It has long been my practice to send executors and administrators of estates numbered letters preparing them for the different stages of the probate process. Letter 1 would be about setting up the estate, Letter 2 about documenting and caring for the estate’s assets, and so on. But I have realized over time that probate has a few quirks no reasonable person could be expected to know, and also that many mistakes are made before the probate court even opens an estate. On top of that, it can be easy to get into probate without understanding where a lawyer’s time goes, or the mindset and approach you should take to make the estate go smoothly and close on time. After all, most people know that they should tally their prescription bills and charitable donations before they see their tax preparer, if they want to be cost effective, but you’d be forgiven for not realizing that probate works the exact same way.

In short, Letter 1 is too late a starting point. There ought to be a Letter Zero, and I’m sharing my first crack at it here. The four points below contain some simple pitfalls that befall most estates and some bigger picture items that are important to understand to get through the process with your sanity and wallet as intact as possible. I hope they can help you at this difficult time.

#1 – Life insurance does matter for probate.

Life insurance is famously free from taxes and equally free from probate; a fact insurance advertisers like to make sure you know. Nonetheless, life insurance is related to what you need to do as representative of a New Haven County estate, in a couple of ways you may not be expecting, and are important to know now.

First, if you or anyone close to you is filing a life insurance claim, it is imperative that the person request that an IRS Form 712 be issued with their check when they send in the claim paperwork. As of 2022, Connecticut probate courts require executors and administrators to provide these to the court with an informational tax filing.However, they can be somewhat difficult to get if they aren’t requested with the claim, and the claims are often made before a probate case is even filed. I list life insurance #1 because it is so important that families know about this requirement.

Second, while it is common for loved ones to use insurance money to pay for the funeral or other bills, most clients do not realize that the recipient is entitled to be reimbursed from the estate. In most cases, these payments are treated as loans to the estate, rather than gifts to the deceased, and funeral and burial costs in particular are the very first thing an estate is required to cover from the assets available. This is true even if the policy was sold or branded as a final expense policy; if the funeral home was paid directly by the insurance company, or the insured publicly instructed the beneficiary to use that money to pay certain expenses. While the beneficiary can always refuse reimbursement, it is very rare for insured people to properly document that reimbursement should not be made, even if that is what they intended.

#2 – Half of probate is bookkeeping.

When you are preparing to probate a loved one’s estate, most people’s thoughts turn to the logistics: When can we all get together to decide who wants what from the house? Should I clean it out myself or hire someone.[1] Should I trade in the car or list it online? When will I have access to the money to pay these bills? What you may not realize is that what your attorney and the court are focused on (read: the thing that costs you money) is the bookkeeping.

Connecticut probate is more like a bankruptcy than any other type of legal case. There is a fixed pool of assets and a pecking order of who might be entitled to get it, so the court appoints someone to collect those assets, manage them until the people in that pecking order are figured out, and distribute them. Once someone is appointed, the reports you make to the court are essentially (1) a list of assets, (2) a tax form listing more assets, (3) a list of decedent’s debts, (4) a ledger showing the estate’s income, expenses, property distributed, and property left to distribute, showing that no money is missing, and (5) a final ledger showing the changes from the first.

In short – prepare yourself to keep the estate financials organized. Buy file folders to keep track of your financial documents. Prepare separate folders for the bills your loved one owed when she died, bills and receipts you get while handling the estate, and funeral/burial costs…each of these categories is reported to the court separately and are paid at different times. I provide my clients a complete pre-labeled file system free of charge to help with this. Prepare a ledger to manage an estate banking account. Select a single space in your house where all of your estate records will go, and only estate records will go. And if you think your loved one’s estate will require a lot of leg work, try to be open minded about hiring professional movers/cleaners/etc. so you have the time and energy to keep your finances organized. The cost for your attorney to untangle your financial records to give the court the reports that they need is often even more expensive. And on that note…

#3 – Keep all of your loved one’s financial documents in hand.

The job of an estate’s representative is to handle probate assets. A probate asset means something the deceased person owned, that is not automatically owned or administered by someone else when they died, so the court’s authority is needed. If a deceased person’s asset had a death beneficiary (life insurance, survivor’s pension), or was jointly owned with others (financial account, cars, most marital homes), or was owned by their trust, those are not probate assets.

Connecticut probate creates two traps for you. For probate assets, you do not start reporting the assets you collect after probate is opened. Instead, we have to document what those assets were worth when your loved one died, plus any automatic bill payments, stock dividends, and other transactions from then to your appointment that you had nothing to do with. The same goes for home and auto loans on probate assets. And for non-probate assets…you have to report those too; you just report it later.

Suffice it to say, if you are receiving your loved one’s mail, make certain you are keeping all financial statements – bank, mortgage, investment, credit card, pension – for your lawyer to review, especially the first statement after they passed.

#4 – Tell the mortgage company…but ignore the mortgage company

Even before probate, you have the right – and it’s smart to use it – to let credit card, auto loan, and mortgage companies know that their creditor has passed away. Often, however, mortgage companies will respond with stern warnings about the need to obtain a new loan, or file paperwork assuming the debt. And with the exception of reverse mortgages,[2] their claims don’t match with reality.

Nearly every mortgage written in the US includes a “due on sale clause,” fine print stating that the mortgage must be paid off immediately if the property is transferred. However, federal law prohibits this for being used when a transfer is to immediate family or involving probate. Even if one of you is “buying out” the others or getting secondary financing, the new owner just needs to keep making payments on the original loan just like the late borrower did, and all is well. Sadly, this doesn’t stop some lenders from falsely claiming otherwise. Even more commonly, honest companies may provide the right kind of paperwork, but it may be written to make the executor the new debtor instead of the new owner, or it may simply be before you have all the information and documentation you need to submit everything correctly.

When it comes to any loan forms or paperwork, it is always best to review these with your attorney before taking any action. At my office, the entire review and explanation can be taken care of in five to ten minutes.

#5 – Being bossy backfires (Or, know your limits).

Until now, I’ve discussed the things you should be doing while waiting for probate to open. But perhaps just as important is the understanding that you are not allowed to do much of anything else. When it comes to a dead person’s private information and probate asset, you have no authority until the probate judge formally gives it to you. It doesn’t matter if you filed the application, or are the spouse or only child; even if you are named executor in the will, that is just pieces of paper until a probate judge decides it’s valid. If you have power of attorney, that legally expired with your loved one.

While you will rarely have any problem organizing the bills, paperwork, and other items you have open access to, you can’t forward their mail, use their ATM card or endorse their checks. But what plays out far worse than these crimes, despite being legal, is trying to assert the estate’s authority against other relatives and beneficiaries, which sadly is not uncommon when strained family relationships are involved. It’s a very easy way to get off on the wrong foot, usually requiring multiple lawyers to step in to cool things down, and when someone inevitably asks the judge to weigh in, it will never look good that you stepped in before the court gave you permission.

A particularly bad variation of this – often where “step- or half-” relations are involved, is when someone else was living in the decedent’s home, and a proposed fiduciary lets themselves into the home to “secure estate property,” tells the occupant they need to start paying rent, or tells them to get out soon or be evicted. This may be well-intended and seem justified, but even if authority was in place, these are nearly always wrong things to do. Legally, an estate representative has to follow all landlord-tenant laws,[3] and if the occupant is an heir or beneficiary, they normally can’t be charged rent or evicted, at least not without the judge’s explicit permission. And practically, there is no better way to ensure both of you are paying thousands in legal fees just to calm the situation back down, or keep fighting for control. In short, if there is occupied property involved, tread very lightly on involving yourself with the property, and consult your Connecticut probate attorney first.

[1] Hire someone!

[2] Reverse mortgages are government guaranteed mortgages for seniors where interest and charges are added to the debt instead of paid off monthly. These mortgages do need to be paid off on most transfers or sales, but the surviving owner or estate representative can request four quarterly extensions – through the anniversary of death – to sell the property or make arrangements to pay off the loan, before the bank can take action.

[3] Generally a landlord can only enter the property for infrequent safety inspections, to make repairs and respond to emergencies like burst pipes, and to show the property to prospective tenants/buyers. In most cases 48 hours notice is required.

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