A power of attorney gives someone you trust the power to sign financial documents for you. If you lose the ability to make financial decisions or you are away on vacation or business, your agent can act for you. 

We find many of our clients have powers of attorney but they are old. Now, more than ever before, it is time to update your power of attorney.  Here are 5 reasons to do so.

Connecticut Changed its Power of Attorney Law

Effective October 1, 2016, Connecticut has a new power of attorney law. See Connecticut Public Acts 15-240 and 16-40.  Most current Connecticut powers of attorney are based on a statute passed in the 1960s. That is before retirement plans existed, before home computers existed and even before electronic banking! The new law clearly defines all of the powers necessary to undertake modern financial transactions. 

Your Agent May No Longer Be Appropriate

Lives do not stay the same. Whether from a divorce, a move to another state or country, death, change in availability, or decline in friendship, your relationship with your agent may not be the same as it was when you named him or her as your agent in your power of attorney. You may now have other people who are closer to you and have good sense who would make better agents for helping you with financial transactions.

A Financial Institution May Not Accept Your Power of Attorney

Some banks do not accept old powers of attorney. They become stale. Any power of attorney more than 3 years old is subject to rejection. With the new Connecticut law, financial institutions have a duty to accept powers of attorney unless the financial institution suspects fraud.  However, it is unclear whether financial institutions will require the use of the new form of Connecticut power of attorney to accept the power of attorney.

Notice to Your Agent of Their Duties

The old Connecticut law gave no guidance to agents. The new law clearly outlines the agent’s duties. Those duties include keeping good records, avoiding conflicts of interest, working with your health care agent, following your estate plan, and following your wishes to the extent known.

Clarify Whether You Want the Agent to Be Able to Make Gifts or Change Beneficiary Designations

The new Connecticut power of attorney law requires the signor to affirmatively elect by initialing whether the agent can make gifts, change beneficiary designations, or amend a trust.  These “hot powers” will create an opportunity for you to define what you want your agent to be able to do. The ability to make gifts could prove useful for saving estate taxes or qualifying for Title 19 Medicaid. Giving the agent the power to change beneficiaries could help reduce income taxes on retirement assets. The agent could abuse these powers, though, so they are not for every family situation. 

With the passage of the new law, there has never been a more important time for Connecticut residents to review and revise their powers of attorney.  Give us a call to talk to our knowledgeable estate planning attorneys about updating your power of attorney. 

Our estate planning law firm recently had an elderly client who was selling her home in Connecticut and moving to another state.  She bought her home with her husband in 2000 and both of them were listed on the deed as joint tenants with rights of survivorship.  Then – in 2003 – the husband died.  Now, many years after the house was purchased and several years after the death of her husband, our client was ready to move.

She signed a contract for the sale of her home and her buyer’s lawyer did a title search of the property.  The title search revealed that there was no release of the inchoate lien for Connecticut succession (or estate) taxes.  The term “inchoate” means “secret.”  The State of Connecticut does not record this inchoate lien on the land records of any town.  Rather, when someone dies in Connecticut owning an interest in real property, the State of Connecticut has an unrecorded – inchoate – lien (for the taxes) on the decedent’s real estate.  This secret lien must be released before you can give clear title to your buyer.

In order to obtain a written release of this lien, our firm first had to provide a succession tax return to the probate court where her home was located.  On the return, we reported the husband owned real estate jointly with rights of survivorship.  We then determined the value of the house on the husband’s date of death by obtaining a copy of the tax assessor’s card for 2003.  We reported one-half of the appraised value on the return.  In addition, we provided the court with a certified copy of the husband’s death certificate and a copy of the deed to the two of them.  

Once the probate court received these documents, it was able to determine that there were no succession taxes due.  The court issued a document entitled Certificate of No Succession Tax and a second document entitled Certificate Releasing the Connecticut Estate Tax Lien.  The Release was then recorded on the land records to officially clear title to the home and enable her to give good title to her buyer.  If any succession taxes had been due, she would have had to pay the taxes to obtain the Release.

Releasing the State’s inchoate estate tax lien is one of many issues that may need resolution during the home selling or estate administration process.  If you have any questions related to what you’ve learned in this blog, please don’t hesitate to call the estate planning attorneys at Cipparone & Zaccaro, PC.  

What to Do if You Only Have a Short Time to Get Your Financial Affairs in Order

The doctor said at your last visit, “I’m sorry. There is nothing more we can do.  You will not live long. I hope your affairs are in order.” Depression sets in as you realize that your life will end soon. A sense of urgency pervades your thoughts and those around you. If you’re like most people, you have a Will and Revocable Trust but they were probably  done 20 years ago when the kids were young. You know that you need to see an estate planning attorney because you don’t have much time left.

What steps can you take to assure proper and efficient administration of your estate?  Here is a 23-point checklist to help you get your affairs in order if you only have a short time to live. 

1.      Prepare a Durable Power of Attorney.

If your illness renders you unable to sign documents and make financial decisions, you will defeat the implementation of your final financial transactions. By signing a Durable Power of Attorney, you confer on another person the power to sign financial documents for you. 

2.      Prepare an Appointment of Health Care Representative and a Living Will. 

If your illness renders you unable to make health care decisions, you need someone with the power to make those decisions for you. An Appointment of Health Care Representative gives your agent the power to make health care decisions for you. This can include administration of pain medications, enrollment in a hospice program, or hiring home care providers. A Living Will gives the doctor permission to stop life support measures if those measures will not prolong your life. You can include end-of-life wishes in the appointment of health care representative and living will.

3.      Update and Fund your Revocable Trust. 

You have a Revocable Trust but things have changed in the years since you set it up. Your children have grown so they can serve as Trustee or Executor. If you are the Trustee of your Revocable Trust, now is the time to change the Trustee to someone you can trust who will survive you. More importantly, now is the time to put assets in the name of your Revocable Trust. For real estate, that means you must sign a deed conveying the property to the Trustee of the Revocable Trust. For brokerage investments, it means transferring your investments to a trust account or to a transfer on death (TOD) account that names the trust as beneficiary.   For a business, it means assigning a membership interest in a limited liability company (LLC) to the Trustee or transferring stock in a corporation to the Trustee. By funding the Revocable Trust, you will reduce the assets that pass through probate thus saving your estate money.

4.       Make Tax-Free Gifts.

You can move hundreds of thousands of dollars out of your estate by  making $15,000 gifts (the current gift tax annual exclusion) outright to donees or to irrevocable trusts with rights of withdrawal. For instance, if you have 10 grandchildren and 5 children, you can give away a total of $225,000 (15,000 x 15). You can prepay a grandchild’s tuition directly to a college without limit. You can pay a person’s medical care for treatment not covered by insurance. 

5.       Make gifts to grandchildren with your lifetime gift tax exemption. 

If you are married, your spouse receives your unused estate tax exemption (currently $11.4 million). The same is not true for your generation-skipping tax (GST) exemption. It’s use it or lose it. Consequently, if you want to give to grandchildren do so through either lifetime gifts to grandchildren or naming them in a trust for their benefit in your Will or trust.

6.      Make Charitable Gifts.

Now is the time to talk to a charity about the legacy you wish to leave. Find out about programs that could use funding or critical needs that the charity could address with your support.  Give an outright gift for simplicity before you die or name the charity as a beneficiary of your retirement plan.

7.       Get Married.

Many couples who were previously married to others live together without getting married. They fear the commitment and the legal consequences if they break up. If you only have a few weeks to live, though, those concerns disappear. As a spouse, your partner will have many more rights than if he or she survives you as a friend.  If you want your partner to receive your estate, why not tie the knot!

8.       Consolidate Accounts.

You may have multiple brokerage accounts and stocks held in street name or in a dividend reinvestment plan (DRIP). With little time left on the planet, diversification and saving brokerage fees are no longer a major concern.  Consolidating all of your investments into one brokerage account would greatly simplify your estate.  

9.       Exercise Powers of Appointment.

Are you the beneficiary of your parents’ trusts? If so, then speak to the attorney who prepared the estate plan and get a copy of those trusts. Have your attorney determine whether you have the power to appoint the trust principal to others including charitable organizations. If so, have your attorney prepare the documents to exercise your power of appointment.  Confirm the effectiveness of the exercise with your parents’ attorney.

10.     Confirm all beneficiary designations in writing.

Most people designate beneficiaries when they set up an account.  You may have set up the account 10 years ago and have no idea who you designated as beneficiary.  Now is the time to confirm who are the beneficiaries and change them if they do not conform to your current estate plan. 

11.     Create a joint account with sufficient funds to cover your final expenses.

Many expenses will arise upon your death. Who will pay for your medical bills, income taxes, cremation or casket, the funeral, the reception, and burial (or scattering of ashes)? Sometimes it can run in excess of $10,000. Estimate what those expenses might be for you and either prepay them or fund a joint account with your Executor (the person who will carry out your Will).  By creating a joint account, your Executor will have immediate access to the funds to pay for final expenses.  The joint owner will not even need to wait for the death certificate to cover these costs.

12.     Exercise Powers to Appoint Successor Trustees.

Sometimes trusts have powers to appoint Trustees.  If you are the Trustee of a trust, look for the power to choose a successor Trustee. If the trust contains such a power, appoint the right person to succeed you as Trustee of the trust.

13.     Revoke old trusts and obsolete premarital agreements.

Are there old trusts you never funded with provisions that no longer make any sense? Do you have an old premarital agreement that seems obsolete given how long you have been married?  Consider revoking them so no confusion occurs regarding the validity of those legal documents after you die.

14.     Convert Traditional IRAs or 401(k) plans to Roth IRAs or Roth 401(k)s. 

If you have traditional IRAs or regular 401(k) plans, consider converting them to Roth IRAs if you have large medical expenses in the final year of your life.  The medical expenses will offset the additional income tax owed upon converting traditional IRAs and regular 401(k)s to Roth IRAs and Roth 401(k)s. It will not only wisely use your medical expenses, it will free beneficiaries from paying income tax on withdrawals from your IRAs and 401(k)s.

15.     Provide Employee Benefit Information.

If you work for a large employer like General Dynamics, Pfizer or the State of Connecticut, you have valuable employee benefits that may be due upon your death.  Your employee records for a pension, 401(k) plan, deferred compensation, or profit sharing plan could help your loved ones. The information from your employer is not always accurate and sometime cannot be found by the employer. Certainly, information on who to contact in the Human Resources department and who are informed co-workers can prove most valuable.

16.     Organize all of your Insurance & Retirement Documents.

Executors spend a lot of time hunting for long-term care insurance policies, life insurance policies, and health insurance information. They often need to find annuity contracts and IRA beneficiary designation forms. Assembling all of those documents will make your Executor’s job much easier and save legal costs.

17.     Complete a Personal Affairs and Funeral Arrangements Checklist.

You need to write down important information such as: 

•what you own 

•who to contact after you pass away 

•what you want for your wake, funeral and burial, or cremation and memorial service 

•what should be in your obituary  

See our Personal Affairs & Funeral Arrangements Checklist. Write down this information and giving it to your Executor and lawyer will prove invaluable to your family and give them peace of mind that they knew what you want and tried their best to follow your wishes.

18.     Arrange a Care Plan for Your Pets. 

You owe it to your pets to have a plan for them as well.  Who will take them into their home? What do they eat and who is their veterinarian. What funds have you provide for their care? See our article Providing for Pets for more information.

19.     Find Important Government Documents. 

Assemble your social security card, birth certificate, marriage certificate, naturalization papers, green card, and DD-214 military discharge papers.  You may be the only one who knows where they are kept because they may have been issued 50 years ago.

20.     Complete a Digital Asset List.  

It is virtually impossible to gain access to your online life without usernames and passwords. Creating a Digital Asset List can give your executor access to your bank accounts online, the ability to pay bills and investing funds. It can also give your executor the ability to access your  social media accounts such as Facebook, Twitter and LinkedIn. Passwords to laptops, tablets, cell phones, and desktop computers must go to the person you trust – your Executor. See our Digital Assets Checklist to learn more.

21.     Inventory Your Safe Deposit Box.  

Go to the Bank with your Executor to assure that your Executor’s name is on the box and he or she has a key to the box. Inventory what is in the box so you know what will be found after you are gone. 

22.     Resign as Agent, Trustee or Executor.   

If you serve as a fiduciary under a Durable Power of Attorney, a trust or a Will, it is time to resign and turn everything over to a successor. Send notice of your resignation to beneficiaries, financial institutions, accountants, and lawyers. It will complete unfinished business and prevent any legal actions for breach of fiduciary duty. Consult your attorney to make sure all releases from liability are secured.

23.     Establish a Caregiver Plan for Your Dependents.

If you have minor children, provide care for a spouse or adult children, or are guardian for a child, you must create a detailed plan for their care. An experienced estate planning attorney can help you create a memo that clearly describes what your dependents need, the resources available to provide for those needs, and the people and organizations who can help meet those needs.

In Conclusion

Not all of these strategies may apply to you. In the short time you have left, you may not even be able to accomplish the strategies that do apply to you. You will certainly need the assistance of a spouse or a close friend (preferably your Executor) to accomplish these last minute tasks. Nevertheless, the more strategies you consider and act upon, the more efficiently your Executor will administer your estate, the better care your dependents will receive, and the sooner your gifts will make a difference for charity and your loved ones.

If you only have a short time to live and need help with financial estate planning, contact our office today at (860) 442-0150. 

Life is a constantly evolving journey.  Laws change.  People change.  Relationships change.  Finances change. Children come along, attend college, become adults, have their own children, and grow into their golden years.  Unfortunately, the language in a Will stays the same and may fail to accomplish your goals if not updated to parallel the evolutions of your life.  

So, once you have taken the sensible step of meeting with an experienced estate planning attorney and executing your Last Will and Testament (likely including a Trust Agreement, Durable Power of Attorney, and Appointment of a Healthcare Representative), how often should you update your Will and related estate planning  documents?  

Rule of Thumb is Every Three to Five Years

As a rule of thumb, you should review your Will and Trust documents with your estate planning lawyer at least once every three to five years to make sure that they still comply with your goals and any changes in the law.  Additionally, other situations may arise for which you should update your Estate Planning documents without delay.  The following are some of the common situations that necessitate you visiting your estate planning attorney to update your Last Will and Testament to accomplish your goals.

Marriage or Divorce

Whether a person is starting or ending a marriage, either event will have a significant legal impact on the person’s estate plan.  Additionally, marriage or divorce will most certainly change a person’s goals for the ultimate disposition of property.  State laws affect the terms of a Will by giving an omitted spouse some share of your estate, which share is unlikely to match your intentions.  In the event of a divorce, state laws will treat your spouse as if predeceased, but this might not apply to certain beneficiary designations on assets that pass outside of the probate process.  In either case, you should update your estate plan to make sure your property goes to your loved ones.  

Birth of a Child

The birth of a child is a wonderful event, but it also creates the need to protect your child  if something were to happen to you.  Who would serve as the guardian of your child or manage your child’s money during minority?  Who will pay for your child’s education?  If you have more than one child, does your will include your newborn in the disposition?  Should you update beneficiary designations now that you are a parent?  These are all typical concerns you should address in your estate planning.

Child No Longer a Minor

Children’s needs change as they grow older and become more responsible.  You may want to reevaluate who you have named as the executor under your Will or the agent in your other estate planning documents.  The person you have named may no longer be a good candidate for the administrative burden of being an executor because of age or infirmity.  Your child may now be a better choice to be your executor.  Moreover, now that your child is an adult, you may want to evaluate whether a trust for a minor is still necessary, or whether the child now needs a different trust for asset protection in the event of credit problems, divorce, or lawsuits.  

Empty Nest

Have you sold your home and relocated or downsized to suit your changing needs after your children have all moved out?  Does your Will specifically devise your former home to one individual?  Do you now own a vacation property in another state?  Are you considering adding your children to your deed?  You should review these issues with your estate planning attorney to make sure your Will, Trust and beneficiary designations accurately address these issues and your estate plan does not encounter any unforeseen obstacles.  Placing a child on a deed can affect real estate tax abatements, capital gains taxes, and government benefits.  Additionally, you want to simplify the process for your family and avoid the need and expense of an ancillary probate process if you own real estate in other states.  

A Change in Net Worth

Has your net worth significantly increased or decreased since you executed your Last Will and Testament?  If so, you should update your Will to add tax saving provisions or remove unnecessary tax provisions to simplify your Will.  The current estate tax exemption in Connecticut is two million dollars.  With proper planning a married couple with over two million combined net worth can protect up to four million dollars from estate taxes.  For a couple worth three million dollars, the savings could be over $70,000!

A Spouse, Child, or Executor Passes Away

You executed a Will to address the inevitability of your passing.  Although it is heartbreaking to consider, you may outlive a spouse, child or another loved one who is named in your Will as either a beneficiary or an executor.  You should update your will to make sure you control who will fill these vacancies in your Will.

Spouse or Child Applying for Medicaid

If you or your spouse or your child is in need of Medicaid assistance in the near future you should update your Will to make sure you don’t inadvertently disqualify them from getting assistance.  Meet with an experienced elder law attorney to review the allocation of your assets and make sure that you, your spouse and your children are protected to the maximum extent permitted and not left impoverished by the need for medical assistance.

Purchasing a Home with a Person Outside of Marriage

Cohabitating with a person outside of marriage can create problems for your estate plan.  If that person is not related to you by blood or marriage, then they have no right to inherit from you or serve as your healthcare proxy.  If you live with a person and buy personal property and real estate together you may need to separate that property at some point because of a change in the relationship or the passing of your partner.  How do you determine who owned what?  Do you want your partner to inherit from you?  You should consult a lawyer to document your wishes while your relationship is strong and cooperation is likely. 

There are many reasons to update your Will and estate plan. Don’t hesitate to contact the estate planning attorneys at Cipparone & Zaccaro, PC to keep your estate plan current. 

On May 10, 2016, the Connecticut Supreme Court issued a ruling that provides a blueprint on how to use a trust to protect assets for children who may need long-term care in the future. In this case, the Court ruled that the Department of Social Services improperly denied a Medicaid application because they  counted assets in a testamentary trust (a trust created in a will) that should have been considered exempt for Medicaid purposes.  Pikula v. Department of Social Services, 2016 WL 1749666 (2016).  This opinion clarifies the boundaries between a general support trust (which is a countable asset for Medicaid) and a fully discretionary supplemental needs trust (which is an exempt asset for Medicaid purposes).

John Pikula prepared a Will in 1989. The Will contained a trust for the benefit of his two daughters, Marian and Dorothy.  The trust requires the Trustee to pay to or spend for the benefit of Marian and Dorothy as much of the net income and principal as the Trustee deems advisable for their maintenance and support, and to add undistributed income to principal. The trust also granted Trustee “absolute discretion” to disburse trust principal “as he may deem advisable to provide adequately and properly for the support and maintenance of the …beneficiaries … [for] any expenses incurred by reason of illness and disability.” The trust also had some important exculpatory language:

In determining the amount of principal to be so disbursed, the Trustee shall take into consideration any other income or property which such income beneficiary may have from any other source, and the Trustee’s discretion shall be conclusive as to the advisability of any such disbursement and the same shall not be questioned by anyone. For all sums so distributed, the Trustee shall have full acquittance.

John died in 1991. The trust held a house as its only asset for many years.  The Trustee eventually sold the house and the proceeds were kept in trust for Marian’s care.  In 2012, Marian entered a long-term care facility and applied for Medicaid.  The trust value was $169,745.   Marian applied for Title 19 (Medicaid) in 2012.

The Department of Social Services (DSS) denied Marian's application for Medicaid stating that the assets in the testamentary trust constituted a countable support trust putting her over the $1,600 asset limit. In 2013, Marian filed a petition in Newington Probate Court and the judge found that it was a supplemental needs trust that could not be counted as an asset for Medicaid eligibility.

With the probate court decree in hand, Marian appealed DSS's decision arguing that her father intended to create a supplemental needs trust based upon the language used in the Will.  She claimed that she could not compel payments from the trust for her support.  Nevertheless, a fair hearing officer at DSS ignored the probate court decree and found that the use in the trust of the language “maintenance and support” created a general support trust which DSS could count as an asset for Medicaid eligibility determinations.  

Undeterred, Marian appealed to the Connecticut Superior Court. Judge Carl Schuman agreed with the DSS hearing officer and ruled in 2014 that the trust was for her support and, consequently, was a countable asset for Medicaid purposes. Marian appealed the Judge Schuman’s decision to the Connecticut Appellate Court but the matter was taken directly by the Connecticut Supreme Court.

This time, Marian prevailed.  The Supreme Court of Connecticut disagreed with the hearing officer’s determination and reversed the Superior Court’s finding that it was a support trust and countable asset. The Supreme Court reasoned that "the fact that the trustee is only required to use as much income as he 'may deem advisable' to provide for a daughter’s maintenance indicates that the testator intended for the trustee to have complete discretion in determining what, if any, of the income or principal was to be used for her maintenance.”  The Court emphasized that the Trustee’s discretion is conclusive as to the advisability of making distributions from the trust and no one can question the Trustee’s exercise of discretion. Further, the Court concluded, after considering the circumstances surrounding the trust creation, that the use of the terms “maintenance” and “support” did not limit the Trustee’s exercise of discretion in a way that would create a general support trust.  The Court also noted that the amount in the trust was not sufficient to provide for Marian’s support, because it would be quickly exhausted if it were applied to her long-term care expenses. In this way, it distinguished this case from a 2004 case entitled Corcoran v. Dept. of Social Services in which the trust value was $854,307. In that case the Supreme Court found the trust was intended by the settlor to be a general support trust which must be counted for Medicaid purposes.  

In conclusion, the Supreme Court found that the trust under John Pikula’s Will was a discretionary supplemental needs trust and DSS could not count it for purposes of determining eligibility for Medicaid. The Pikula case teaches the importance of estate planning. John protected his daughter by preparing a Will with a discretionary supplemental needs trust. Marian will now receive the long-term care she needs because of her father’s foresight and his attorney’s able drafting.  

There are many benefits to putting your assets in a trust. However, if you set up a trust you have to appoint another person to manage the trust assets either now or in the future. This person is called the “Trustee.” The Trustee holds legal title to property for the person whom the trust benefits (the "beneficiary").

How Choosing a Trustee Works

The trust document prepared by the attorney names the Trustee. The Trustee can change as circumstances change. For instance, if you are signing a revocable living trust, it names a person to control the trust property while you are alive. In your lifetime, you can be the Trustee.  The trust document also names a successor Trustee to take over after the original trustee dies or becomes incapacitated. The successor Trustee is a separate individual or independent professional trustee. Keep in mind, that this is not true for all types of trusts. Other trusts -- such as an irrevocable trust or special needs trust – require that you name a separate Trustee from the start.

Factors to Consider When Choosing a Trustee

To carry out your wishes, you should choose a thoughtful, meticulous and prudent Trustee. The choice is important because being a Trustee can be a difficult job.

The two most important questions to ask yourself when selecting a Trustee are:

1. Does this person have the ability to manage the trust assets?
2. Is this person trustworthy?

Does This Person Have the Ability to Manage the Trust Assets?

You should pick a Trustee who has experience managing the type of assets that the trust will hold. The Trustee should also have experience filing estate tax returns if the trust is funded at death. In the case of a special needs trust, the Trustee should have knowledge of federal benefits programs.

Being a Trustee is not a temporary job.  It can last years, sometimes decades. You need to choose a person who can manage the trust for an extended period of time.  You should also select someone who has the time to devote to day-to-day trustee duties. You also need to consider the Trustee’s health. Certainly, a person who is wise but is in poor health would not be a good person to appoint as Trustee.

The Trustee must be organized. The Trustee has to monitor the trust investments. The Trustee must file a yearly income tax return.  The Trustee must weigh requests for funds and decide if the trust document allows the requested distribution. The Trustee must write checks. Every year the Trustee must provide an annual accounting to beneficiaries of the trust.  The accounting would include the assets and liabilities of the trust as well as its income and expenses. Trustees of trusts created under a Will must file an accounting with the local Probate Court every 3 years unless the Will waives the duty to file an accounting.

Is This Person Trustworthy?

Your experience with the prospective Trustee can help determine whether the Trustee is trustworthy.  A person’s trustworthiness is comprised of many personality traits.

The Trustee has a duty to manage the trust in the beneficiary's best interest. A good Trustee is someone who can think logically and rationally and not be swayed by competing agendas. The Trustee also needs to be able to do what they think is in the best interest of the beneficiary, even if the beneficiary does not agree with the Trustee's decisions.

The Trustee must have good judgment. They must be able to gather and weigh all the pertinent information before making important decisions. The Trustee may retain a lawyer, accountant and financial advisor to assist with those decisions.

Who Can Serve As a Trustee?

Any person over 18 years of age and capable of managing his or her financial affairs can serve as a Trustee. An attorney, accountant, financial adviser or other professional may serve as an independent trustee.  Many financial institutions provide trust services.  In addition to being independent, a professional trustee usually has experience and expertise managing trust property and preparing trust tax returns. 

Can You Change the Person Who Is Trustee?

You can change who is Trustee.  You can simply write a letter to the Trustee exercising your right to change Trustee if the trust allows it.  If the trust does not allow you to change the Trustee, you can file a motion to remove the Trustee in the court with jurisdiction over the trust. The court will expect you to propose a new Trustee.

Whomever you choose as Trustee, you must review your choice of Trustee every few years. The person who is right today may not be right tomorrow. You may no longer agree with the distribution decisions of the Trustee or have a concern regarding the Trustee’s investment performance. The fees of the Trustee may no longer make sense given the value of the trust assets.

The attorneys at Cipparone & Zaccaro, PC can help you determine who is the best Trustee for you and your trust and assess Trustee performance.

Being chosen as the Executor of an estate shows that the decedent thought of you as a trusted friend or family member. However, settling the affairs of someone who has passed away is a huge responsibility. In this post, we discuss some of the main things you need to do as the executor of an estate.

The duties of an Executor sound simple enough: distribute the deceased’s property and arrange for the payment of debts and expenses. And if this was a TV show the whole thing would be done in less than 60 minutes, family disputes and all. 

In reality, carrying out the provisions of a Will through probate is a complex process. Family dynamics can make the probate of an estate miserable for the Executor.  Family members may drain bank accounts, steal and sell probate property, and cart away family heirlooms. As the Executor, you must manage the estate’s investments wisely and account for what was done with the decedent’s assets during the estate administration. 

Here are just a few of the responsibilities of an executor:

• An executor finds the deceased person's assets and manage them until they are distributed to estate beneficiaries.
• An Executor decides whether or not formal probate court proceedings are needed. 
• An Executor figures out who inherits what property under the Will and follow Connecticut law on the distribution of estate property. Keep in mind that a Will only controls property the decedent held in his or her sole name without a designated beneficiary.
• An executor must handle day-to-day details. Settling an estate may include terminating leases and credit cards and notifying banks and government agencies about the death of the deceased. 
• An Executor sets up an estate bank account. Use estate funds to pay debts, as well as continuing expenses such as utility bills, mortgage payments, and homeowner's insurance premiums.
• An Executor pays taxes. An Executor must file a final income tax return, an estate tax return and an estate income tax return.

When you’re in the midst of grieving for a loved one, the idea of stepping into legal shoes can feel overwhelming. The task list is huge and the risk of making a significant mistake (like improperly distributing the decedent’s property) is very real.

As the Executor of the estate, you are responsible for everything that can go wrong. You owe a fiduciary duty to not only the estate beneficiaries but also the decedent’s creditors! In the midst of your personal grief, you are suddenly the peacekeeper, a detective, and an officer of the court. It’s a sad reality but the battles you fight here can permanently damage your family relationships.

Why You Should Hire Cipparone & Zaccaro for Estate Settlement

If a Will names you as Executor, speak with an attorney  at Cipparone & Zaccaro, PC.

With more than 100 years of combined experience, our attorneys can assist with:

• The entire probate process
• Petitioning the courts to appoint you as the estate executor
• Assuring the estate property is properly managed
• Preparing the estate tax return and the income tax returns
• Accounting to the court for your management of estate assets
• Resolving disputes with family members

Please call our office today at (860) 442-0150 today so we can explain your options as Executor of a Will.

After a parent, relative or friend dies, you may be surprised to learn that you were chosen to be the Executor of his or her estate.  You might think of your appointment as an honor, a mark of trust and an indicator of how highly the decedent valued your relationship.  In truth, being chosen as an Executor can also feel like a burden, an obligation you might not want to tackle for any number of reasons. 

Do You Want to Serve as Executor? 

The first thing you should know is that you can decline the job and let it pass to someone else.  Every estate and family situation is unique.  Many factors will influence the amount of work an Executor will need to do:  the size of the estate, the type of assets owned by the decedent, the number of debts the decedent had, how well the beneficiaries get along, the quality of decedent’s Will and Trust(s), and your state's laws.

Here are some factors that can help you decide. 

Practical Considerations

1. Being the Executor of an estate is time-consuming.  It can be hard for you to be effective in this role if you work full time or have a family.
2. Because of the time commitment and possible stressors that come from dealing with family members, creditors, and professionals in the probate arena, being the Executor of an estate can wear you down if you have personal health problems.  This is equally true if you are caring for another family member and cannot spare the time or energy.
3. If you live outside the state where the decedent lived, that alone may cause you to decline being the Executor of the estate. Physical distance, time difference, and other factors make an already complex job even harder to manage. 

Emotional and Family Dynamic Reasons

Concerns regarding death can bring out the worst in people.  Even families that generally get along well can have fractures, arguments, and bad feelings during the loss of a parent or grandparent.  Many complex issues such as grief and jealousies over “who got what” come up and can alter relationships.  The Executor of the estate is often the brunt of beneficiaries' fear and anger.  And, if you are one of those family members grieving, this added burden can make an already difficult time significantly worse.

Issues of Temperament

Being a good Executor carries with it a requirement to be fair and even-tempered.  That can be hard under the best circumstances.  But, during a period of bereavement, it might seem Herculean. Some things to consider: 

• A good Executor must be careful, patient, thorough, organized and committed to doing a good job.  The amount of detail and minutiae is significant.
• An Executor must have excellent people skills. There is a large professional community involved in the process (bankers, accountants, realtors, appraisers and other agents) that you will need to tap to do your job well.  You will need to deal respectfully with troublesome family members and dependent beneficiaries.
• Stepping into a key decision-making role when you’re in the midst of grieving for a loved one can feel overwhelming.  The task list is huge and the risk of making a significant mistake (like improperly distributing the inheritance or paying creditors that have low priority) is very real.

If the prospect of acting as the Executor under a Will seems overwhelming, consider hiring experienced trust and estate counsel to guide you or handle the entire probate process.  Attorney fees are paid through the estate.  When you hire an estate settlement attorney to help you take a parent’s Will through probate, you are still involved in the overall proceedings and provide valuable family knowledge to assure the best outcome.  Hiring an experienced attorney honors your loved one’s wishes to get through probate in a timely and fair manner.  Knowledgeable assistance reduces your risk of making a critical mistake (for which you are literally liable!).

Happy New Year! Some of you might be wondering how much you can give this year without having to file a gift tax return and whether you need to do some estate tax planning. Here are the key figures to keep in mind for 2016.

Estate Tax Exclusion

This year, the federal estate tax exclusion is $5,450,000. Therefore, if an estate is worth less than that amount, no federal estate tax will be due. The estate tax rate is 40% of the amount above estate tax exclusion. Each spouse has his or her own estate tax exemption and can use a predeceased spouse’s unused estate tax exemption. This principle is known as the “portability of unused exemption between spouses.” With portability, couples can now have assets of $10.9 million without owing any federal estate tax. A surviving spouse who remarries will lose the prior deceased spouse’s exemption.

The Connecticut estate tax exclusion remains at $2 million. Thus, if an estate is worth less than that amount, no Connecticut estate tax will be due. Depending on the amount above the Connecticut estate tax exclusion, the estate tax rate ranges from 7% to 12%. Each spouse has his or her own estate tax exemption. Unlike the federal estate tax, however, there is no portability in Connecticut. The only way for a couple to use their entire $4 million estate tax exclusion is by having an estate tax saving trust.

Gift Tax Exclusion

The annual federal gift tax exclusion remains at $14,000 for 2016. If a person makes gifts of $14,000 each to 4 different individuals, none of the gifts are considered taxable, and none of them have to be reported on the Federal Gift Tax Return Form 709. In 2016, a taxpayer can split gifts with his or her spouse so that $28,000 can be given to each donee. A taxpayer, however, must report split gifts on Form 709. The annual exclusion for gifts to non-citizen spouses is not the same as the annual exclusion for gifts to U.S. citizen spouses. That is because gifts to non-citizen spouses can be subject to federal gift tax. Gifts to citizen spouses are not subject to gift tax because of the unlimited gift tax marital deduction. The annual exclusion for gifts to non-citizen spouses in 2016 is $148,000.

Besides the annual exclusion, each taxpayer also has a lifetime gift tax exclusion. In 2016, the lifetime gift tax exclusion is $5,450,000. Thus, by applying some of your lifetime gift tax exclusion, a gift with a value in excess of the $14,000 annual exclusion will result in no gift tax owed, but you must file a Form 709 with the IRS. When you die, your estate tax exclusion will be reduced by the amount of the gift over the annual exclusion. The lifetime gift tax exclusion is the same for U.S. resident non-citizens and U.S. citizens.

The federal gift tax rate is 40% for the amount above the lifetime gift tax exclusion.

Although Connecticut uses the annual federal gift tax exclusions for its own annual gift tax exclusion, Connecticut has a different lifetime gift tax exclusion: $2 million for 2016. You have to file a Connecticut gift tax return if you make any taxable gifts. For example, if you are not married and you give $50,000 to each of your 2 children, you will have to file a Connecticut gift tax return even though no gift tax is payable.

Federal and Connecticut gift tax returns are due by April 15th of the year following the gift.