Once appointed, the fiduciary will take over the decedent’s assets, determine and pay proper debts, and distribute the remaining property to the decedent’s intended beneficiaries. Naturally, the fiduciary must not commingle the estate assets with their own. Throughout this period, the fiduciary must file all necessary documents such as estate tax forms, gift tax forms, and certificates for land records. The exact duties of a fiduciary are discussed in greater detail below:
a. File Certificates for Land Records
If the decedent owned real estate that was devised in his will, the court will provide certificates for land records that the executor or administrator must record at the town clerk’s office to show the executor or administrator has been appointed to manage and dispose of that property. This form, PC251, must be filed within two months of appointment as fiduciary.
b. File Inventory of Estate
Also within two months of being appointed, the fiduciary must file an inventory of all estate assets. This inventory must include all property the decedent owned in their name such as real estate, bank accounts, retirement accounts, cars, household items, and personal effects. Any property held with a partner, but not with right of survivorship, must also be listed. In addition, if life insurance policies are payable to a decedent’s estate, those must be included in the accounting as well. Once all property is listed, it must be valued according to the fair market value at the decedent’s time of death. This can be completed through getting verified appraisals.
Any assets not intended for probate need not be listed, such as property held with right of survivorship, life insurance policies with named beneficiaries, joint bank accounts, and other payable on death accounts.
c. Sell Estate Property to Pay Expenses and Claims
Next, the fiduciary must determine the validity of any claims against the estate and pay all proper debts and taxes. The process of determining valid claims starts with the fiduciary placing a notice in the local paper within 14 days of appointment requesting creditors to present their claims. Once this occurs, creditors have 150 days to present their claims. The proper form, PC-234, can be found on the probate court website. Within 60 days of the conclusion of the 150 day creditor claim period, the fiduciary must file a return of claims and list of notified creditors, form PC-237, with the court. After the 150 days concludes, a fiduciary can, in good faith, distribute all remaining estate assets. In addition to settling creditor’s claims, the fiduciary must also pay all administration expenses, fees, and taxes. These expenses include fiduciary fees, attorney’s fees, probate court charges, legal
notice charges, and any other expenses relating to the maintenance of the decedent’s property. If there are not enough assets in the estate to settle all debts, the estate is deemed insolvent.
d. File Estate Tax Returns and Pay Taxes
Within six months of the date of death, an estate tax return must be filed by the executor with the State of Connecticut. This deadline may be extended up to six months upon filing of a request, form CT-706/709. The appropriate tax forms should be filed with the probate court for the district in which the decedent resided at the time of death. If the decedent was a non-resident, the forms may be filed in a probate district where the decedent owned property.
Federal estate taxes are due on estates larger than $5.34 million (2014, adjusted for inflation each year). If a decedent’s estate is less than that amount, no federal estate tax is due. The majority of estates, therefore, do not end up owing federal estate taxes.
As for Connecticut state estate taxes, the exemption amount is $2 million for those passing after January 1, 2011. This figure is drastically less than the $3.5 million exemption that was available in 2010. If the decedent’s estate is less than $2 million, a simplified tax return, form CT-706 NT, should be filed. In cases where the decedent’s assets exceed $2 million, form CT-706/709 must be filed to determine the tax due. If a decedent’s estate is less than $2 million, there will be no federal or state estate taxes due. Remember, these are just the exemption amounts for Connecticut and the federal government. There are many ways to decrease or avoid the amount of taxes owed at death. Many of these options are outside of the scope of this publication and highly complex. If you have an estate that is worth more than either of the exemption amounts, you will want to discuss proper estate and financial planning with an experienced attorney. Every estate is different, and there are numerous ways to plan for and reduce estate taxes. Only a specialist can help you decide the best tools for your estate.
e. File Final Financial Report
Within 12 months of the decedent’s death, a fiduciary must file a financial report with the court when the administration of the estate is complete. There are two forms of this report, a simpler form PC-246, and a more complex form PC-241 or 242. The latter forms will be needed by a fiduciary when there are trusts that disperse income and principal to separate beneficiaries due to more complex tax implications. Once the financial report is submitted, the probate court will hold a hearing to allow beneficiaries to question or object to the accounting or the way the assets were handled. This hearing can be avoided if all parties waive their rights to the hearing through form PC-245. This form states that all parties received a copy of the final accounting and waive their right to such a hearing. This is most common when no one questions the estate and how it was handled. If the estate cannot be closed within a year, the fiduciary must file status updates with the court. The first report must be filed within three months of the day the fiduciary was appointed and then annually thereafter. These reports must include detailed financial accounting and the reason why the estate is open longer than the usual year.
f. Distribute Remaining Assets to Beneficiaries
Once the fiduciary has completed all other tasks and settled all other debts, assets may finally be distributed to beneficiaries.
g. File Affidavit of Closing Estate
Finally, to complete their duties, the fiduciary must file form PC-213, the affidavit of closing. This form is used to report receipts and disbursements that occur after the final accounting was submitted. If directed to do so by the court, this form must be submitted within 30 days after the distribution of all assets.
Although the fiduciary may have many steps to take, the probate process is not as daunting as it may seem. The beneficial oversight the probate court supplies to a decedent’s estate outweighs the probate court fees and process. With proper planning, and a trustworthy executor, most of these costs can be avoided completely.
Estate Administration in Connecticut: Appointing a Fiduciary
Much of the probate process involves filing forms and paying fees, but there are many steps to the process. After filing a petition with the probate court, the next step is to appoint a fiduciary. The executor or administrator of an estate is called a fiduciary. This means they hold a position of trust in the handling of another’s property. A fiduciary owes a duty to properly manage and dispense the decedent’s property and can be held liable for certain failures or unlawful acts.
ABOUT THE AUTHOR: Joseph C. Maya, Esq.
Joseph C. Maya is the Managing Partner at Maya Murphy, P.C., and offers deep knowledge and experience in estate planning, trusts, estate administration and commercial law services in Connecticut and New York.
Copyright Maya Murphy, P.C.
Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.