New probate fees in Connecticut have made it the most expensive place to die, making some wealthy residents wonder if they can afford to live there. Last week the state started sending out bills to some unsuspecting relatives of recently deceased for as much as $1 million, because of a new probate fee structure that doubled the assessment rate and eliminated a $12,500 cap, making it punitively expensive to die as one of its residents. Will and estate attorneys say the state is now requiring its wealthiest residents to fund its probate court system, after budget cuts pulled all funding. Governor Dannel Malloy's office did not return calls for comment.
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According to Vincent Russo, a spokesman for the state probate court system, due to “a difficult budget year,” the state legislature was forced to cut all funding to the probate court system. Previously, the state provided about one-third of the probate court budget, and fees made up the rest.
According to Judge Paul Knierim, Connecticut’s probate court administrator, there was “precious little warning” to residents or to estate planning attorneys of the new fee. “It became evident that fee increases were a possibility at the end of May and in June,” he said. The new fees are the highest in the nation, and were effective July 1 -- and retroactive for anyone who passed away as of January 1.
The state legislature doubled its probate fees to .05%, for those worth $2 million or more, and eliminated a $12,500 cap. And in Connecticut, life insurance proceeds are included in the estate, so the hefty new fee will apply to the value of one’s life insurance policy too. “The biggest surprise was that it was retroactive,” said Jim Dougherty, an estate attorney based in Greenwich, Connecticut. Since the first bills were mailed out last Thursday, many residents are still unaware of the new “death tax.” And since it’s retroactive to January 1, there was no way for estate attorneys to prepare their clients for the fees. “People are generally unaware of statutory probate fees to begin with, so this will have an even greater impact,” said Michelle Lee Beltrano, an estate attorney based in Greenwich, Connecticut. Dougherty said the new fee is enough to cause some residents to consider leaving the state. “For every $10 million in assets, there will be an additional $50,000 in probate fees,” he said. “It’s definitely another factor.” “Attorneys are becoming deeply concerned about the fairness of the fee and the prospect that people will leave the state,” Knierim said.
Knierim said approximately 700 estates fall into the affected category each year, representing approximately .02% of Connecticut’s population. “It’s not fair to impose such a burden on a very small segment of the population,” he said, adding that if the fee were applied to last year’s estates, there would have been two $200 million estates that would have owed $1 million probate fees, compared to the $12,500 charged before the fee increase.
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