cause conflict. Outdated or missing beneficiary info can delay distribution or lead to legal disputes.
• They ensure faster transfer of assets. Assets with named beneficiaries go directly to the person named.

Tips for Managing Beneficiaries

• Review your beneficiary designations every few years or after major life changes (marriage, divorce, birth, death).
• Use full legal names and relationships when listing beneficiaries.
• Consider setting up a trust as beneficiary if your heirs are minors or need oversight.

Conclusion

A beneficiary is more than just a name on a form — it’s a key part of your estate plan that affects how and to whom your assets will be distributed. Keeping your beneficiary designations up to date ensures your wishes are honored and your loved ones are protected.

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What Is a Trustee? | Role, Duties & Responsibilities

Learn what a trustee is, what they do, and why the role is so important in estate planning. Understand trustee responsibilities from a trusted estate planning attorney.

What Is a Trustee?

If you’re creating a trust or have been named in one, you may be wondering: what exactly is a trustee?

In estate planning, the trustee plays a central role — and it comes with serious legal responsibilities.

Here’s what you need to know.

Trustee Defined

A trustee is the person or institution responsible for managing the assets in a trust according to the instructions laid out in the trust document. The trustee acts on behalf of the beneficiaries — the people (or organizations) who are meant to benefit from the trust.

In simple terms, a trustee is the one in charge of the trust funds and assets — making sure everything inside is protected, invested wisely, and distributed properly.

Who Can Be a Trustee?

• An individual: Often a trusted family member, friend, or professional advisor.
• A professional: Such as an attorney, accountant, or corporate trustee (like a bank or trust company).

The most important thing is that the trustee is trustworthy, organized, and capable of following the law and the terms of the trust.

Trustee Responsibilities

Trustees have what’s called a fiduciary duty, which is the highest standard of legal responsibility. This means they must act in the best interest of the beneficiaries — not themselves.

Typical duties include:

• Managing trust assets responsibly (e.g., real estate, investments, bank accounts)
• Following the terms of the trust
• Keeping accurate records
• Communicating with beneficiaries
• Paying any taxes or expenses of the trust
• Distributing assets according to the trust instructions

Failure to perform these duties correctly can lead to legal liability — so it’s not a role to accept lightly, and a trustee can choose not to serve.

Trustee vs. Executor: What’s the Difference?

People often confuse trustees with executors, but they serve different roles:

• A trustee manages a trust, which can last for years — even decades.
• An executor administers a will and oversees the probate process, typically a one-time role after someone dies.

Sometimes, the same person can serve in both roles, but the responsibilities are distinct.

Should I Choose a Family Member or a Professional Trustee?

That depends on the complexity of the trust and the dynamics of your family.

• A family member may understand the beneficiaries’ needs and save on fees, but could face emotional pressure or conflict.
• A professional trustee is neutral, experienced, and better equipped to handle complex trusts or family tension.

The trustee plays a vital role in making sure your trust works the way you intended. Choosing the right trustee — or understanding your responsibilities if you’ve been named as one — is crucial to protecting the trust and its beneficiaries.

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What Is a Trust in Estate Planning? | Trust Attorney Explains

Learn what a trust is, how it works, and whether it’s the right tool for your estate plan. Discover the benefits of trusts from an experienced estate planning attorney.

What Is a Trust?

When it comes to estate planning, trusts are one of the most powerful and flexible tools available. But what exactly is a trust — and do you need one?

Let’s break it down in simple terms.

Definition: What Is a Trust?

A trust is a legal arrangement in which one person (the trustee) holds and manages property for the benefit of another person (the beneficiary). The person who creates the trust is called the grantor or settlor.

Think of it like a secure box for your assets — one where you decide:

• What goes inside
• Who manages it
• Who gets it, and when

There are many different types of trusts, each designed to accomplish different goals.

Types of Trusts

1. Revocable Living Trust
   • Can be changed or revoked at any time by the grantor.
   • Often used to avoid probate and maintain privacy.
   • Assets in the trust pass directly to beneficiaries upon death, without court involvement.
2. Irrevocable Trust
   • Cannot be changed once created (with limited exceptions).
   • Often used to reduce estate taxes, protect assets from creditors, or qualify for Medicaid.
3. Testamentary Trust
   • Created through your will and takes effect after death.
   • Useful for managing assets for minor children or beneficiaries who need oversight.
4. Special Needs Trust
   • Protects a disabled person’s eligibility for government benefits while providing supplemental support.
5. Charitable Trust
   • Allows you to support a charitable cause while also gaining potential tax advantages.

Why Use a Trust?

Here are a few reasons people include trusts in their estate plans:

• Simplify Probate: Assets in a trust pass directly to beneficiaries without needing probate court approval.
• Maintain Privacy: Wills become public after death — trusts do not.
• Provide Control: You can set specific rules for how and when assets are distributed (e.g., over time, at certain ages, or for specific purposes).
• Protect Beneficiaries: Trusts can shield assets from creditors, lawsuits, or even a beneficiary’s own poor spending habits.
• Reduce Taxes: Certain trusts can minimize or eliminate estate taxes for large estates.

Do You Need a Trust?

Not everyone needs a trust — but many people benefit from having one. You might consider a trust if:

• You want to avoid probate
• You have minor children or dependents
• You own property in multiple states
• You have concerns about incapacity
• You want to protect or control how assets are used

A trust is a versatile legal tool that offers privacy, control, and protection — and it can be customized to fit your specific goals. Whether you’re looking to simplify inheritance, care for a loved one, or shield your estate from taxes and probate, a trust might be the right fit.

Wondering whether a trust makes sense for your situation? Our estate planning attorneys can walk you through your options and help you create a plan that meets your goals. Contact us today for a personalized consultation – Call 203-885-0500.

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Successor Liability: You May Be Liable for Unpaid Business Taxes When Buying a Business

If you rush into buying a business you may receive a nice little gift from the State of Connecticut. Except it’s not a gift, it’s a bill, for the unpaid state tax liabilities of the previous business owner. That is because Connecticut has Successor Tax Liability for unpaid state business taxes, but the liability is avoidable.

What is Successor Liability?

Successor Liability is a statutorily created obligation for the Buyer (“successor”) of a business to hold, from the purchase funds, any amounts of business tax that are owed and unpaid by the Seller at the time of the sale, and use it to pay off the Seller’s tax debts to the State. If the Buyer fails to do so, they are liable for those unpaid business taxes.

What taxes can a Successor be liable for?

The Buyer of a business can be hit with successor liability for Sale and Use Tax, Admissions and Dues Tax, and Income Tax Withholdings.

This would theoretically apply to both amounts that were collected and not remitted to the State and amounts that should have been collected but were not. The successor liability also extends to penalties and interest on the unpaid tax amount.

What kind of business succession transactions give rise to successor liability?

Successor Liability will be created when:

1. one or more persons buy the business or stock of goods of a seller
2. a co-owner quits or transfers ownership for little or no consideration
3. a change in the form of ownership occurs

Successor Liability does not arise when:

1. transfer of a business or stock of goods is part of a foreclosure, repossession, bankruptcy or receivership
2. the purchase is of a controlling interest in a business entity

Is there a limit to the amount of successor liability?

The Buyer is liable for the unpaid business taxes of the Seller ONLY to the extent of the purchase price, valued in money.

The “purchase price” could involve cash, property, assumption of liabilities, cancellation of debt, and the taking of property subject to liability.

So, if the Buyer is receiving a business, in exchange for $10,000 cash, a Derek Jeter rookie card valued at $1,000, the assumption of liability for two outstanding small claims cases (max payout $5,000 each), the forgiveness of $500 in debt owed by Seller to Buyer for a lost bet on the Super Bowl, and the assumption of a $200,000 mortgage on the business property, the Buyer would potentially be liable for up to $221,500 of unpaid business taxes of the Seller.

How can Successor Liability be avoided?

This is the million dollar question. How does a Buyer protect themselves from being liable for the Seller’s unpaid business taxes?

The short answer is that the Buyer needs to meet their obligations under Connecticut law and withhold any tax amounts owed by the Seller. But how does that Buyer know if the Seller owes the State of Connecticut any taxes and the amount owed?

It is the Buyers responsibility, or the responsibility of their appointed agent, to request Tax Clearance Certificates for each type of business tax they want to be protected against owing. The State will review the file of the Seller, and either issue a Tax Clearance Certificate stating that no taxes are due, or an Escrow Letter, telling the Buyer how much money needs to be withheld from the purchase price to pay off the Seller’s state business tax liabilities.

Of course, if an Escrow Letter is issued, the Buyer still needs to follow through with holding onto the funds and actually paying off those tax liabilities or they are still on the hook.

At Glouzgal Law PLLC, our business attorneys represent Buyers in the purchase of businesses and business assets. Part of our job is doing the due diligence necessary to protect the interests of our clients and minimize their exposure to liability. For all our business purchase clients, we take on the responsibility of getting Tax Clearance Certificates for the business tax liabilities our clients may be exposed to. If an Escrow Letter is issued instead, we make all parties aware of the unpaid tax debt, make arrangements to hold the necessary amounts in escrow, and follow through with paying off those business tax liabilities.

Successor Liability is just one of the considerations when buying a business or business assets. If you are in the process of buying a business or business assets, schedule a free 20 minute phone call with one of our business attorneys to discuss your goals and needs.

SCHEDULE A CALL WITH A BUSINESS ATTORNEY

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