Rich or poor, single or married, close family or estranged family, with children or without:
No matter your situation, there is an estate plan for you. Don’t let inertia or indecisiveness prevent you from putting your future in order now. Even if you don’t want to think about your own demise, you should at least plan for unforeseen circumstances during your lifetime such as illness, accidents, or disability.
What comes to mind for most clients when a lawyer discusses estate planning is a Will or Trust. While a will is a core document and a trust might benefit many clients, individual asset beneficiary designations and real property deeds are actually some of the most important documents to consider.
As I tell many clients, you could leave a million dollars to your spouse in your Will but if your only asset is, for example, an investment account with a beneficiary designation, then the designated beneficiary will receive that account to the exclusion of everyone else.In that example, your will would not be an operative document and no assets would pass pursuant to its terms.
A real property deed or bank or investment account beneficiary designation will cause that particular asset to pass to the survivor, joint owner, or designated beneficiary without a formal probate proceeding. Survivorship designations for investment or bank accounts are typically “TOD,” “transfer on Death,” or “POD,” “payable on Death.”With respect to real property, a survivorship designation typically reads“joint tenants with rights of survivorship” or “joint tenants,” or “unto the survivor of them.”
Joint ownership with respect to bank or investment accounts (or even real estate) can be a thorny area. If a client designates a child as a joint owner, that child will be entitled to immediate access to the account so designated. The child can begin to withdraw money without the consent of the client. Moreover, the child will take the account upon the client’s passing, to the exclusion of any of the client’s other children or relatives. Worse, judgment creditors of the child would be able to attach the account, for example, if the child failed to pay a credit card debt and the card company pursued a judgment in court.
Beneficiary designations and joint ownership are the most common vehicles used to “avoid probate.” Best of all, for clients at least, these designations can conveniently be made on most financial accounts without the need to hire a lawyer. I always encourage clients to review these designations periodically, especially when opening new accounts or rolling over retirement accounts. A good practice is also to print a copy of the designation, as I have seen financial institutions lose designations in the past.
Another way to avoid probate is to simply gift assets during one’s lifetime. This is not always the most practical course of action, however, especially if the client still needs the assets for him or herself. Particularly concerning are look-back periods for Medicaid benefits if the client is ever in need of such programs as long-term care.Currently, the look-back period is five years.Clients often confuse the Medicaid look-back period for the period of time for inclusion in one’s gross taxable estate of gifts made in contemplation of death, which is three years.Furthermore, gifting has its own limitations, such as the $15,000 per year exclusion; that is, a client may give $15,000 per year per person. A client’s spouse can make a similar gift. Gifts over this combined amount are not always immediately taxable. They can reduce the client’s lifetime exclusion which, forConnecticut purposes, is $3.6 million for the year of 2019 and $5.1 million for the year of 2020,and $11.4 million at the federal level for 2019.
Trusts are also a common vehicle to avoid probate — that is, to avoid a formal probate proceeding — which will be discussed shortly. Here, it is worth mentioning some important points about probate because, full disclosure, I clerked in the probate courts for fourteen years prior to practicing law. Assets without a designation go “through probate.” Probate entails the appointment of either an executor (if a client died with a will, or “testate”) or an administrator (if a client died without a will, or “intestate”). Probate can become thorny if a disgruntled heir or beneficiary challenges a will or objects to the appointment of a particular executor or administrator.
A probate proceeding also includes a period for creditors to make claims against estate assets. While creditors cannot generally take non-estate assets, estate assets are exposed. The worst creditor to have is the State ofConnecticut; if a deceased person was the recipient of state aid or care(Medicaid, cash assistance, and even incarceration, to name a few), the State will claim the entire value of its assistance.
There is a five month period during which creditors must make claims; within this span of time the estate must remain open. After the creditor period, assuming no claims have been brought, the fiduciary can prepare and file a final accounting or financial report to close the estate and distribute funds.
The final accounting or financial report generally entails reporting to the probate court the beginning inventory value, any receipts of funds, the expenses of the estate (including funeral, administration and creditors), taxes, and a listing of proposed distributions for the court to approve. It is always good practice, in order for the fiduciary to protect him or herself, to wait for a court order of distribution prior to actually disbursing any funds. Remember that Connecticut law provides for a 30 day appeal period from the time the court issues its ruling, during which a disgruntled party may to go to the superior court to dispute a probate court decision.
It may be worth omitting a recipient of State aid, effecting a trust outside of probate, or creating a trust for a disabled person. A word about state assistance: the State of Connecticut, in its public welfare largesse, will claim against an estate if a decedent or beneficiary was a recipient of state assistance. The StateDepartment of Administrative Services may claim up to the entire estate if the decedent was on state aid, including setting limitations on fiduciary fees, and even funeral reimbursement.
In the case where a beneficiary of an estate is on state assistance, the State will claim up to half of a beneficiary’s share, or the amount of the claim, whichever is less. A party who is subject to a state claim generally cannot give away any part of the inheritance or maintain assets in kind (such as a house or car).
It is prudent for anyone making a will to omit desired beneficiaries who have been on State assistance and provide for such beneficiaries outside the will.
As always, clients should seek competent legal advice for guidance through the probate court or estate planning processes. The foregoing is intended only to be a basic reference. There is no substitute for personalized legal counsel to protect your rights and guide your important personal and financial matters.
 Conn.Gen. Stat. § 45a-347 (2019).
 Conn. Gen.Stat. §§ 45a-468d to468e (2019).
 Understand Medicaid’s Look-BackPeriod; Penalties, Exceptions & State Variances, American Council on Aging (Jan. 21, 2019),
 I.R.C.§ 2035 (2000).
 Conn.Gen. Stat. § 12-642 (2019).
 Rev. Proc. 2018-57, 2018-49 I.R.B.827.
 Conn.Gen. Stat. §§ 17b-95, 18-85c (2019).
 Conn.Gen. Stat. § 45a-356 (2019).
 See Forms PC-246, PC-441.
 Conn.Gen. Stat. § 45a-196 (2019).
 Conn.Gen. Stat. §§ 17b-95 (2019).