Establishing a revocable living trust is a smart way to avoid probate and streamline estate administration. But once your trust is in place, an important question follows: How should your assets be connected to it?
Generally, you have two options:
- Retitle the asset into the name of the trust
- Name the trust as the beneficiary
Each option serves a different purpose depending on the type of asset and your estate planning goals. Here’s what Connecticut residents should know.
Retitling Assets to the Trust
Retitling means transferring ownership of an asset from your individual name to the name of your trust.
When to Retitle:
- You want the asset to be managed under the trust terms during your lifetime or in case of incapacity.
- Common for Connecticut real estate, non-retirement investment accounts, bank accounts, and personal property.
Benefits:
- Avoids probate: The trust already owns the asset at the time of your passing.
- Continuity: Your successor trustee can manage assets without court intervention if you become incapacitated.
- Streamlined administration: Makes your estate easier and faster to settle.
Drawbacks:
- Requires time and coordination with banks, brokers, and town clerks to update titles.
- Not appropriate for retirement accounts like IRAs—retitling these may result in adverse tax consequences under IRS rules.
Naming the Trust as a Beneficiary
Instead of transferring ownership, this approach involves naming the trust to receive certain assets after your death.
When to Use:
- Ideal for retirement accounts (IRAs, 401(k)s), life insurance, annuities, and payable-on-death (POD) accounts.
- When you want to maintain personal control during life but pass the asset through the trust after death.
Benefits:
- Bypasses probate while allowing you to keep the asset in your own name during life.
- Especially useful for retirement accounts, avoiding tax issues while ensuring the trust ultimately receives the funds.
Drawbacks:
- Assets won’t be managed by your trustee if you become incapacitated.
- For retirement accounts, your trust must qualify as a “see-through” trust under IRS rules to preserve tax-deferred growth for your beneficiaries (see IRS Pub. 590-B).
Which Is Right for You?
Retitle when:
- The asset is non-retirement (real estate, bank/brokerage accounts).
- You want the trust to manage the asset immediately or in case of incapacity.
Name the trust as a beneficiary when:
- The asset is a retirement account or life insurance policy.
- You want the trust to receive the asset only after your passing without changing ownership now.
Connecticut-Specific Considerations
Connecticut does not require probate for assets titled in a revocable trust, so retitling key assets like real estate can make the estate administration far more efficient. However, retirement accounts should be handled carefully to avoid jeopardizing income tax deferral.
Additionally, under C.G.S. § 45a-499c, beneficiary designations must be properly updated and clearly documented, or they may not be recognized. Always consult with an attorney to ensure your trust and assets align with your wishes and state requirements.
Take the Next Step
At the Law Offices of Charles L. Kurmay, we help clients across Connecticut make informed decisions about how to fund their trusts and protect their families. Whether you’re establishing a new estate plan or updating an existing one, our team is here to guide you.
📞 Call us at (203) 380-1743 to schedule a confidential consultation and ensure your assets are titled to serve your goals.
