Whenever you open a financial account, you’re almost always asked to name a beneficiary. Simply stated, a beneficiary of the account is someone who is entitled to the benefits of the account, typically, on the death of the account holder. If you’ve purchased life insurance, for example, you name a beneficiary who receives the benefits of the policy when you pass.
As you age, it is important to have your affairs in order to ensure peace of mind for you and your family. Several documents need to be in place to help your family know and carry out your wishes.
Probate and trust administration are not the same. There are important differences and similarities between administering a decedent’s probate estate and administering a decedent’s trust estate.
Estate planning is the process of arranging, while you are alive, what will happen to your estate, your children and your wealth after you die.
Beneficiaries of a trust typically pay taxes on the distributions they receive from the trust’s income, rather than the trust itself paying the tax. However, these beneficiaries are not subject to taxes on distributions from the trust’s principal.