2017 Developments in Connecticut Estate and Probate Law
| Publication year | 2021 |
| Pages | 154 |
By Jeffrey A. Cooper [*] and John R. Ivimey [**]
This Article provides a summary of recent developments affecting Connecticut estate planning and probate practice. Part I discusses 2017 legislative developments. Part II surveys selected 2017 case law relevant to the field.
I. Legislation[1]
A. Conservatorship Accountability.[2]
Public Act 17-7 authorizes the Probate Court Administrator to randomly pick conservator accounts for audit by an independent auditor in a manner designed to detect and deter fiduciary malfeasance.[3] The Administrator must select accounts that have not been already approved by the Probate Court.[4] The auditor has 90 days to complete the audit and submit a written report to the Probate Court.[5]The audit report is admissible into evidence, and an interested party may call the auditor as a witness.[6] The auditor is paid by the Probate Court Administrator's office.[7]
In addition, the Act directs the Probate Court Administrator, in consultation with the Probate Assembly, to adopt standards of practice for court-appointed conservators intended to guide them in the performance of their duties.[8] While the court may consider evidence of a conservator’s failure to follow the standards when determining whether a conservator has breached a fiduciary duty, a failure to follow the standards will not automatically be a bre ach of fiduciary duty.[9]
B. State-Wide Adoption of the Medical Orders for Life-Sustaining Treatment Program.[10]
Public Act 17-70 requires the Commissioner of Public Health to establish a statewide program to implement the use of a medical order for life-sustaining treatment ("MOLST") by health care professionals.[11] Patients are to participate in the program voluntarily.[12] A patient or the patient's legally authorized representative can put in place her or his preference regarding life-sustaining treatment when the patient has been determined to be approaching the end stage of a serious, life-limiting illness or is in a condition of advanced, chronic progressive frailty.[13] This determination can be made by a physician or an advanced practice registered nurse.[14]The MOLST can be written by a physician, advanced practice registered nurse or physician assistant.[15] The Act expands upon a pilot program previously in place in several areas of the state.[16]
C Connecticut Uniform Recognition of Substitute Decision-Making Documents Act and Revising the Connecticut Uniform Power of Attorney Act.[17]
Public Act 17-91 makes changes in two related areas of law.
First, the Act adopts the Connecticut Uniform Recognition of Substitute Decision-Making Documents Act.[18] As a result, substitute decision-making documents (such as powers of attorney and appointments of health care representatives) properly executed in other jurisdictions are valid in Connecticut.[19] The meaning and effect of a substituted decision-making document is determined by the law of the jurisdiction indicated in the document or, if none, the jurisdiction in which the document was executed.[20]
Under the Act, a person who is asked to accept a substitute decision-making document has to do so within a reasonable time if the document meets the validity requirements.[21]The person may not require the principal to produce a different form of document.[22] However, the person is not required to accept the document if:
1. The person would not be required to act if the principal had made the request directly;
2. The person has actual knowledge of the termination of the decision maker's authority or the substitute decision-making document;
3. The person's request for a statement of fact, a translation of the document, or an opinion of counsel in accordance with the Act is refused;
4. The person believes in good faith that the document is not valid or the decision maker does not have authority to request a particular transaction; or
5. The person makes or has actual knowledge of a report to an appropriate agency that the principal is subject to abuse, neglect, exploitation or abandonment by the decision maker[23]
A person who refuses to accept a substitute decisionmaking document in violation of the law is subject to a court order mandating its acceptance, and may be liable for reasonable attorney's fees and costs incurred in connection with any action mandating acceptance.[24]
Section 11 of this Act also revises several sections of the Uniform Power of Attorney Act. As under prior law, a principal may only grant certain powers by express grant of such authority in the power of attorney.[25] The Act adds two new powers to this list of powers that require an express grant of authority:
1. An agent's authority over the principal's digital devices, digital assets, user accounts and electronically stored information; and
2. An agent's authority over the principal's intellectual property interests, including copyrights, royalties and trademarks.[26]
The Act also amends Connecticut's statutory forms of powers of attorney to clarify that an agent needs express authority in a power of attorney to take any action that directly benefits the agent or a dependent of the agent.[27]
In addition, the Act changes the interrelationship between powers of attorney and conservatorships. Previously, the Probate Court was authorized to reinstate the authority of any agent under a power of attorney that the court previously limited or suspended when appointing a conservator. The Act now requires the court to reinstate the agent's authority unless it finds that doing so is not in the conserved person's best interest.[28]
D. Changes to the Estate and Gift Tax.[29]
Public Act 17-2 increased the state estate and gift tax exemption over three years, beginning in 2018. The Act provides for a $2,600,000 exemption for those dying in 2018 and a $3,600,000 exemption for those dying in 2019. The Act also provides for the state exemption to match the federal exemption for those dying in 2020 and thereafter, but two subsequent pieces of legislation have left this result in doubt.[30] While it appears that the state estate tax exemption will increase to at least $5,100,000 in 2020 and thereafter, we expect future legislative action will be necessary to clarify the situation.
Despite the legislative confusion, Connecticut joins the national trend of states eliminating their state estate taxes or increasing their exemptions.[31] While reducing direct estate tax revenues, a higher state estate tax exemption may lessen the likelihood of wealthy retirees relocating elsewhere and reduces the number of estate tax returns filed annually, thus achieving significant administrative savings for both taxpayers and the government.[32]
II. Case Law
A. State Estate Taxation
In Brooks v. Commissioner,[33] the Connecticut Supreme Court discussed the question of whether a marital trust established out of state was includable for Connecticut estate tax purposes when the beneficiary died a Connecticut domiciliary. The Court ruled that the trust was includable in the estate.
The underlying facts concern a woman whose husband had died while a domiciliary of Florida.[34] The husband established and funded a trust for the wife’s benefit, and his executors elected to qualify the trust for the estate tax marital deduction as a Qualified Terminal Interest Property (“QTIP”) trust.[35] Defying typical migration patterns, the wife relocated to Connecticut after her husband’s death and died a domiciliary of this state.[36] The plaintiffs, executors of the wife’s estate, omitted the value of the QTIP trust from her Connecticut estate tax return, contending that since the trust had not been qualified for a Connecticut marital deduction at her husband’s death, it did not need to be included in the wife’s estate for Connecticut tax purposes.[37] The defendant, the Department of Revenue Services, disagreed, and the case worked its way to the Supreme Court.[38] The Supreme Court sided with the Department of Revenue Services.[39]
In reaching its holding that the QTIP trust was includable for Connecticut estate tax purposes, the Supreme Court undertook a detailed review of the estate tax regime under both federal and Connecticut law.
The Court began with an analysis of the federal estate implications of the QTIP election, concluding that upon the wife's death, a "fictional transfer" of the trust corpus occurred from the wife to the remainder beneficiaries.[40] Accordingly, the assets of the QTIP trust were thus properly includable in the wife's estate for federal estate tax purposes.[41]
The Court then turned to the language of Connecticut's estate tax statutes and observed that Connecticut General Statutes § 12-391(c)(3) provides that the gross estate for Connecticut purposes "is the same as the gross estate for federal estate tax purposes."[42] The Court held that the meaning of this statute was plain and unambiguous, requiring that "if assets are included in a decedent's federal gross estate, they are included in his or her state gross estate as well."[43] In Brooks, this resulted in inclusion of the QTIP assets.
While the Court's analysis of the applicable statutes seems straightforward enough, it does raise a policy concern. One might rightly view a QTIP election as a bargain made with the taxing authorities to defer tax otherwise due at the first death until the surviving spouse's subsequent death.[44] Viewed from that perspective, it might seem improper for Connecticut to now benefit from a bargain struck with the state of Florida.[45] Indeed, we wonder if the Commissioner would have proffered the same "plain meaning" arguments had the facts been reversed and at issue was the more common scenario where the first spouse dies in Connecticut and the survivor, the beneficiary...
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