Probate and Estate Administration in Connecticut
Serving Families and Individuals in Guilford, New Haven and Madison, CT
Probate is a court-supervised procedure for collecting a deceased person's assets, paying debts and taxes, and distributing the property to the person's beneficiaries (either according to the instructions the person set forth in his or her Will or as determined by state law if the person died without a Will). The length of time to administer a probate estate may be as short as a few months, or as long as a few years, depending on many factors.
In Connecticut, probate is required if the Decedent owned land (real property) in his or her sole name, or if he or she owned more than $40,000 in his or her sole name, without a "pay on death" or beneficiary designation. It can be helpful to think about it this way: if the asset has a way of getting to the next owner on its own (either because it has a beneficiary designation, a "pay on death" instruction, or because it has rights of survivorship in a joint owner, then the Probate Court does not need to order or decree that the asset be transferred to anyone else. The transfer can occur without the Court's assistance. But, if the asset cannot move to the intended beneficiary on its own, then the Probate Court's assistance is required. If the total value of the assets the Probate Court needs to transfer is very small (for example a small bank account and a car); the Probate Court will expedite the process and issue a Decree after a minimal amount of paperwork is submitted. If the Court needs to supervise the transfer of real estate or more than $40,000, then a full probate estate must be opened.
This mostly involves time, because there are certain mandatory waiting periods that must be observed when a probate estate is opened. The first time period concerns the time allowed to admit the Last Will and Testament and appoint a fiduciary to administer the estate. The Probate Court must give legal notice to all legal heirs (relatives) of the deceased and any known beneficiaries to tell them that a Will has been presented for probate. This gives all those people the opportunity (for a limited period of time) to come forward if they believe the Will is not authentic, or if they are in possession of a Will that was executed more recently in time.
Once the Will is admitted and an Executor (or Administrator) is appointed, the biggest "waiting period" pertains to potential creditors of the Deceased. The Probate Court will publish notice in a local newspaper informing any potential creditors that they have one hundred and fifty (150) days from the date the Will is admitted and an Executor is appointed (the "claims period") to file claims against the estate for any outstanding debts. "Claims" are any expenses or obligations incurred during someone's lifetime, which must now be paid by their estate. Most estates have some claims (e.g., utility bills, credit card bills, medical bills).
Finally, there is a waiting period at the conclusion of the estate, after the Executor has presented an "Accounting" of all activity in the estate: all transactions, any income received, expenses paid, and proposed final distribution of all the assets. The Probate Court will review the Accounting and in some instances schedule a hearing to allow all those who might be interested in the matter to raise any questions or voice any concerns or complaints. Assuming the Accounting is approved, there is a thirty (30) day appeal period during which anyone objecting to the Accounting must come forward "or forever hold their peace." After the expiration of this hold period, the estate process can conclude, and the property can be transferred pursuant to the Will's instructions.
Living Trusts and Probate Avoidance
Having assets titled in trust prior to death may result in probate avoidance. This means that the Probate Court will have little or no supervisory role in settling an estate. But there are certain important steps that most take place even if probate is not required.
Estate Tax Returns
Connecticut requires the filing of an estate tax return in every estate, regardless of the estate's value, and regardless of whether probate is required. Not all states have the same requirements. Estate tax returns are completely separate from income tax returns. They do not reflect any income at all. Rather, they are a "snapshot" of the value of every asset owned by the decedent, or in which the decedent had an interest, at the time of death. They include assets such as real estate, life insurance proceeds, retirement benefits, and even jointly owned property or property held in a revocable trust. Estate tax returns are not filed at the same time as income tax returns. They are filed once, with a due date based on date of death. There is no ongoing filing obligation like there is with income taxes.
Release of Estate Tax Liens
If the deceased owned any interest in real estate here in Connecticut at the time of death, it will be important to secure a Release of Estate Tax Liens and file it on the land records. This Release confirms either that no estate tax was owed, or that all applicable estate taxes have been paid. Real estate cannot be sold without this Release -- and a Release must be obtained for every owner of the property, not just the last to die. (Thus if a husband and wife owned the property together as joint tenants with rights of survivorship, a release must be obtained upon the death of the first spouse and again upon the death of the second spouse.)
Assets Titled in Trust
When assets are titled in trust prior to death, those assets are almost always reported under the social security number of the Trust's Grantor. But when the Grantor passes away, that social security number "expires." A new tax identification number must be applied for in the name or names of the Successor Trustees. Each account will then need to be "re-registered" with this new information. Signature cards or Application Forms will need to be completed by the new Trustees, as well as whatever other formalities the institution in question requires for new account holders.
When assets pass from one owned to another as a result of death, in many instances, the cost basis for the asset may change. This is commonly referred to as a "step up" in basis. For example, if the Decedent originally purchased shares of stock for $10 a share, but the value was $50 a share on the day he/she died, the new tax basis would be $50 a share. If the stock were subsequently sold for $54 a share, capital gains tax would only be assessed on $4 per share (the difference between the date of death value of $50 a share and the sale price of $54 a share). The laws providing for a step up in basis apply to property that is solely owned, jointly owned or even held in trust. It is important that you consult with a qualified tax advisor regarding step up (or step down) in basis.
A Word About Insolvent Estates
If it appears that the debts of a Decedent may exceed the assets of the estate, special probate procedures may be required. The Probate Court has a specific procedure for administering insolvent estates, that provides creditors with the opportunity to bring claims forward, and any available assets are allocated in an order of priority (by type of debt) set by statute. Debts of the Decedent (and in some cases the Decedent's immediate family) to the State of Connecticut for public assistance (usually in the form of Medicaid assistance) are particularly "dangerous" because you may not have any idea how large a debt has been incurred. Until the State of Connecticut has either established the scope of its claim to the estate, or waived its right to pursue a claim, no distributions should be made of any estate assets that may be called upon to repay that debt.
If a family member has passed away and you would like to schedule a meeting to discuss the estate administration process, please call us or complete the meeting request form. Please review the attached "Estate Administration Information Checklist" for a list of the information that may be pertinent.