THE LATEST RAVE:
IN DEFENSE OF PROBATE IN CONNECTICUT
I suppose it is naturally human to want change. By it we are capable of improvement. However, this urge of ours, if not restrained, can also be just plain destructive of some excellent institutional handiwork. Therefore, we ought not to take action on any new course unless we can determine that it will move us forward rather than backward.
In recent years, much criticism of Connecticut’s centuries-old probate system has circulated within legal and judicial circles. Occasionally the debate has spilled out into the public arena as various interest groups seek to elicit support for one reform proposal or another. On October 23, 2005 an editorial appeared in the Commentary section of the Hartford Courant, authored by a professor of the Yale Law School, referring to our “state’s predatory probate system” as a “national disgrace.” Strong words. My goodness. Things must be bad. I wonder how I can have practiced in something so despicable for more than a quarter century without having noticed so many alleged evils.
The general thrust of the article is that probate judges have been given a license to steal under the present time-honored system. It is claimed that the judges deliberately complicate the process and thereby “make work,” generating greater “unnecessary fees”. This central thesis is wrong. For decedent’s estates, the probate fee is fixed by statute. Probate judges have virtually no ability to affect the amount they charge. In fact the same fee is due, whether probate is used or not. The choice as to whether the probate system will be used rests with the decedent during life and depends upon the manner in which he or she arranged for wealth to be transferred at death. So whether or not citizens avail themselves of the probate system to transfer their assets when they die, the State of Connecticut charges a probate fee based upon the amount of wealth they transfer. No one can blame the judge for that.
How a system is financed is a legislative choice. The probate system is financed by quasi-user fees. The larger the amount that is transferred on account of death, the greater the fee, presumably on the theory that those with greater wealth are more able to support and benefit from such a system. There is also a very natural assumption that larger estates are likely to require more work. Nearly every manner in which government is financed involves a progressive collection system. The probate court structure stands there, ready to be utilized by anyone who chooses. The fact that all decedents pay this particular fee, whether the structure is used or not, is a common strategy used to spread the cost. This is not “predatory” unless you think all taxes and fees are predatory.
The really interesting truth about Connecticut Probate fees is how miniscule they are in relation to other costs people willingly incur to transfer wealth between generations, especially legal and accounting costs. I would wager that the cost of drafting most living trusts, supposedly to avoid dreaded probate, exceeds the probate fee that will be involved. An enormous industry exists to sell living trusts, life insurance, continuing legal and accounting services, all fueled by hawking fear of the cost of probate fees. Citizen consumers would be smart to comparison shop. The probate fee is published in the statutes for all to see, (CGS 45a-107). It is utterly transparent. It’s guaranteed however, that the average citizen persuaded into trying to avoid probate hasn’t a clue about what such avoidance is really going to cost. And regardless of how much they spend trying to avoid probate itself, the fee will be due anyway.
So let’s take a look at what probate fees are for an estate. It
starts at $25.00; it can never be higher than $12,500.00 and that’s for
an estate of $4,754,000.00 or more. For an estate involving wealth
transfer of $500,000.00 it’s $1,865.00. For transfers between husband
and wife, the calculation is based upon one-half the figure
transferred. Yes, it is money, but not so much money that it merits
perjorative exclamations and extreme makeovers. Remember the fee is
flat no matter how much trouble the estate is for the judge to handle
or how long it takes. A resourceful and economizing family that wants
to make use of the probate system on a do-it-yourself basis can save
several times the usual lawyer’s fee. The process is made simple enough
to do that. All Probate forms are now available at the Connecticut
Judicial website. The complications arise due to conflicts among
beneficiaries and assets being left in a mess.
The Yale professor says wealthy people leave Connecticut in their golden years out of fear and disdain for probate fees. Not hardly. Probate fees are too small for them even to sneeze at. If money really drives all their decisions, it’s taxes that do it. It used to be said they were leaving because of our death taxes; this caused Connecticut to pass legislation about a decade ago phasing out those taxes. In July, 2005 however, the legislature voted to bring death taxes back. It now stands that only those with more than $3.5 million in assets will pay a Connecticut estate tax. We are conflicted about what to do with the well-to-do. There are periodic runs on Florida license plates as tax policy changes. It also could have something to do with the weather....
When people remember bad financial experiences relating to estates, they remember the huge amount of tax they paid....or the lawyer’s fee....
Trusts are better? Find someone from a dysfunctional family who may have been a beneficiary of a living trust but wasn’t the trustee, and see what he or she says. The big selling point about living trusts is that one gets to avoid the structure and costs of probate. I don’t care what anyone says. The costs of administering living trusts are the same or more than having a Will and going through probate in Connecticut. The more insidious drawback comes from the avoidance of the structure of the court system and the needed oversight that it provides. Thy will may not be done. The trustee of a living trust is able to acquire, control and hand out assetswith little oversight and without the particular knowledge of the beneficiaries. This is great if the trustee is totally honest, absolutely impartial and knows what he or she is doing. Where intra-family rivalry is present, however, as it is in many families, what the deceased wanted may not happen. A beneficiary who is fortunate enough to know he is a beneficiary of a living trust has only very expensive options available to force exposure of the trust instrument and to force distribution according to its terms. The legislature has given the probate courts very little jurisdiction in these matters and most conflict resolution requires the Superior Court system. What’s wrong with that? The time and costs are so high most people cannot or will not undertake it. How wise is any policy that would drive ordinary people into that predicament? Surely a Yale law professor can’t be advocating that lawlessness is preferred over a modest fee to support a legal system established by our founding fathers which I believe has served us well for a long time. Be careful what you wish for.
I am sure that it can be made to sound alluring that no “outsider” should ever have the ability to ask about or find fault with transferring a family’s wealth at death. But what if YOU turn out to be the outsider? If a dispute arises and a judge is involved, one side wins and is happy but the losing side blames the system and the judge. Let’s say that any kind of a judicial system is never loved in the abstract. But when it comes right down to it, we want and need a system to be there, maintaining order and predictability. People want their day in court. Once they get it, in any impartial form, they are usually satisfied.
The best way to assure that a judicial structure will be utilized is to make it easily accessible to the people who need to use it. There have been many probate procedures which have been streamlined in recent years, requiring easier paperwork and shorter time periods. If it weren’t for the fact that the Connecticut tax landscape just got a whole lot more complicated, the need for expensive legal services in connection with estate settlement might have been declining.
Make probate courts big and fancy; that’s the solution.
The Hartford Courant article recounts that a New York University professor commented on how bad the Connecticut probate courts have always been. Our courts have been generally small and numerous. This is bad? They have been approachable and near. In the small courts, the case loads were small, meaning the judge had time for you. For decades the New York Surrogate’s Courts have been so clogged with business that testate estates are settled by release. If you as beneficiary want money from the executor you have to release him or her from all liability before you get any money; that’s because the delay in years and the huge cost of getting an account approved by the big fancy court is considered worse than being cheated by your executor. This cannot be a system Connecticut wants to emulate. But it is moving in that direction. On January 1, 2011, many of the smaller courts are being merged into larger courts on the theory that it will cost the state less. Time will have to tell whether this was the case and whether citizens benefited or were harmed.
Now that small courts are all consolidated into big courts, everybody will be doing more driving. The judge likely will not know you or your family or the town where you live. You may wait much longer for your matters to be heard. Yes, Connecticut’s Superior Courts are a possible substitute. The average wait for a trial is how long now? Filing fee how much? Cost to all taxpayers for the facilities? Don’t forget the lawyer. Yes, many of the smaller courts used to be in small quarters with few frills. That was economizing for real.
Something else can be said for the no-frills. In 2009 I read that the probate courts handled something like 82,000 matters and of those 90 went to Superior Court for a re-hearing. That should tell you the most about the efficiency of the system just as it was. It should also affirm that the vast majority of beneficiaries found the existing probate structure well-suited to their purpose. We'll see if it will work out to be better and cheaper to add all those 81,910 matters to the Superior Court dockets or to create an entirely new set of courthouses for this additional work. I have my doubts.
OK, then. Make all the judges lawyers.
Back in Rome court used to be held every day at 10:00AM in the middle of the forum. You and the guy you were arguing with would both go down there at 10:00 and your problem would be decided right then by whoever was available to hear you. The important feature was that the decision had to be made right then and the settlement had to be accomplished by the end of the day, including the return of the stolen cow or whatever. Great system. Not long after Rome fell, Connecticut established its Probate Courts. The Founders realized that the kind of decision that would need to be made mostly called for an objective independent person selected from within the community. When there’s been a death in the family, these are emotional times that call for some sensitivity and personal treatment. A lot of what a probate judge does is guide some rather sober members of his or her community through the tasks of carrying out some very personal matters. It really does help that the judge knows the people already and they know the judge. After all, they picked him or her. There is an important quality of life issue involved for small town people being able to have their matters handled in their town by members of their own community. I think this was important enough that it should have stood up fairly well against claims that only lawyers can be judges. Forcing a town to have a lawyer for a judge means the townspeople can’t freely pick the person they want, the personality they want. Or for that matter, if the citizens had thought it was all that important, they would have elected a lawyer. The fact that they didn’t meant that they didn’t want one or didn’t think they needed one. Democracy still works pretty well at the town level. (I hear that we are fighting for that in a bunch of foreign countries. OK, so I’m fighting to keep it on the home front.)
You can laugh, but home rule in New England is the essence of what the American Revolution was fought for. None of us should discard any local institution in favor of a regional one just to try something different. We are content with many of our important rights being administered by our lay townspeople. Time will have to tell whether this new experiment with bigger Probate Courts was a step in the wrong direction.
The insistence on having all probate judges be lawyers means the costs get much higher for everyone. But I’ll allow that some estate matters involve large sums of money or are legally complex and that the people involved could have been uncomfortable with a lay judge. Now all estates will have an attorney judge to hear the matter or the parties can utilize their right to a trial de novo in the Superior Court, if they feel the additional cost and delay will be worth it. The choice of the level of expertise is still therefore left to the citizens rather than dictated in advance. From the statistics I quoted earlier, apparently about one in a thousand used to think they needed a “real” judge.
123 small courts cost more than 12 big ones- “a far better job at a fraction of the cost”?
Many towns will now be outsourcing their probate caseload. Some of us expect a decline in service available. Remember the same number of cases will need to be handled. Exactly how the regional courts will be financed at the town level is obscure.
If no decline in the level of service are to be allowed (except to the citizens themselves who will have to drive farther, make toll calls and deal with unfamiliar people) and services are to be enhanced, as some maintain, there will not be a big reduction in the probate fee if the costs are all funded from the probate fees collected. The theory is economy of scale, but where services are delivered to people, rather than widgets produced, it is not necessarily true that any such economy exists. Add to that the pay-scale for sufficient numbers of expert full-time judges and the support staff that they demand and I believe it’s clear that the same or greater fees will have to be collected. To me small and simple will always be cheaper to buy than big and fancy. It has always seemed contradictory (and a bit nutty) to be loudly against any cost but loudly in favor of getting more and better from your government.
My expectation is that an unstated part of the reorganization will be to shift the financing of some aspects of the new bigger courts to town budgets, the state's general fund and the income tax, thereby making the cost invisible during the estate settlement process. That’s what I think the Yale professor wants for his “persons of means.” This isn’t eliminating wasteful spending; this is redistributing it and hiding it where it can grow happily ever after undetected. The law currently permits any shortfall in covering the costs of maintaining the existing court system to be funded from the state general fund- no increase in probate fees has ever been absolutely required. But increases have been imposed nevertheless. I have speculated that the Office of Probate Administration in Hartford prefers the autonomy of not having to explain itself to the legislative process. Calling such attention might result in the wholesale inclusion of the probate courts into the state judicial system and its budget and elimination of the Probate Administrator and that would be that.
What would be wrong with merging all probate courts into the Superior Court system?
For me this is the most subtle part to explain. For all of my legal career I have had the unpleasant task of consoling many potential litigants with the unhappy truth that where there is a right there is not always a remedy. Litigation is so very expensive and emotionally taxing. As a nation we have set a fairly high standard for certain types of dispute resolution in our judicial system. But at what cost? Connecticut has many brand new court facilities; we seem willing to spend. Even so, the caseloads outpace all that is offered. Sometimes it seems we do it on purpose to weed out the weak cases or to force combatants to settle. It’s as if we consider most civil-side litigation as optional- citizens shouldn’t actually get their day in court. Not only that, but ordinary people are intimidated by the process; they don’t understand it and it doesn’t mesh at all with their daily lives. The result is they will use it only when they simply have no other choice. Often they just skip it and accept the injustice. I wish this weren’t so.
Oddly enough, I’ve never had this issue with the small Probate Courts as they used to exist. Despite the vigorous industry developed around avoiding probate, it seems the majority of state residents rather expect that if someone dies, something will happen in probate. They wonder when it’s going to happen. It is an accepted part of ordinary life. There is definitely some concern about the cost until they find out how much it’s actually going to be. Sometimes people are even a little disappointed if I tell them there really doesn’t have to be a hearing. I have to believe that these attitudes reflected an appreciation of a community court with a community member sitting as judge, a simple yet orderly procedure that they could actually understand. They feel protected by it. To a democratic society this relationship is central.
Under the former small court system hearings were scheduled by appointment, date and time specified. Everyone was notified well in advance. In contrast the Superior Court model requires endless waiting at the courthouse, often after having been summoned on a moment’s notice. This results from having given the rapid processing of heavy caseloads preference over personal inconvenience and cost. Because of the expense of running the place there can be no down time for Superior Court personnel, just to save an individual the cost of missing work and paying the lawyer to wait.
The call for lawyer judges and court consolidation never seemed to me to be a grass-roots movement. The skirmishing always took place among those in the upper echelons of the probate assembly, the judges in big cities and certain erudite members of the bar. I suppose I have a natural suspicion of anyone who too strenuously tells the average guy he is being ripped off. Often that’s just another kind of sale’s pitch for the recommended alternative. Possibly there is more profit being made there. Either that, or the combatants are just too removed from the common people to know what matters to them.
The judge as entrepreneur
The last complaint I want to address is that Connecticut’s probate fee system turned our probate judges into money-making machines, and this was bad. What I think is that it kept the job attractive to a certain kind of person- an entrepreneur- someone who can see that, if the court is run efficiently, the pre-set fees collected would represent enough to make a living. That helped to keep the court independent. The possibility of profit is our American way to achieve quality and effort in a market system. Elections are our way of choosing who will serve us.
Every change that’s possible is not inevitable
The fact that death taxes have not been eliminated after all, means that the funding mechanism for the Probate Courts that has been in effect for so long does not have to be radically changed for now unless the cost of what has been done with regionalization makes the whole enterprise much more expensive. Thankfully, the legislature has finally determined that the probate fee can bear interest if it isn't paid. So the payment system ain’t broke and still don’t need fixin’, unless these new cost-saving moves turn out to be something else.
So I'm waiting for everyone to be nostalgic for the simplicity and
balance that once was. How long that will take, I don't know exactly.