The estates of high-net-worth individuals can be heavily impacted by estate taxes. We are using the plural because there is a federal estate tax, and there is also a Connecticut state-level estate tax. Fortunately, there are steps that you can take to mitigate damage if your estate is exposed.
Estate Tax Exclusions
There is a federal estate tax exclusion, which is a set dollar amount that can be transferred tax-free. The estate tax would potentially be levied on the portion of an estate that exceeds the exclusion.
It was $5.49 million in 2017, but in December of that year, the Tax Cuts and Jobs Act was enacted. A provision in this measure doubled the exclusion for 2018, and it was indexed for inflation. This resulted in a $10.18 million exclusion.
Since that time, there have been annual inflation adjustments. During the current calendar year, the federal estate tax exclusion sits at $12.07 million, and there is a 40 percent maximum rate.
There is an unlimited marital deduction, so any amount of property can be transferred to a surviving spouse tax-free, but there is a caveat. This deduction is only available to American citizens.
The state-level estate tax exclusion in Connecticut is contact form and we will get back in touch with you promptly.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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