This article examines 3 common probate mistakes, misconceptions and myths.
Myth: Probate can be totally avoided by placing assets in survivorship or a living trust.
This myth is often promoted by purveyors of “one size fits all” living trust packages. When a Connecticut resident dies, even if all their assets are in survivorship or a revocable living trust, probate proceedings are still necessary for Connecticut estate tax and probate fee clearance. If probate proceedings don’t take place, there will be a problem when the real estate in which the deceased person had an interest is sold. Property in a living trust or survivorship allows for transfer of ownership independent of the probate court; the probate court has no role determining the legal owner of that property (one element of “avoiding probate”.) However, the Connecticut Department of Revenue Services treats property in a trust or survivorship as includible for calculating Connecticut estate taxes liability and probate fees. Property is clear of Connecticut estate tax and probate fee liens only after the probate court issues a release of lien upon payment of the probate fee and any outstanding Connecticut estate tax.
Misconception: Probate fees and taxes can cost 33% or more of an estate’s value.
Three fees and taxes that may be assessed on a deceased person’s assets are federal estate tax, Connecticut estate tax, and Connecticut probate fees. For anyone dying with less than $2 million in assets in 2016, there will be no federal or Connecticut estate tax liability. Connecticut probate fees are progressive and based on the value of the deceased person’s estate: the greater the value of the estate, the higher the probate fee. In Connecticut, probate fees are established by law, not by probate judges and courts. The courts must strictly adhere to the established fee schedules. Probate fees range from one third of one percent to one half of one percent. For example, if a Connecticut resident dies owning assets valued at $600,000, the Connecticut probate fee will be approximately $2,100. A change in the way probate fees were calculated in 2015 removed the $12,500 “cap” on probate fees and increased the marginal rate for estates valued in excess of $2 million to one half of one percent – a significant increase in probate fees for high value (multi million dollar) estates. It’s likely that more changes to Connecticut probate fees are on the horizon and will be the subject of a future article. However, Connecticut probate fees are far lower than the 33% or more that some people believe.
Mistake: Relying on the advice of a well-meaning bank teller, friend, nurse, social worker or contractor for probate and estate planning advice.
Even after fourteen years as a probate judge, I am still amazed by how many people believe they can dispense advice on probate matters! I’ve seen people proceed in probate relying on the advice of well-meaning relatives, friends, neighbors, bank tellers, nurses, social worker and others. Probate is a highly specialized area of the law, and even very few attorneys are well versed in probate law. Attorneys with substantial probate experience are most qualified to give reliable advice. Probate court clerks cannot give legal advice, but are able to answer many questions and provide probate forms to the public. Unlike other courts, many – but not all – matters in Connecticut probate courts do not require an attorney.
THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE, NOR SHOULD IT BE RELIED UPON, AS LEGAL ADVICE. CONSULT A QUALIFIED ATTORNEY FOR ADVICE REGARDING YOUR SITUATION.
COPYRIGHT 2016 DOMENICK N. CALABRESE. ALL RIGHTS RESERVED. COPYING, DISSEMINATION AND DISTRIBUTION WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE AUTHOR IS STRICTLY PROHIBITED.