by Richard L. Emerson – I am often asked this question and the answer is “it depends”. If there is no Will then under the rules of intestacy the first $100,000 of probate assets are distributed to the surviving spouse and the balance is distributed 50/50 between the surviving spouse and the children. If the children are not children of the surviving spouse then the probate assets are distributed 50/50 from the first dollar. If there is a Will then the Probate Court will make sure that the distribution scheme under the Will is followed.
There is a statute which allows you to change those distributions. Where there is no Will, under C.G.S. Section 45a-433 (b) if all persons interested in an estate who are legally capable of acting make and file in the Probate Court a division of the estate, made, executed and acknowledged like deeds of land then that distribution will be valid once recorded in the Probate Court Records. This is known as a Mutual Distribution Agreement. For an estate with a Will, a Mutual Distribution Agreement is authorized under C.G.S Section 45a-434 (b). Normally, this plan is submitted to and approved by the Probate Court.
In both cases the document must be signed by each interested party, attested by two witnesses and acknowledged as the free act and deed before a Notary Public or other person authorized to take acknowledgements.
Income, gift and estate tax consequences should be considered before entering into a Mutual Distribution Agreement and the IRS even instructs its agents to look for gift tax consequences if heirs agree to change the distributions under a Will or by state statute. However, if the Mutual Distribution Agreement is part of a bona fide settlement of a substantial claim that a Will was invalid then there should be no adverse income, gift or estate tax consequences.
The problem with a Mutual Distribution Agreement is that all interested parties must agree and it has been my experience that one or more interested parties will not like the idea of changing the distributions. Therefore, while there is a way to change the terms of a Will or in intestacy, it is not used often since all parties must agree. If you would like further information, please call Attorney Richard Emerson at 203-744-1929 x35.