As if it is not hard enough when you lose your spouse, you may think that you do not have to go to probate since you held everything jointly. People think that everything passes to them cleanly and automatically. Unfortunately, that is not the case. You will be surprised to learn this during the closing process.
First, both of your names are on the deed on the land records. You will not be able to transfer the deed without addressing this issue by getting your spouse’s name removed from the deed. Secondly, many people do not know that the State of Connecticut automatically places invisible liens on your property, which do not show up on the land records, namely, the estate tax lien and the probate fee lien.
The estate tax lien is a tax that must be paid whenever anyone passes away. This is handled by filing the estate tax return form with your local probate court. The Connecticut estate tax is 12% of the estate with the same federal exemption of $13.61 million, as of 2024. Prior to 2023, the Connecticut estate tax rate was between 10.8 and 12%. If you want to sell your property now but your spouse passed away in 2020, then you would need to identify the tax rate for 2020. However, both the estate tax return and the tax payment must be made within six months after the spouse’s death, or you will be subject to penalties (at least $50) and interest.
The probate fee lien is a new lien as of July, 2015, when the Connecticut legislature stopped funding probate courts. This fee is a percentage between 1% and .5% of the gross taxable estate. It is due 6 months plus 30 days after your spouse passed away. This lien too has interest charges if not paid on time. And since most people are not aware of it, it usually comes as a surprise to them at the time they try to sell the real estate.
Title companies will pick up on these issues when they conduct title searches as a normal step in the closing process. In order to release these liens to clear title, you will have to file the Connecticut estate tax return and pay the probate fee with your local probate court in order for them to issue the Certificate releasing these liens, which will get filed on the local land records. Be sure to include all real estate owned, i.e. vacant lots, etc., or you may need to go back and reopen the estate, amend the estate tax return and pay additional penalties and interest.
Because this issue is a defect on title, it could create undue delays in your real estate closing. This could cost you money and risk losing the sale all together. Be aware of these invisible liens and take the necessary steps before you prepare to sell your home.