Estate Planning | Making a Difference One Family at a Time

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out-of-state estate taxesWhen you live in Connecticut, you might assume that your estate will only be subject to Connecticut estate taxes. However, that is not always the case.

If you own property in another state, your estate could face estate taxes outside of Connecticut. This is an issue many people overlook, but it can have a significant financial impact on your loved ones.

Understanding the Basics of Estate Taxes

Estate taxes are taxes on the transfer of property after death. Connecticut has its own estate tax, and in 2025, the exemption amount is set at $13.99 million.

Unless your estate’s value exceeds that amount, you will not owe Connecticut estate taxes. However, other states have their own estate tax rules, and they do not always align with Connecticut’s generous exemption.

Nearby states such as Massachusetts have a much lower estate tax threshold. In 2025, Massachusetts exempts only the first $2 million of an estate. Anything above that amount could be taxed, even if you live in Connecticut.

Which States Pose a Risk?

Massachusetts is not the only state that can create this kind of tax burden. New York, Rhode Island, Vermont, Maine, Maryland, Minnesota, Illinois, Hawaii, Oregon, and Washington also have state-level estate taxes.

If you own a vacation home, rental property, or any other tangible assets in one of these states, your estate might be required to file and pay estate taxes in that state, regardless of your Connecticut residency.

For example, let’s say you own a house on Martha’s Vineyard valued at $3 million. The portion above the $2 million exemption, which is $1 million, would be subject to the Massachusetts estate tax after your death.

Even though you live in Connecticut, your estate must comply with Massachusetts law because the property is located there.

How to Plan Ahead

Estate tax planning becomes more complex when you have assets in multiple states. However, with the right strategies, you can often reduce or manage the potential tax burden.

One approach is to consider how your assets are titled. In some cases, transferring property to a trust can help manage tax exposure, although you must handle this carefully to avoid unintended consequences.

Another strategy is to review whether it makes sense to sell or gift out-of-state property during your lifetime. By making lifetime transfers, you might reduce your taxable estate and avoid triggering an estate tax in another state altogether.

In addition, reviewing the type and value of property you hold in other states should become part of your regular estate plan review. As laws change, what was once a manageable risk can become a larger concern, and regular updates allow you to stay ahead of new challenges.

Why Legal Guidance Matters

Estate tax law can be complex, especially when it involves multiple states. The tax savings from proper planning can be substantial, but mistakes can also be costly.

A licensed estate planning attorney familiar with multistate tax issues can guide you through your options and develop a strategy tailored to your needs.

Your attorney can also coordinate with legal professionals in other states when needed, creating a seamless plan that reduces surprises later.

Take the Next Step!

Our firm can help if you would like to work with an attorney to put a plan in place, regardless of your tax situation. We have an office in Glastonbury and another one in Westport, CT, and you can send us a message or call us at 860-548-1000 to request a consultation appointment.

Jeffrey A. Nirenstein, Estate Planning Attorney
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