You may be concerned about taxes that can reduce the value of the estate that you are passing on to your loved ones. There is a federal estate tax, and in Connecticut, we have a state-level estate tax. The existence of these taxes is the bad news; the good news is that every estate is not subject to an estate tax.
Federal Estate Tax Credit or Exclusion
There is a federal estate tax credit or exclusion. This is the amount that you can transfer before the tax would be applied. During the rest of 2015, the federal estate tax exclusion is $5.43 million. The maximum rate that would be applied to the taxable portion of an estate on the federal level is 40 percent.
If you are married, you should be aware of the fact that there is an unlimited marital deduction. You can transfer any amount of money and/or property to your spouse free of the federal estate tax. The tax-free transfers would be limited to the amount of the exclusion only when you are transferring assets to others.
Connecticut State Estate Tax Exclusion
You may breathe a sigh of relief when you see that the $5.43 million exclusion exceeds the value of your estate. There is however something else that you need to take into consideration. The Connecticut state estate tax exclusion is considerably lower than the federal estate tax exclusion. As a result, you could be exempt from the federal tax, but exposed to the state level estate tax.
At the present time, the Connecticut state estate tax exclusion is $2 million. The top rate of the Connecticut state estate tax is 12 percent.
There is also an unlimited marital deduction on the state level. You can leave unlimited assets to your spouse free of the Connecticut estate tax.
Estate Tax Efficiency Strategies
If you are exposed to death taxes, there are estate planning techniques that can be implemented to mitigate your exposure. The ideal strategy will depend upon the circumstances. Irrevocable trusts of various different kinds are used to provide estate tax efficiency.
Free Estate Tax Report
You should understand the tax laws thoroughly when you are planning your estate, especially if you have been successful from a financial standpoint. To learn more about the federal estate tax, download our in-depth report. This report will provide you with a great deal of detailed information, and it is being offered to our readers free of charge at the present time.
To get your copy of the special report, visit this page and follow the simple instructions: Free Estate Tax Report.
Schedule a Consultation
If you would like to discuss taxation or any other inheritance planning matter with a licensed professional, send us a message through this page to set up a free consultation: Hartford CT Estate Planning Attorneys.