2019 Developments in Connecticut Estate and Probate Law
| Publication year | 2021 |
| Pages | 379 |
BY JEFFREY A. COOPER,[*] JOHN R. IVIMEY [**] AND KATHERINE E. MULRY [***]
This Article provides a summary of recent developments affecting Connecticut estate planning and probate practice. Part I discusses 2019 legislative developments. Part II surveys selected 2019 case law relevant to the field.
I. LEGISLATION [1]
A. Estate Taxation for Nonresidents with Interests in Pass-through Entities[2]
Public Act 19-186 amends General Statutes Section 12-391(e)(2) which governs the estate taxation of nonresident decedents.[3] The Act provides that nonresident decedents who own real property or tangible personal property in a pass-through entity, including partnerships, S corporations, single member LLCs and multi-members LLCs, will be subject to Connecticut estate tax under specified circumstances.[4] Under the new law, the pass-through entity will be disregarded and the underlying property will be considered owned by the nonresident decedent proportionate to his or her interest in the entity if any of the following apply:
(1) The entity did not carry on a business for proft or gain;
(2) The entity did not own the property for a valid business purpose; or
(3) The property was not acquired through a bona fde sale for full and adequate consideration and the decedent retained any power with respect to or any interest in the property that would bring the real property or tangible personal property located in the state within the decedent’s federal gross estate.[5]
B. Adoption of the Connecticut Uniform Trust Code[6]
Public Act 19-137 enacted the Connecticut Uniform Trust Code effective January 1, 2020. The Connecticut Uniform Trust Code codifes and expands existing trust law and sets forth a framework for establishing directed trusts and domestic self-settled asset protection trusts.[7] While certainly a major change in law, the Connecticut Uniform Trust Code has been adequately covered in other publications and pre-sentations.[8] Accordingly this article will not address the spe-cifcs of the new law.
C. Electronic Probate Filing[9]
Public Act 19-47 establishes the framework for electronic
fling and delivery of probate documents and for electronic payment of court fees and expenses.[10]
The Act changes the timeframe for fling a probate appeal to account for electronic flings. The appeal period is now calculated from the later of the date on which the court mailed the order, denial or decree appealed from, or the date on which the court electronically transmitted that order, denial or decree.[11]
The Act also changes the fling fees from $225 to $250 for motions, petitions or applications in probate matters except for decedent’s estates.[12]
ii. Case law
A. Wills and Trusts
1. In Terrorem Clause
In Salce v. Cardello,[13] the superior court found that neither party had violated the in terrorem clause contained in their mother’s estate planning documents.
The case began when the defendant, a benefciary under a will and trust, noted some potential errors in the estate’s CT-706 estate tax return.[14] The fduciary refused to amend the estate tax return unless instructed to do so by the probate court, so the defendant requested a probate court hearing on the matter.[15] The plaintiff, also a benefciary under the will and trust, claimed that the defendant’s request for a hearing violated in terrorem clauses contained in those documents, which operated to disinherit any benefciary who “objects in any manner to any action taken or proposed to be taken in good faith” by a fduciary.[16] The defendant fled a counterclaim against the plaintiff alleging that he had violated the
in terrorem clauses.[17] The probate court found that neither party violated the in terrorem clauses.[18]
After a trial de novo, the superior court looked to a 1917 Connecticut Supreme Court case, South Norwalk Trust Co. v. St. John, where the Court held that in terrorem clauses are generally enforceable but will not operate against a ben-efciary who acts “in good faith and upon probable cause and reasonable justifcation.”[19] Applying this standard to the case before it, the court held that neither benefciary had violated the in terrrorem clause.[20]
The case provides a useful overview of the law governing the enforceability of in terrorem clauses, reminding both planners and litigators that while such clauses are viable in Connecticut they will be strictly construed so as to deter meritless litigation but not that brought in good faith.
B. Estate and Trust Administration
1. Domicile
In Owens v. Owens,[21] the superior court found that a decedent remained domiciled in the probate court district in which he had long maintained his primary home even though he died a resident of a different district.
The plaintiff, the decedent’s daughter, appealed a decree of the Litchfeld Hills probate court appointing her brother as administrator of her father’s estate, alleging that her father had not been domiciled in that district.[22] She instead contended that her father had been domiciled in Essex, where, in the summer prior to his death, the decedent and his sig-nifcant other had moved into a rental apartment.[23] The decedent had also rented a small commercial space in Essex.[24]
The defendant contended that his father had been domiciled in North Canaan, where he owned a home.[25] For many years prior to his move to Essex the decedent had spent his nights either in that house or in his signifcant other’s home in neighboring Salisbury.[26] He continued to own that home until his death, had much of his personal property there, and would return there at least once per week until he became too ill to do so.[27]
The superior court undertook a detailed analysis of governing precedent differentiating domicile from mere residence, the former of which requires evidence that the decedent has the “intention of permanently remaining” in his or her current location.[28] Accordingly, the court reasoned, a person’s domicile is not changed by a mere change of residence with intent to return to the prior domicile.[29] Applying this defnition, the court determined that the decedent continued to view North Canaan as his permanent home and hoped to return there, even after he began to spend the bulk of his time in Essex.[30] Accordingly, North Canaan remained his domicile until the time of his death.[31]
The case presents the common fact pattern of an aging person relocating to be closer to family members or obtain health care. The court’s analysis provides a useful roadmap for resolving questions of domicile in such cases.
2. Probate of Lost Will
In Williams v. Williams,[32] the superior court allowed a will to be admitted to probate even though the signed original could not be found.
When a decedent died at age 80, her original will could not be located.[33] In the weeks prior to her death, the dece-[
25
] Iddent had unsuccessfully attempted to locate her original will in her house.[34] She also repeatedly telephoned her attorney during this period, asking for his help in locating the will and reaffrming her intent that it remain valid.[35]
In considering the above facts, the court began its analysis by noting that Connecticut follows the common law rule that a will that cannot be found is presumed to be revoked.[36]The burden rests on the proponents of the will to rebut the presumption of its revocation and prove its provisions.[37]
Proponents of the decedent’s will produced a photocopy of the will and brought forth evidence of the decedent’s conversations with her attorney and her insistence that her will was located somewhere in her house.[38] The superior court found that evidence suffcient to overcome the presumption of revocation and admitted the will to probate.[39]
While the facts of the case were unusually favorable insofar as the decedent had such extensive conversations with her attorney soon before her death, the case nevertheless provides a helpful summary of the law governing the admission of a lost will.
3. Prudent Investor
In Tatoian v. Tyler,[40] the Appellate Court held that a trustee was not liable under the state’s prudent investor regime for investment losses incurred by a trust. Two aspects of the Court’s opinion deserve further consideration.
The underlying dispute concerned a trust funded in large part with the common stock of a publicly-traded company.[41]Among multiple causes of action, the trust benefciaries sued the trustee for failing to properly diversify those investment assets.[42] The trustee successfully moved to dismiss that
count, contending that the governing document had negated the default duty to diversify.[43] On appeal, the Appellate
Court affrmed.[44]
In affrming, the Appellate Court opined in two crucial areas. First, the Court agreed with the superior court’s fnding that language in the governing trust, which authorized the trustees to “continue to hold any stocks, securities or other property received by them… without any duty of diversifca-tion,” had effectively negated the default duty to diversify found in General Statutes Section 45a-541c.[45] While other authorities have questioned whether such seemingly boilerplate language is suffcient to negate the default duty to diversify,[46] the superior court found this “clear and unambiguous language” to negate the default duty as a matter of law,[47] and the Appellate Court affrmed without delving into
the issue.[48]
Second, the Court left standing the superior court’s analysis that General Statutes Section 45a-204, which facially allows a trustee to retain all inception assets without liability for loss, is actually subject to a “reasonable prudence” standard.[49] As the superior court noted, “this reasonableness standard is not evident from the...
To continue reading
Request your trial