67 CBJ 126. Connecticut Probate Law 1992.

• Author: By MARK F. KOFWER (fn*)

Connecticut Bar Journal

Volume 67.

67 CBJ 126.

Connecticut Probate Law 1992

126Connecticut Probate Law 1992By MARK F. KOFWER (fn*)I. LEGISLATION

1. Probate Court B. Powers of Appointment C. Gift Tax D. Medicaid/Medicare Assistance E. Miscellaneous Statutes II. CASES

1. Wills and Trusts B. Probate Court C. Conservators D. Actions By and Against Estates and Executors E. Intestacy I. LEGISLATION

   Several 1992 legislative initiatives resulted in additions or amendments to the General Statutes that are of interest to trust and estate practitioners.

1. Probate Court

   Public Act 92-46 provides that the reasonable compensation of a conservator shall be paid from the Probate Court Administration Fund whenever a ward is unable to pay for such services. (fn1) Payment shall be made pursuant to the rules and regulations and at the rates established by the Probate Court Administrator. This Act also requires that any Probate Court waiving fees of any applicant or petitioner must be reimbursed from the Fund pursuant to rules and regulations established by the Administrator. (fn2)

   Public Act 92-118 makes several technical revisions to the probate statutes. (fn3) This Act amends CONN. GEN. STAT. § 52-192 to give precedence to certain civil matters over most other actions pending in Superior Court. (fn4) Actions brought by or against (1) executors or administrators of estates, (2) conservators of the estates of incapable persons, and (3) guardians of the estates of

   127 minors now have precedence over ordinary civil matters, as do several other types of actions previously accorded such status, such as appeals from probate and appeals from actions of commissioners appointed by the Probate Courts. (fn5)

   Public Act 92-118 also specifies that in cases involving the termination of parental rights of indigent parents before the Probate Court (as opposed to the Superior Court), reasonable compensation of counsel must be established by the Probate Court Administrator and paid from the Probate Court Administration Fund. (fn6) This Act also requires the Court to provide notice to a minor who is twelve years old or older, rather than fourteen years or older, of a hearing on the reinstatement of a parent as guardian of the minor. (fn7) This change makes the notice requirement for reinstatement consistent with the notice requirement for the removal of a parent as guardian.

2. Powers of Appointment

   Public Act 92-73 makes clear that the donee of a power of appointment to anyone other than his or her estate shall not have the power to appoint property to his or her estate, himself or herself, his or her creditors or his or her estate's creditors. (fn8) This Act applies to wills and trusts executed before as well as after the effective date of October 1, 1992 unless (1) a court has entered an order directing distribution of the estate before the effective date of this Act or (2) a contrary intention of the donor has been demonstrated by clear and convincing evidence in the power of appointment or otherwise. (fn9)

   Public Act 92-73 also provides that no fiduciary, distributee or appointee shall be liable for any action taken or benefit received before the effective date of this Act which concerns the construction of a power to appoint property to anyone other than the estate of the donee, provided the action was taken or the benefit was received in good faith. (fn10)

3. Gift Tax

   Public Act 92-5 from the May Special Session makes several changes to the Connecticut gift tax regime. (fn11) A penalty of 10%

   128of the tax due or $50, whichever is greater, is established for failure to pay the gift tax. (fn12) This Act also imposes an interest rate of 1.25% on the unpaid tax for each month or part of a month the tax remains unpaid after the due date. (fn13) This Act permits the Commissioner to extend the gift tax filing and payment deadline for a showing of good cause. (fn14) However, even with an extension, the taxpayer must pay the 1.25% monthly interest until the full tax is paid. (fn15)

   The Commissioner is also now required to notify the taxpayer within a reasonable time if the Commissioner finds the taxpayer is liable for additional gift tax. (fn16) Any taxpayer who files an amended federal gift tax return must file within the next ninety days an amended Connecticut gift tax return. (fn17) If the Internal Revenue Service changes for federal purposes the amount of a taxpayer's taxable gifts, then the taxpayer must report that change to the Commissioner within ninety days after the final federal determination. (fn18)

4. Medicaid/Medicare Assistance

   In 1992, the General Assembly enacted several statutes that affect participation in the Medicare/Medicaid program. Public Act 92-79 increases the State's ability to recoup money from legally liable relatives by authorizing the Commissioner of Administrative Services to calculate the relative's contribution from additional financial sources, including wage, salary and commission information obtained from any such relative's employer. (fn19) Additionally, this Act requires the Commissioner of the Department of Income Maintenance to seek a federal waiver in order to reduce long-term care Medicaid costs to the State. (fn20) The waiver request must include an extension up to sixty months of the thirty-month look-back period relating to transfers of assets at less than fair market value. (fn21) Generally, federal law prohibits institutionalized applicants and recipients of Medicaid from transferring assets for less than fair market value within

   129 thirty months of their application for assistance. Whether the length of the look-back may be modified without legislation is unclear.

   Public Act 92-233 imposes a significant and perhaps controversial change in the law of trusts. (fn22) This Act requires the Superior Court to terminate certain inter vivos trusts established by or on behalf of a person or his or her spouse who has applied for or is receiving public or medical assistance, where the settlor or spouse is a beneficiary of the trust. (fn23) The corpus of the terminated trust must be returned to the settlor, thereby allowing the Department of Income Maintenance to consider the trust corpus when making eligibility determinations. (fn24)

   Before Public Act 92-233, amounts held in such trusts were not available to satisfy the cost of the care of such persons, and the Department of Income Maintenance could not consider such amounts in making eligibility determinations. This change in the law raises serious policy questions and conflicts with applicable federal law, which generally permits settlors to retain an income interest in trusts without including, for purposes of the eligibility determination, principal in which the settlor has no interest. Moreover, by returning principal to the settlor's estate, the outright termination of the trust in some cases will upset carefully considered estate plans of the settlor where the needs of the Department of Income Maintenance could be satisfied by less drastic measures.

   Public Act 92-233 also amends CONN. GEN. STAT. § 17-134b to clarify that in making Medicaid eligibility determinations, the Department of Income Maintenance must include in its consideration dispositions of property made on behalf of an applicant or recipient or his or her spouse by a guardian, conservator, person acting under a power of attorney or other person authorized by law. (fn25) Dispositions of property made pursuant to a court order must be evaluated in accordance with the standards applied to any other disposition. This Act also limits the amount of net income or property of a ward that may be distributed by a conservator to the ward's spouse where the ward is institutionalized and is receiving or has applied for Medicaid assistance. (fn26)

   130E. Miscellaneous Statutes

   Public Act 92-168 concerns the amount of benefits allowed in an irrevocable funeral contract. (fn27) This Act increases the maximum allowable amount of an irrevocable funeral contract for Medicaid eligibility purposes from three to four times the highest amount the State pays for public assistance recipients' burial. The public assistance burial allowance in Connecticut is $1,200, so this Act increases the irrevocable funeral contract amount from $3,600 to $4,800.

   2. CASES

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