Please review 6 Easy Steps to Open an Estate in Connecticut.
1) Post a Probate Bond
Unless the will specifically indicates a bond is not required, the executor will need to get a Probate Bond. The coverage and insurance premium will be based on the expected size of the estate. The executor may have to front the money to get the bond as the estate checking account may not have been open yet.
2) Gather the Assets
The executor will need to gather the assets of the decedent. A review of the prior income tax returns is a good place to start.
3) Pay the Creditors
The decedent’s creditors will need to be paid. The executor will open an estate checking account. Creditors could include the mortgage holder, credit card bills, medical expenses and other miscellaneous items.
4) File the Income Tax Returns
There will need to be a final Individual Income Tax Return, Form 1040, filed. Additionally there may be an Estate Tax Return, Form 1041, to be filed. The 1041 will need to be filed every year the estate is open and has more than $600 for gross income. If the fair market value of the assets at the date of death exceeded $5,120,000, a Federal Estate Tax Return, Form 706 would need to be filed. All Connecticut estates must file an estate tax return. If the Connecticut assets exceed $2 million there is a taxable estate and Form CT-706 needs to be filed. If it is a non-taxable estate, Form CT-706-NT will need to be filed. The CT-706-NT is actually filed with the Probate Court, not the Connecticut Department of Revenue Services.
5) Report to Probate Court
The Probate Court will require filings while the estate is open. These filings will report the income and expenses of the estate. Additionally, the assets of the estate will also be detailed.
6) Make Distributions to the Beneficiaries
Distributions will be made to the beneficiaries identified in the will. While an executor may be able to make interim or preliminary distributions, it is usually best to wait.
7) Close the Estate
To close an estate, the final report to Probate Court and the final tax returns will need to be filed. Additionally final distributions to the beneficiaries will need to be made. It is recommended that the executor maintain a modest reserve for a short period of time. This may be used for any unexpected expenses that may come up.
If Form 56, Notification of Fiduciary Relationship, was filed when the estate was opened, it should be filed again notifying the IRS that the relationship has terminated.
ACTION ITEM: Executors should take these 7 Easy Steps to Manage an Estate in Connecticut.
Please give us a call if you need help with an Estate in Connecticut.
Thomas F. Scanlon, CPA, CFP®
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
