Estate tax returns can be complex, but as a surviving spouse, you may have specific requirements. Learn what you need to know about filing an estate tax return in this article.
False Facts Friday Issue 3: “My dearly-departed spouse and I owned everything jointly, so there is no need for me to file any papers with the Probate Court.”
Does Owning Assets Jointly with Your Spouse Avoid Probate?
Most people want to “avoid probate.” Sometimes when a couple hears that if they own all of their assets jointly they will be able to avoid probate, thinking that nothing has to be done when their spouse passes away, from a legal standpoint, especially if they already have a will.
This is not true In Connecticut – when someone passes away, you have to file an Estate Tax Return!
This is true if the person owned assets in his or her own name, or owned all of his or her assets jointly with their spouse or someone else. Now before you start cursing Connecticut (a state I happen to love), let’s go through what this means and the reason behind it.
Will You Owe Taxes On Your Spouse’s Estate?
Currently, the estate tax exemption in Connecticut is $12.92 million per person. So although an Estate Tax Return must be filed for every decedent, tax is due from very few estates.
And even if the decedent’s assets exceeded $12,920,000, there is an unlimited marital deduction, so if all of the assets pass to the decedent’s spouse, there is no tax due, no matter the value of the estate.
Why Do You Have To File The Estate Tax Return?
The filing of the Estate Tax Return ensures that the proper tax, if any, is paid. It is also how title to real estate is passed from two joint owners to the sole survivor.
Most couples own their home in joint tenancy with rights of survivorship. This means that the property passes by law to the surviving spouse upon the first spouse’s passing without the need for probate administration, which leads to this confusion.
How Do The Land Records Get Updated?
If the surviving spouse attempts to sell the property, they will have trouble because the land records show that the home is owned by two people. The buyers’ attorney will be looking for a deed signed by both spouses.
To ensure that the land records properly reflect that the surviving spouse is now the sole owner, an Estate Tax Return has to be filed with the Probate Court. The Probate Court then reviews the Return to determine if the estate owes any tax.
Then it issues an invoice based on the value of the estate (for example, an estate of $250,000 that passes entirely to a surviving spouse would owe a fee of approximately $550) and once that invoice is paid, the Court issues a Certificate that can be recorded on the land records.
This Certificate effectively removes the deceased spouse’s name from the land records, allowing the surviving spouse to sell or refinance the home individually.
We Can Help!
The attorneys and staff at RWC, LLC, Attorneys and Counselors at Law are experienced in assisting families of decedents through all aspects of probate, including completing and filing Estate Tax Returns. Please contact us at (860) 669-1222 to schedule a consultation if you think you or someone you know may need to file documentation regarding a deceased family member.
Disclaimer: each state has different laws regarding these types of proceedings. Since we are located in Connecticut, we will be discussing state-specific regulations. That’s not to say that the laws may be the same or similar, do your due diligence in checking your own state’s laws.
Joan Reed Wilson Esq. – Managing Partner
Practices in the areas of estate planning, elder law, Medicaid planning, conservatorships, probate and trust administration, and real estate. Admitted to practice in the States of Connecticut and California, she is the President of the CT Chapter of the National Academy of Elder Law Attorneys (NAELA), an active member of the Elder Law Section of the Connecticut Bar Association, accredited with the PLAN of CT for Pooled Trusts, with the Veteran’s Administration to assist clients with obtaining Aid & Attendance benefits for long-term care needs and with the Agency on Aging’s CareLink Network.