The Life of a Connecticut Executor

Most people are honored to find out that they have been appointed as the Executor for someone’s will. However, there seems to be a near-universal underestimation of what that role entails. Below is a list of tasks that need to be on every Executor’s radar screen as they work their way through the probate administration process. The list is by no means exhaustive. The purpose of this post is not to provide a collegiate-level seminar on how to manage an estate. The goal is to help you appreciate what the job entails before you appoint an Executor in your Last Will & Testament. As you will see, this is not a role in which everyone will thrive, and you should avoid appointing the wrong person.

• Collect Assets. Figure out if the decedent had bank accounts, investment accounts, retirement funds, life insurance, real estate, automobiles, valuable personal effects, etc. Then take control of those assets.

• Real Estate. Lock up and secure the property, make sure the heat is on to avoid frozen pipes and continue to pay insurance premiums until it’s turned over to the beneficiaries.

• Cars. Keep them locked and don’t let anyone drive them while they are in the estate. If someone drives them around and gets into an accident, then the estate may be in trouble.

• Personal Stuff. There’s a chance that the decedent’s tangible personal property (a.k.a. “stuff”) could be an important issue to address. In most cases, the family doesn’t care about any of the stuff and a majority of it gets donated or thrown out, or the family peaceably distributed everything without the need for the Executor’s involvement. But every once in a while, World War III will break out over a family heirloom (often an item that has little-to-no financial value). So, the Executor should quickly figure out if any items fall into this category. If so, it should be secured right away before someone walks off with it

• Last Income Tax Returns. Connecticut and Federal income tax returns are still due April 15th even though the taxpayer has died. Hopefully the decedent had an accountant that prepared prior returns and he/she can help you with this task.

• Keep the Peace. A sudden financial windfall can bring out the worst in people and it’s not uncommon to have an Executor who is forced to deal with beneficiaries who are complaining about some aspect of the probate administration (how long the process is taking, whether the sale price for the house is fair, who gets the photo album, etc.). So, it’s up to the Executor to be a good diplomat and keep everyone happy, or at least happy enough to avoid litigation.

• Deal with the Probate Court. In the world of probate, it’s like an employer-employee relationship in which the Probate Judge is the employer and the Executor is the employee. This means that the Executor is accountable to the Judge and must ask for permission to do certain things, such as selling real estate (unless the will waives the need for court approval). It also means that the Executor can be “fired” by the Judge if she doesn’t fulfill her responsibilities. So, it’s important to dispel yourself of a common myth about probate; the Executor is not the boss. The Judge is.

Again, this is just a short list of many (not all) tasks for the Executor to address during the probate administration process, which usually takes several months. So, when you are preparing your last will and testament, pick an Executor with the right temperament and skill set. You should also make sure that person is aware of what the job entails and agrees to take on the role.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship. If you need legal advice, consult with a lawyer instead of a blog.

Connecticut Probate Cannot be Avoided

For those of you who have not been through the probate process in Connecticut yet, I'm writing to give you a head's-up about the fact that there is no way to completely avoid probate in this state.

In other words, even if you do everything humanly possible to avoid probate, which is to say you use a revocable living trust (and actually fund it, by the way!), you have updated beneficiaries on your life insurance, retirement accounts, annuities, etc., you use joint ownership effectively, and you use TOD/POD features if available, someone will still need to file documents with the probate court upon your passing.

The most important document to file, regardless of how many assets (if any) have to go through probate, is the estate tax return.  The return needs to list everything in your name when you died, including probate and non-probate assets.  The court will use this return to determine if there is any estate tax liability to attend to. It will also be used to calculate the probate court's fee. And yes, there will be a probate court fee even if none of your assets are actually processed through probate.

Now, having said that, please keep in mind that there is an enormous difference between filing a few documents with the court and going through a full-blown probate process (maybe 10-12 months of administration, even if everything goes smoothly). So it is still worthwhile to consider some probate-avoidance maneuvers you can make before you pass away.   

So, to sum up, you can only minimize Connecticut probate upon death.  You cannot avoid it entirely.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

"Should I Transfer the House to the Kids?"

To start off, I want to warn you that you will be disappointed by this post.  You probably Googled the above question and stumbled upon this post with the hopes that you will find a definitive "yes" or "no" answer.  Unfortunately, as simple as the above question sounds, the legal analysis used to arrive at an anser is lengthy enough that I would probably be committing legal malpractice by even suggesting that there is a universally applicable answer. 

There.  Now that that's out of the way, here's what you will learn from this post:  as self-serving as this may sound, in order to find a good answer to this question, you need to sit down with an experienced elder law attorney who can walk you through all of the pro's and con's of transferring ownership of the house to the kids (or someone else) in order to avoid the need to sell the house and spend the proceeds down on the nursing home at some point in the future. 

And here is a non-exhaustive list of all the issues to consider:

• Gift tax.
• Capital gains tax.
• The dreaded "5-year look-back" period for Medicaid.
• Will the kids turn evil someday (perhaps they already are evil?) and try to evict you from the house?
• Will this transfer result in an unintended distribution of your estate upon your death?
• Will one of the kids get sued someday, resulting on the property?
• Will one of the kids get divorced someday, subjecting the house to a divorce settlement process?
• Are one of the kids getting asset-tested government benefits?
• Should you retain a "life use" (a.k.a. "life estate") in the property?  It could be helpful tax-wise, but it could be problematic for Medicaid eligibility.
• Will you lose a senior or veteran real estate tax credit that you currently enjoy?
• What are the odds that you (based on your health, family medical history, level of local family support) will need permanent nursing home placement in the future?

In short, whether to gift the house to the kids is a short and simple question.  But settling on the answer to that question is a complicated process with a lengthy list of issues to consider. Also, since every family is different, there is no one-size-fits all answer to this question.  In other words, just because your neighbor three doors down the road gifted the house to his kids does not necessarily mean that you should too. 

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Higher Recording Fees for Deeds on December 1st

Due to the new Connecticut budget, the fee for recording a document on the town land records will be increased by $7 per document. More specifcially, the fee for the first page will be raised from $53 to $60, every page after that is still $5. 

This new fee applies to all deeds received for recording on December 1st and afterwards. So even if a deed is postmarked prior to 12/1 but received on 12/1, the new fee will still apply.

The new fee is statewide. The Town Clerk's Office is responsible for recording documents on the town's land records. 

What are the Odds of Nursing Home Placement?

Whenever I sit down with clients to plan ahead for Medicaid eligibility we spend a lot of time walking through the worst-case scenario of permanent nursing home placement, thereby triggering approximately $12,600 per month in nursing home fees (Connecticut is the 2nd most expensive state in the U.S. when it comes to nursing home care).  But it's also important to at least consider the possibility that the client will never actually need to be placed in a nursing home. 

There is no "crystal ball" to use and nothing can be guaranteed, but there are factors to consider when trying to determine the odds that you will need permanent nursing home placement at some point in the future.

Is there a history of dementia and/or Alzheimer's Disease in family?  It seems like these are the types of conditions that most often trigger the need for long-term nursing home placement, and they are very hereditary.  Other issues like diabetes, a heart condition, a bad hip etc. can usually be managed adequately at home.  

Do children, grandchildren and other family members live nearby or are they beyond driving distance from your home?  The larger the local support network, the less likely that you will need to be permanently institutionalized.  

How extensive are your liquid assets?  Even if you don't have long term care insurance in place, the more you have in investments, bank accounts, retirement accounts, etc., there is a greater possibility that you will be able to provide yourself with home health care and/or companionship to keep you in the community.

I always advocate for planning for the worst and hoping for the best.  However, you need to realize that future nursing home placement is not a "given", and if the chances of requiring institutionalization are remote based on your own set of personal circumstances then you should factor that into your planning. 

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

The Ever-Evolving Last Will & Testament

Many of my clients tend to procrastinate when it comes to finalizing their estate planning documents. They struggle over who to appoint as guardians for the kids, or who should be the "back up" executor if the surviving spouse can't act, or who's going to end up with the tool collection.  Sometimes these questions can be tough ones and people "freeze up" and stress out over whether or not they're making the right decision.

As the estate planner I'm always concerned that the infamous bus is going to run my clients over while the drafts of the wills sit on my desk, unsigned.  So I try to gently nudge my clients along towards finalizing everything. 

One factor that I try to impress upon my clients is the fact that their wills are not set in stone; that they should conceptualize their wills as "evolving documents". In other words, as developments occur in the family (if people pass away, someone becomes disabled, someone gets divorced, there's a "falling out", etc.) it is very easy to tweak the documents in order to address the new family situation.

I also emphasize that, thanks to computers, tweaking the documents is very easy and very inexpensive, assuming that the changes are not overly-complicated.  I always keep the documents on my computer, so re-printing the documents with small changes and a new date and re-signing everything is awfully easy. And there is nothing exotic about my law practice; this is the case with just about any law practice out there. 

So, don't stress out about it too much when you set up your will and other documents.  Make the best decision you can given the current circumstances and facts.  Then schedule a signing date with your attorney knowing that you can easily change things later if you need to. 

And remember that once your documents are signed you will experience a wonderful, liberating "peace-of-mind", and that's what estate planning is all about.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Keeping it Simple with "Small" Probate in Connecticut

As you take whatever steps that are necessary to avoid probate in Connecticut (which seems to be a mild passion for many of my clients) you should keep in mind that the probate process for "small" probate estates is pretty quick and straightforward.

"Small" is, of course, a relative term.  As far as the State legislature is concerned, your estate is small if your probate assets are under $40,000.  "Probate assets" are assets that are solely in the name of the decedent and do not have a designated beneficiary.  So, joint assets and things like life insurance policies, annuities, 401K's, IRA's, POD (payable-on-death) accounts, etc. are generally not probate assets.

Please note that the threshold amount for "small" probate was $20,000, but that was increased to $40,000 in 2007.

Generally speaking, if it's a small estate you only need to file the following with the probate court: (1) the original will, (2) an affidavit confirming that you are not "probating" the will, (3) an "affidavit in lieu of administration" , (4) an original death certificate, (5) a copy of the paid funeral bill, or a statement of the outstanding balance, and (4)  an estate tax return listing everything that was in the decedent's name (both probate AND non-probate assets) so that the Court can determine if any estate tax is due.

If there is no will then the remaining funds will be distributed in accordance with the laws of intestacy, which is to say that it generally goes to the next-of-kin under Connecticut law.

If there is a will and the distribution instructions are not consistent with the laws of intestacy then you can still keep it simple if all the heirs waive their right to contest the will.  The Court will then simply order distribution pursuant to the will's instructions. 

Of course, if the heirs aren't pleased with the proceedings for some reason, then things will probably get pretty complicated.  In all likelihood, the simple process is out the window and you're unfortunately looking at a full-blown probate process. 

If you have some time on your hands and you're not intimidated by judicial forms and some paper-pushing then you can probably tackle a "small" probate process on your own without legal help.  Otherwise, it probably makes financial sense to simply hire an experienced probate attorney who can wrap up the process as quickly as possible.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

What is "Elder Law"?

This question is posed to me pretty often at networking events. Unfortunately, as is the case with many queries in the legal profession, the answer is not a simple one, and I'm sure my colleagues in the Elder Law bar would find it difficult to come up with a definition that we all agree on. 

"Elder Law", covers a relatively wide swath of the law because it addresses many different legal issues. Based on 20 years of law practice, my own personal definition of Elder Law is this: addressing legal issues that concern older individuals, the disabled, and their families.  

Assuming my own definition is relatively accurate, right off the bat you can see that "Elder" may not be the best word to describe this area of the law. In my own practice, I would not consider the vast majority of my clients as "elderly". A good percentage of them may qualify as "older". Many are disabled or "special needs", but relatively young. One unique aspect of this type of law practice (particularly in regards to estate planning and Medicaid/nursing home planning) is that the legal services I provide directly involve, or at least have some direct impact on the close family members of my clients. And the spectrum of ages for those individuals is very wide. Suffice it to say that "elder" seems to be an insufficient term to describe my clients. However, I have not come up with a better term thus far.

So, what are the various legal issues that my older and disabled individuals often face? It's a long list: estate planning, Medicaid planning and the Medicaid application process, conservatorships and guardianships in the probate court system, Social Security, Medicare, Veterans Administration benefits, special needs trust planning, addressing inadequate care at a skilled nursing facility, assisted living facility or with home care, working with the State of Connecticut in regards to the administration of benefit programs, decedent's estate administration in probate court, and strategic transfers of real estate. These are the issues that currently come to mind, but the list is by no means exhaustive. 

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

What is the Medicaid "Pick-Up Date"?

A lot of my Medicaid clients get confused over the date that Medicaid coverage kicks in (also known as the Medicaid "pick up date") once Medicaid eligibility has been determined by the State of Connecticut.

The short answer is that Medicaid can start as early as the first day of the month during which the Medicaid "spend-down" was completed, assuming that there are no issues with periods of ineligibility that have been triggered by gifting during the 5-year look-back period.  So, if an applicant spends his/her assets down below the Medicaid asset limit ($1,600) on November 20th, then Medicaid coverage can begin retroactively on November 1st.

Why would it start later than the first of the month?  Because if the spend-down included private payments to the nursing home which effectively paid for nursing home care past the first of the month, then the nursing home would not need Medicaid coverage until later in the month. 

So, in the above example, let's assume that the Medicaid applicant made a partial payment to the nursing home as part of her spend-down and that payment covered her up until December 10th.  In that case, the Medicaid pick-up date would be December 11th so that the payment for care would be "seamless" for the nursing home.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

What Living Trusts CANNOT Do

Revocable living trusts are often a very useful tool when it comes to estate planning, and most of my clients opt to set one up. This is particularly true if minimizing probate involvement upon your death is a major planning goal. However, I find that many clients grossly overestimate what can be accomplished with their trust documents.

Here are the most common myths I've run across in regards to living trusts:

"I will avoid probate if I have a living trust."

This is the most popular myth about living trusts. If you take the necessary steps and fully fund your living trust then you will certainly minimize the necessary probate court procedure. However, at least in Connecticut, even if you do everything perfectly and keep all of your assets out of probate, there are still at least a few documents that you will need to file with the local probate court, the most prominent of which is the estate tax return.

"A living trust will protect my assets if I end up in a nursing home."

This would be fantastic if it were true, but it's not. Assets in a typical living trust are not protected from the nursing home or any other creditor. There are other types of trusts that could be used, but they are typically income-only, irrevocable, someone other than yourself needs to be the beneficiary, and you still have the 5-year look-back to worry about. That is a level of trust planning that goes well beyond revocable living trusts.

"A living trust will allow me to avoid estate tax."

A living trust definitely can include special estate tax planning provisions. But you can accomplish the same type of tax planning in a last will & testament. Please note that the current estate tax exemption in Connecticut is $2 million. 

"A living trust will allow me to avoid probate court fees."

This makes absolute sense. If you use your living trust and take other measures to keep all of your assets out of probate when you die, then there would be no probate court fees, right? Unfortunately, that's not correct. Even if absolutely no assets go through probate, the court will still charge a fee based on the overall size of your estate, and that calculation includes  all of your non-probate assets. So it's referred to as a "court fee", but it operates more like a tax. This is how the Connecticut probate court system is funded. 

"I don't need a last will & testament if I have a living trust."

It's true that you don't technically need a will if you have a living trust. "Need" is a strong word. But it's highly advisable to have a will to accompany your living trust. The purpose of the will is to take any assets that end up accidentally going through probate (despite your best planning efforts) and transfer them over into your living trust. Unfortunately, those assets will have to go through a probate process before going into your trust, which was what the living trust was designed to avoid in the first place. So make sure that you do the appropriate planning to keep everything in the "non-probate" category at all times. 

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.