Connecticut Dubbed "Worst State to Die" in Wake of New Probate Costs

To speak with an experienced probate law attorney, please contact the experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or at JMaya@Mayalaw.com.

In the past year, Connecticut has gained a national reputation as a bad place to die. Now state lawmakers are being asked to do something about it. If they don't, some trust and estate lawyers say that litigation is possible.

The issue lies with fees being charged by the probate court system. Last year, the General Assembly voted to stop giving any state general fund money to the Probate Court system. With the 54-court system needing to be fully self-sufficient, lawmakers also eliminated the $12,500 cap on fees charged for administering estates. Because Connecticut has some especially wealthy people, fees in some cases have surged past $100,000.

Cummings & Lockwood principal Paul Bourdeau said the firm's estate clients are "really very incensed."

"I had one set of clients who switched their residence to outside of Connecticut because of the fee. It pushed them to move and establish a domicile outside of Connecticut," Bourdeau said. He said he sees about one client a month with assets over $10 million who plan to leave the state. "That's why we have three Florida offices. People are fleeing Connecticut."

Probate Court Administrator Paul Knierim said revenue is falling short of expectations by about $6 million, and he plans to ask the legislature to provide the Probate Court system with general fund money again. But he is also backing a proposed measure that would cap estate fees at $40,000.

For now, there is no cap, and the estate fees are based on a percentage of the total estate value. For estates worth more than $2 million, the fee is about 0.5 percent of the value. Under the current fee structure, a $20 million estate would net a $105,615 fee, for example. The state also has an estate tax on all estates worth more than $2 million, with rates ranging from 7.2 percent to 12 percent.

In the past year, both Fortune magazine and CNBC have tabbed Connecticut as "the most expensive place to die."

"We are concerned that the new fee structure is hurting compliance and giving people an incentive to move out of state," Knierim said. "The current fees make Connecticut the most expensive state in the nation for probate fees."

Knierim's office is hearing from estate planning attorneys that the probate court fee increase is a big issue for their clients. "Many residents see it as the last straw," he said. "Our concern is that it is not a sustainable revenue source because it motivates people to move."

Knierim said placing a $40,000 cap on probate fees would be a "critical first step."

"I see it as a good start in a discussion that needs to happen in this legislative session," Knierim said. "The legislature needs to restore reasonableness to the fee structure. It is an inescapable conclusion that we need to restore a cap on probate fees."

'Economic Reality'

So far, there have been eight estates since the cap was removed which incurred fees of over $40,000, according to Knierim. The largest fee imposed was $232,815, in a case involving an estate in the range of $50 million, he said.

Meanwhile, Knierim said he will be seeking a $14 million appropriation from the legislature for the probate court system. Knierim said it appears the system will collect only about half of its projected $12 million revenue this fiscal year. "Merely capping fees without replacing the [general fund support] will leave us unable to operate," Knierim said. He said the probate court needs funds to cover the services it provides for the elderly, children and individuals with mental illness. It pays for conservators for 4,000 individuals, for example.

In his Feb. 3 speech on the state budget, Gov. Dannel Malloy proposed the $40,000 estate fee cap. Gian-Carl Casa, undersecretary for legislative affairs with the Office of Policy and Management, said not having a cap on probate fees "imposes exorbitant fees on estates and makes Connecticut less attractive as a place to live."

Asked about Knierim's call for general fund appropriations for the Probate Court system, Casa said: "Connecticut is facing a new economic reality and we need to adapt and change the way we do business. We have made progress, but the reality of this economic recovery means we can't budget based on what we want to spend, but instead have to budget based on what we actually have.

"Like other state agencies the probate system is being asked to live within its means," Casa added. "We will work with them to help them do that."

'Cry of Anger'

State Rep. Gail Lavielle, R-Norwalk, recently proposed a bill which would place a cap on probate court fees and restore general fund support for the probate courts. Lavielle said the removal of the cap created "one more reason for people to not want to die here [in Connecticut]."

"We do have a number of people exiting the state for financial reasons, so we are losing people with resources," Lavielle said. "Even if you have a trust and your will doesn't go through probate, you still have to pay the fees."

While her bill doesn't mention a specific amount for a cap, Lavielle would like it to be back at $12,500; she doesn't think Malloy's proposed $40,000 cap goes far enough. Likewise, her bill doesn't suggest a specific appropriation for the probate courts. "The probate courts do a lot more in conservatorship and other services than in actual dealing with estates," Lavielle said. "The current system is asking for a portion of what they do to subsidize their entire operation, which is not a good way to do business. My bill seeks to get things back to where they were."

The situation has attracted the attention of other lawmakers. State Rep. John Frey, R-Ridgefield, has introduced a bill to put a $25,000 cap on probate fees. Private practice attorneys say some sort of change can't come soon enough. They said there has been discussion in the legal community about a formal legal challenge to the constitutionality of the probate fee system, though any challenge would be less likely if a cap is imposed and lower fees are made retroactive.

Day Pitney partner Gregory Hayes, who handles estate matters, said the removal of the probate fee cap has "created a cry of anger and frustration on the part of clients and their advisers. We have many estates with substantial fees, and one with a projected fee of as much as $1 million."

He said that it is "amazing how the fee could go from $12,500 to us now dealing with estates that have to pay hundreds of thousands. It has been the subject of much discussion and consternation. Connecticut taxes wealthy citizens more and more. If you are already unhappy with the state's tax policy, this motivates clients to think more closely about leaving."

Murtha Cullina partner Alfred Casella, who also handles estate and probate matters, said there is a lot of frustration among his clients too.

"It has a real psychological impact on clients," Casella said. "The thought of paying a large probate fee in addition to other taxes prompts people to consider making another jurisdiction, like Florida, their domicile. Especially if people already have property out of state, sometimes it is the final step to make them consider changing to another jurisdiction."

If you have any questions or would like to speak to a probate law attorney about a will, trust, or estate matter, please contact the experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or at JMaya@Mayalaw.com.

For continual access to the legal world, follow us on Twitter and LinkedIn. We offer the latest updates on caselaw and legal news. In addition, informational videos are available for your convenience on our YouTube channel. 

Source- Michelle Tuccitto Sullo, $100,000 Probate Bills? Bar Pushes for Fee Reduction; Lawmakers Consider Capping Estate Costs as Wealthy Threaten to Relocate, Conn. 42 Law Trib. 7  at 1