Updated: August 18, 2025
This question comes up often, so it’s our “Question of the Month”! I also chose this topic to highlight beneficiary designations, which are a simple yet powerful planning tool. In this post, I’ll give an overview of beneficiary designations: what they are, other terms they’re known by, how they impact probate (hint: they mostly don’t!), and why they’re so useful for estate planning.
What Are Beneficiary Designations?
A beneficiary designation is essentially a way to name someone to receive your assets after you pass. Beneficiary designations are also known as payable on death (POD) or transfer on death (TOD) forms.
Here’s an example:
John has a bank account with $1,000 and names his wife, Suzy, as the beneficiary using a POD form. When John passes, Suzy begins probate for John’s estate. While gathering his assets, Suzy learns that she is the beneficiary of the $1,000 bank account. All the bank requires is John’s death certificate to release the funds to Suzy. At that point, the $1,000 belongs to Suzy outright—it is not subject to probate or creditors.
In summary, a beneficiary designation is a document you fill out with your bank or financial institution that allows someone to inherit the assets in your account upon your death. These assets pass directly to the named beneficiary, regardless of what your will says.
How Do Beneficiary Designations Impact Probate?
In Connecticut, assets with beneficiary designations are considered “property passing outside of probate” or “jointly owned property.” You might see these terms on probate court forms.
Here’s what that means in practice:
- Assets with a beneficiary designation are not included on the estate inventory filed with the probate court.
- However, they must be listed on the Connecticut Estate Tax Return (CT-706 or CT-706NT), as the tax return collects information on all the decedent’s assets, not just probate assets.
The key benefit of beneficiary designations is that they bypass the probate process entirely. The assets are distributed directly to the named beneficiary without court approval, delays, or interference from creditors.
A Note on Jointly Owned Real Property
For real estate, the equivalent of a beneficiary designation is ownership as joint tenants with rights of survivorship (JTWROS). This allows property ownership to transfer directly to the surviving owner(s) upon the death of one owner, bypassing probate.
However, there’s an important caveat: in Connecticut, when a property with JTWROS ownership transfers, an estate tax lien is automatically placed on it. This requires:
- Filing an estate tax return (CT-706 or CT-706NT) with the probate court.
- Obtaining a PC-258 form from the court, which releases the lien.
- Recording the PC-258 form on the land records to clear the title.
Until these steps are completed, the surviving owner(s) will not have clear title to the property.
Why Are Beneficiary Designations So Powerful?
Beneficiary designations are a great tool for estate planning because they simplify and expedite the process of transferring assets.
If all of a decedent’s assets have beneficiary designations, the probate process can be reduced to a tax-purposes-only estate. This means filing just a few documents with the probate court, and the estate can be opened and closed in a matter of weeks—far quicker than the year or more that full probate often takes.
Here are some key benefits:
- Speed: Beneficiaries receive the assets quickly without waiting for court approval.
- Certainty: The named beneficiary is guaranteed to receive the assets, avoiding disputes or contests.
- Protection from creditors: Assets with a beneficiary designation do not go through probate and are not available to creditors of the estate.
Combining Beneficiary Designations with a Trust
Beneficiary designations are also useful for integrating assets into a trust. A trust allows assets to pass outside of probate, but some people prefer to keep full control of their assets during their lifetime instead of transferring ownership to the trust.
In this case, you can name the trust as the beneficiary of your account. This ensures you maintain control during your lifetime, while the trust receives and manages the assets after you pass. This approach combines simplicity, control, and the benefits of trust planning.
Final Thoughts
Beneficiary designations are an incredibly useful estate planning tool for reasons far beyond what we’ve covered here. They are a key part of Disability Planning Partners’ toolkit for creating efficient and effective estate plans.
If beneficiary designations sound like the right option for you, or if you’d like to learn more, we’d be happy to incorporate them into your estate plan. Contact us today!
