When an individual dies in Connecticut, that person’s estate must go through probate if he or she has a will or through estate administration if there is no will or the will is invalid. Essentially, the two processes are the same except that in probate the estate’s assets are distributed according to the decedent’s will while in estate administration they are distributed according to intestate laws. In addition, any person who owned real estate located in Connecticut (even if they never were a Connecticut resident) at the time of their death must also go through the probate process. this process is referred to as an "Ancillary Probate". For sake of this article, we’ll use the term “probate” to apply to all three (3) processes.
However, not every asset a decedent owned will pass through probate. Only three types of assets get probated:
- Personal possessions, business interests and assets in the decedent’s name (which does not include assets in trusts or owned in the name of a business);
- Assets owned by the decedent in joint tenancy with someone else but with no rights of survivorship, meaning the decedent’s interest in the asset doesn’t pass to the co-owner automatically; and
- Financial and insurance accounts with no living beneficiary designated (see more about this below).
There are also three kinds of assets that don’t go through probate in Connecticut:
- Assets owned by a trust or by a corporation or limited liability company
- Assets owned in joint tenancy with rights of survivorship
- Financial and insurance accounts with a designated beneficiary other than the decedent or the decedent’s estate who is living
Real Estate and Connecticut Probate Laws
When real estate must go through probate, it is usually handled as directed in the will. However, there are some circumstances that would require selling the property instead of passing it on as directed in the will. These include any situation in which selling the real estate is the only practical means of distributing its value appropriately, such as:
- Real estate left to two or more people who don’t want to co-own the property and one beneficiary is unable to buy out the others;
- An estate without enough liquid (cash) assets to pay creditor claims – the real estate is sold to satisfy the debts and any remaining cash typically goes to the beneficiary/beneficiaries originally intended to receive the real estate; or
- An intestate estate (no valid will was left) – the real estate is sold and proceeds divided as required by law.
There will a fee due the probate court for all estates and all revocable living trust owned assets. The fee is determined by the total value of all assets reported on the Connecticut estate tax return. The fee accrues interest until it is paid in full. This fee is in addition to any estate tax that may be due.
Life Insurance, Financial Accounts and Other Assets with Designated Beneficiaries
Life insurance policies, bank accounts, investment accounts and instruments and similar assets are treated a little differently than most assets when it comes to probate. These kinds of assets usually require the policy or account holder to name someone as a beneficiary of the account. As long as the beneficiary designation is up to date and the beneficiary is a living person other than the decedent or an organization, the value of that policy or account will pass directly to the beneficiary and does not have to go through probate. It does, however, have to be included as part of the estate when figuring estate taxes.
Some situations, though, require these kinds of assets to go through probate. If any of the following apply to a beneficiary-designated account/policy, it must go through probate:
- The beneficiary is the decedent
- The beneficiary is the decedent’s estate
- No beneficiary is designated
- The beneficiary is deceased
- The designated beneficiary cannot be located
Life insurance policies and financial accounts usually have a place to designate multiple beneficiaries in case the first listed beneficiary is dead or cannot be located. In such a case, only if all listed beneficiaries are dead or cannot be located will the asset pass through probate.
Connecticut Estate Tax Return Filing
Any person who dies as a resident of Connecticut must have an estate tax return filed. This is true whether or not an estate tax will be due. All assets owned by the decedent must be reported on the estate tax return whether they are subject to probate or not. You must report all interests owned in real estate, all annuities, all life insurance death benefit, all IRAs and other retirement plans; essentially everything that has any value.
Get Help with Probate of Your Loved One’s Estate or Planning Ahead to Keep Your Estate Out of Probate
If a recently deceased loved one left an estate that must go through probate, the assistance of an experienced Connecticut probate attorney can help keep costs down, decrease confusion and frustration, and avoid costly errors. Call us today to make sure your loved one’s estate is handled correctly.
Of course, proper advance planning can keep an estate altogether. If you want to ensure your hard-earned assets benefit the people you intend and aren’t consumed by probate costs, taxes and other expenses, the estate planning attorneys at Weatherby & Associates, PC can show you how.
Call our Bloomfield, CT probate attorneys toll free today: 888-822-8778.