The Connecticut Elder Law Blog

Dying With Debt, But Without a Will

I recently received an e-mail questioning what would happen if someone died without a will but plent of debt.  Could the creditors go after the surviving children?

To greatly summarize what would happen under Connecticut law, if someone dies without a will then an estate would still be opened in the local probate court.  If the debt is large enough then the creditors might take the time and effort to initiate the probate process if the family does not step up and do it. 

The court would then appoint an “administrator” (this person would be called the “executor” if there was a will) and that person’s first job would be to ascertain the legitimate, outstanding debts of the decedent and pay them off with estate assets, if possible.  Once all of the legitimate creditors are made whole then the administrator would distribute any remaining funds to the next of kin.  “Next of kin” would be the surviving spouse, if none then the children, if none then siblings, and so on.  All of these steps would be taken under the supervision of the probate court.

So, in short, the creditors couldn’t directly go after the kids since the kids have no legal responsibility for the parents’ debts (unless they agreed to be responsible in writing, for some reason).  But the creditors could go after the estate which would reduce what the kids would have received from the estate otherwise.

Connecticut's New Conservatorship Laws

For those of you who are involved in conservatorship matters in Connecticut, there's a whole new atmosphere in our probate courts due to a new set of laws that kicked in on October 1st.  This was prompted mostly by a great deal of negative press that the Connecticut probate system has been receiving over the last several years.

There are a lot of new administrative issues addressed by the new laws, and if you would like to review the laws in their entirety, click here for PA-07-116 and here for PA-07-117.

In regards to the "big picture" evaluation of the new laws, there are two issues to bring to your attention: (1) more formal hearings, and (2) an enhanced emphasis on the conserved person's wishes.

As of October 1st, all probate court hearings, regardless of whether or not the matter is contested, must follow the formal rules of evidence.  This includes the use of tape-recorders during hearings, swearing in anyone who provides testimony, etc.  This is a dramatic departure from the previous procedure which allowed for a more informal approach to hearings and employed more relaxed evidence rules in order to facilitate a less restrictive discussion of conservatorship matters. 

The new laws also mandate a stronger consideration of the conserved person's wishes when the conservator acts and when the Court renders a decision.  Essentially, if the conserved person can communicate his wishes and it's possible to accomodate such wishes without jeopardizing his safety and well-being (and the necessary financial support can be provided) then the conservator needs to to do what she can to fulfill those wishes.  The law talks about the "reasonable and informed preferences" of the conserved person, which is certainly open to different interpretations.  In any case, the strong emphasis on ascertaining and trying to fulfill the conserved person's wishes is new to conservatorship law in Connecticut.

Who's Who in a CT Conservatorship Proceeding (Part 3 of 3)

Of course, the conservatorship process does not end with the appointment of a conservator.  In fact, it usually does not end until the conserved person passes away.  It is very rare for a Court to terminate a conservatorship while the conserved person is still alive; the Court will only do so if the person's capacity to manage his own affairs is restored.  But in most cases the mental disorder that initially prompted the conservatorship (usually Alzheimer's or some other type of dementia) is not something that improves or goes away. 

However, a "conservatorship of the estate" (financial management only) may terminate if the incapacitated person runs out of money or nearly does so since there would obviously be little for the conservator of an estate to do at that point.  "Conservatorship of the person" (management of personal affairs) typically continues until death.

After the conservatorship is established the conservator is required to report to the Court regularly in regards to how things are going.  This is done by way of written reports which summarize any extraordinary developments and financial accountings.  Whenever such reports and accountings are filed, interested parties and their attorneys (including the attorney that the Court assigned to represent the conserved person) are given an opportunity to review them and see if anything contained in them would warrant a hearing or a status conference.

Again, a conservatorship proceeding is a serious legal affair.  If you think a family member or friend is in a situation which requires the judicial supervision and legal safeguards offered by a conservatorship then make sure you educate yourself thoroughly on the process.  And I'm aware that this advice is self-serving, but it's worth it to retain an attorney experienced in conservatorship matters if you expect things may get complicated in court.

Who's Who in a CT Conservatorship Proceeding (Part 2 of 3)

Then there is the "Guardian Ad Litem" (GAL) who's job is to interview all the interested parties, look at the totality of the circumstances and inform the Court what she thinks would be in the respondent's best interests. 

Of course, what the respondent wants may be quite different from what is in his best interests.  But, unlike the attorney, the GAL does not advocate for anyone's position.  The role of the GAL is to provide the Court with a detached, impartial perspective on the situation.  The Judge can find the GAL's report and testimony invaluable in difficult cases.  This type of person does not get involved in most conservatorship proceedings, but incorporating such a person into the matter can have a dramatic impact on the outcome.

Finally, we can't forget the Judge.  Not only does he make the critical decision as to whether a conservator is necessary, but the Judge also plays an important ongoing role in the conservatorship.  Although a conservator will make day-to-day decisions for the incpacitated person, she is always accountable to the Judge.  It is sort of like an employer-employee relationship, with the conservator acting as the employee who needs to answer to the boss, or the Judge.

Who's Who in a CT Conservatorship Proceeding? (Part 1 of 3)

When a conservatorship proceeding is initiated in the local probate court, it's often an unpleasant, or at least an awkward affair.  It can also be a rather confusing affair for the uninitiated, so the purpose of this three-part blog is to explain the different roles involved in this unique legal matter.

When a conservatorship application is submitted to the local probate court, someone (the "petitioner") is claiming to the Court that the person in question (the "respondent") has lost the capacity to manage his own personal and/or financial affairs.  If the Court agrees with the petitioner then a "conservator" is appointed to take over some or all of the respondent's affairs.  This is obviously a serious matter because such an action essentially takes away many of the respondent's civil rights.  So the laws establish safeguards to ensure that appointing a conservator is the right thing to do in under the circumstances.

First of all, the Court will appoint an attorney to represent the respondent.  This is assuming that the respondent does not have the ability to go out and find his own attorney the way an average person would (looking through the Yellow Pages, asking friends for referrals, etc.).  The attorney is required to treat the respondent like any client that walked into her office off the street.  That is to say that she can counsel the client on how to proceed (assuming she is able to effectively communicate with the respondent), but ultimately the attorney must ascertain what the respondent's position is in regards to the conservatorship; does the respondent agree that he needs a conservator or is he objecting to the conservatorship application?  Or something in between? 

But once the attorney learns the respondent's position, she needs to advocate for that position in court.  This is where it can get awkward for the attorney, because no matter how irrational or unreasonable the respondent's position is, the attorney is still obligated to advocate for that position. 

How Much Does Probate Court Cost in Connecticut?

One of the most common questions my clients ask, particularly when we have a discussion about revocable living trusts, is how much Probate Court is going to cost upon death.  The Connecticut Probate Courts apply a formula to your gross taxable estate to determine what the Court is owed, and they will not issue all the decrees and other documents you will need to close out the estate until the Court's fee is actually paid. 

Unfortunately, it's not a flat percentage.  Fortunately, most of my clients tell me that the fee turns out to be much less than they had anticipated.  Here is the calculation you need to make:  it's $150 for the first $10,000 of the gross taxable estate, plus another .35% of anything between $10,000 and $500,000, then an additional $.25% of anything over $500,000.  For example, if your gross taxable estate is $500,000, then the bill for the Probate Court will be $1,865.

But don't forget that your gross taxable estate includes all life insurance proceeds and the equity in your real estate.  Most clients are not aware of the fact that life insurance is part of the calculation and they tend to forget about the home equity, so most clients have estates that are larger than they thought.

One other thing that is worth mentioning here has to do with revocable living trusts.  Living trusts are very good at avoiding the probate process, but they will not allow you to avoid probate costs.  In other words, if you have a living trust and it is fully funded, you will avoid the hassle of having to prepare and file several documents with the Court, you will not have to attend Court hearings and you shouldn't have to hire an attorney to guide you through the process.  But before the Court will issue all the documents that you will need (for example, a document to formally remove a decedent's name from a deed on the land records), it's going to send you a bill based on the calculation in the previous paragraph, even if you did not go through the formal, full-blown probate process.  This is probably the singlemost common misunderstanding when clients create living trusts, so you should take this fact into consideration while you are trying to decide between making a Will or a Living Trust the centerpiece of your estate plan.

Posts on revocable living trusts and the estate tax (a separate issue from probate costs) will appear here in the future.