![]() Halloween is a time for pumpkins, candy, falling leaves, and, of course, death. Costumes of skeletons, zombies, mummies, ghosts, and the Grim Reaper remind us that this celebration used to be considered more serious, and scary, than it is, today (at least, by most people). On the other hand, death in Connecticut has become scarier, with Hartford issuing a recent change in estate taxes and probate fees. There are those who are concerned that the wealthiest of Connecticut’s citizens will move away, rather than die here, and burden their estate with our State’s taxes. To assuage the hedge fund managers in Greenwich, a new cap on estate taxes, of $20 million, was enacted. This is the good news. Since, however, this cap is triggered only on estates of $170 million or greater,it has little impact on the rest of us. For estates of people dying in 2015, the bad news applies. The estate tax starts at just $2 million (the $5+ million figure in the media refers to federal estate taxes, not State). The top tax rate currently stands at 12%, although, fortunately, Connecticut eliminated the “cliff,” in which estates greater than $2 million were taxed from the first dollar, not only on amounts over $2 million. The former situation led to an estate valued at $2,000,001 to pay six figures in taxes, where an estate with one dollar fewer paid none – a nightmare scenario referred to by many as: “The most expensive dollar in America.” Unfortunately, the news goes from bad to worse. The old cap on probate fees, of $12,500, has been removed, which will lead to more money going to the probate court, and less to the beneficiaries. Worse still, a new 0.5% fee on estates greater than $4.754 million has been added, so any estate concerned about the federal estate tax needs to be even more concerned about Connecticut’s State estate tax. Why are probate fees jumping now? According to Paul J. Knierim, Connecticut’s Probate Court Administrator, the increase in fees is a reaction to the State completely eliminating the courts’ funding. The probate courts, in order to remain open, need to receive their operating expenses from the only remaining source of funds – estates. So, what can families do to protect their estates from being subject to these new fees? Firstly, sit down with an experienced estate planning attorney (not just whomever did your real estate closing. If you wouldn’t want your dentist to take out your appendix, don’t have the a real estate, divorce, or other attorney plan your estate). Secondly, talk to your attorney about trusts, lifetime giving, charities, and other ways to prepare your estate, to minimize taxes and fees. Bring a financial advisor and a CPA along – attorneys provide legal advice, but do not advise concerning what assets to transfer, which to sell, and the tax consequences of particular actions. One common planning method to avoid?The famous (or infamous) “living trust.” While living trusts can provide continuity of asset management and a certain level of privacy, they are useless when it comes to protecting an estate from the fees and taxes discussed above. As part of the probate process, all assets, even the amounts in Living Trusts, must be disclosed, and the court calculates its fee on the total amount, regardless of whether a particular item is a “probate asset.” In conclusion, while the cost of dying in Connecticut has risen, there are methods to help reduce or eliminate the taxes and fees to be due. The best advice is to speak with the right attorney, sooner rather than later, to discuss options, and plan an estate that protects the assets but, more importantly, protects the beneficiaries. The Law Offices of Everett G. Sussman has twenty-five years of experience with estate and probate matters, and has offices in Shelton and Cheshire. He can be reached at (203) 231-8946, [email protected], www.estatelawonline.com, or www.facebook.com/lawofficesofegsussman. © 2015 The Law Offices of Everett G. Sussman |
CategoriesAuthorsGreater Valley Chamber Staff, Interns & Members Archives
November 2023
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