Cost of settling estates rising as states hunt for more revenue

Cost of settling estates rising as states hunt for more revenue
Connecticut tops the nation in probate fees — latest example of removing caps to fund courts.
JUL 08, 2015
Thanks to the recession in 2008, your clients may be paying higher probate fees in the years to come. Meager state coffers resulting from shrunken tax revenue have meant lawmakers around the country have had to cut state spending for education, public safety and, yes, the courts. “Effectively, probate court fees have gone up or will go up in every state because of the Great Recession,” said Bill Raftery, an analyst with the National Center for State Courts. “Legislators have had to push up fees to keep these courthouse doors open.” Connecticut is the latest state to boost the cost of settling estates in order to make up for a lack of funding — and the increase is pretty spectacular. New probate court fees that took effect July 1 eliminated a $12,500 cap and set fees for estates worth $2 million or more at 0.5%. Smaller estates pay lower fees. The new fees apply to deaths after Jan. 1, 2015. Therefore, a $10 million estate last year would have paid $12,500, but this year that same estate will owe $50,000. (More: Joan Rivers' estate planning gambit: A New York state of residence) A large majority of Connecticut estates are under $2 million, though in 2014 it settled an estate worth over $1 billion, said Vincent Russo, the spokesman for the state probate court system. Mr. Russo surveyed the 50 states and found Connecticut now imposes the highest probate fees in the nation. The closest are New Jersey and North Carolina, which both charge 0.4%, but North Carolina caps the fee at $6,000. Mr. Raftery said it's not just probate court fees that have risen. Many other state court fees also have increased to pay more operating costs. “There's a lot of pressure on the courts to generate their own revenue,” he said. No funds were appropriated for Connecticut's probate courts system for the next two years under the most recent budget passed by the legislature and signed by Gov. Dannel Malloy. State law dictates the fees probate courts can charge estates seeking settlement. Many other costs are typically associated with probate, including paying for lawyers and accountants. These fees also are separate from state estate taxes that most states charge based on the value of the estate.

Latest News

Texas man says SEC and fund could make him pay twice
Texas man says SEC and fund could make him pay twice

A $141M judgment and a federal asset freeze collide over one shrinking pool

Osaic executives Kristy Britt and Greg Cornick to leave
Osaic executives Kristy Britt and Greg Cornick to leave

The firm's CFO and EVP of Wealth Management Solutions are the latest executives to exit the broker-dealer.

Estate planning becomes a client retention issue for financial advisors, survey finds
Estate planning becomes a client retention issue for financial advisors, survey finds

Clients are saying they would consider switching advisors if another professional offered estate planning services, according to a new Trust & Will survey.

Candidly adds AI agents for Trump Accounts, workplace benefits
Candidly adds AI agents for Trump Accounts, workplace benefits

CEO Laurel Taylor says the fintech's composable AI stack helps workers optimize dollars across Trump Accounts, 529s, 401(k)s, and other employee benefits.

BMO adds three advisors in Dallas amid Y'all Street wealth boom
BMO adds three advisors in Dallas amid Y'all Street wealth boom

The bank has swiped three private banking veterans from BNY as the city climbs the ranks of America's fastest-growing wealth hubs.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.