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Probate and Real Estate
Probate and Real Estate
Domenick N. Calabrese, Judge
Connecticut Probate District 22
One of the fallacies that I sometimes hear is that if all the property someone owns is in survivorship or a living trust, there is no need to go to the probate court at all when the owner dies. This is, in fact, untrue. The only exception to filing an application and estate tax return with the probate court is when someone passes away owning no assets whatsoever – including survivorship property and assets in living trusts. While assets owned in survivorship or in a trust pass outside of the probate process, it is still necessary to file a “tax purposes only” estate with the probate court, including the Connecticut Estate Tax Return, and paying a probate fee (generally one third of one percent) on the gross value of the assets in which the deceased person had an ownership interest.
Unfortunately, a situation that recurs involves a fact pattern similar to this scenario: A caller to the court tells the clerk that the caller’s mother owns a house, is selling it, and the closing is scheduled to take place next week. Mom needs tax clearance from the probate court in order for the buyer to purchase the property. After some questioning by the clerk of the court, the following facts come to light: the house is owned in survivorship by the caller’s mother and the caller’s father. Mother is still living, but father passed away five years ago. Since father didn’t have any solely-owned property when he passed away, his family erroneously believed that there was no need to go to the probate court, and no application was filed there. Without an application and a Connecticut estate tax return, the court cannot provide tax clearance. There is then a rush by the family to the probate court with an application for a tax purposes only estate for a resident who passed away five years ago. It is unlikely that the Certificate Releasing Connecticut Estate Tax Lien can be issued by the probate court in time for the closing.
When a Connecticut resident passes away, their estate may be liable for the payment of Connecticut estate or succession taxes. If there are Connecticut succession or estate taxes due, and they are not paid, the Connecticut Department of Revenue Services may place a lien on any real estate that the decedent had an interest in. This includes real estate owned only in the name of the decedent as well as real estate in which the decedent had a divided or undivided interest with others (such as survivorship, or tenants in common). The only way to determine whether Connecticut estate or succession taxes are due is for the probate court to review the tax return submitted by the executor or administrator of the estate. If the probate court determines that there is no estate or succession tax due, it issues an opinion of no tax due or a release of lien for succession taxes. This document is then recorded on the land records to give notice to the world that the real estate is clear of any Connecticut estate and/or succession tax liens that may have been attributable to the decedent owner. If there is no such release of lien or opinion of no tax due recorded on the land records, a prospective purchaser of the real estate takes it subject to a potential estate tax lien. Most prospective purchasers would not want to take that chance.
This article is for informational purposes only. It is not intended to be, nor should it be relied upon, for legal advice. Readers should retain the services of competent legal counsel for advice as to your particular situation.
Copyright ©2010 Domenick N. Calabrese. All rights reserved.