Connecticut estate taxes can be assessed if the value of your estate exceeds a certain dollar value. Federal estate taxes can also be charged. In many situations, ownership of a family business will result in your estate being over the excludable amount, and thus being taxed. This, in effect, means the value of your company and business assets end up being taxed. The effect that this can have on ongoing company operations can be detrimental.
Nirenstein, Horowitz & Associates can provide you with assistance in understanding your options for trying to protect your business. We will work with you to determine if Connecticut estate taxes will be charged after your death and will explain how this could affect ongoing company operations.
We can also help you to take steps to determine if you can reduce or avoid taxation. If there are legal avenues for you to prevent your estate from being taxed, we will help you to make that happen. Give us a call today.
When Are Connecticut Estate Taxes Assessed?
Connecticut is one of 14 states with an estate tax, and is the only state that imposes a gift tax. The Yankee Institute for Public Policy indicates Connecticut’s estate tax brought in $168 million in revenue over the course of 2014. The tax charged on estates in Connecticut is separate and distinct from the federal estate tax rules. A death can result in the estate being forced to pay both state and federal estate taxes, depending upon the total value of the estate.
Connecticut Form CT-706/709 provides instructions on the estate and gift tax as well as details on when the estate is taxable. The tax is a graduated one. If the estate is over $2 million, for example, a tax of 7.2 percent is assessed on the amount exceeding $2 million. If the estate is valued at more than $10,100,000, on the other hand, the amount due is $748,200 as well as 12 percent of the amount over $10,100,000.
While these numbers initially seem as if the taxes are applied only on very wealthy people with large estates, this is not necessarily the case. Estate taxes can often hit farm owners and family business owners and can have a detrimental effect on the legacy of the land or company owner.
How Can Connecticut Estate Taxes Affect Your Family Business?
If you have a family business, your ownership stake in the company and the business assets could be worth a lot of money. It is very common for the value of a business to push your estate over the $2 million mark so it becomes subject to taxation. If this happens, your estate is going to have to pay the tax bill which is due.
The problem is, a lot of business owners have wealth tied up in their business and don’t have the money to pay a big tax upon death. This can result in big problems when Connecticut estate taxes indicate thousands of dollars are owed. With few options, it may sometimes become necessary to sell the company or at least to sell part of its assets and property in order to generate the money to pay the taxes.
Washington Post reported this has been an issue not just for business owners, but also for farmers too. Some were forced to sell hundreds of acres of land just to try to keep an inheritance they received after death. While farmers get some special protections from estate taxes if they farm the land and meet certain other requirements, business owners may be more vulnerable to being effectively forced o sell companies or business assets to pay state and federal estate tax bills.
Getting Help from a Connecticut Estate Planning Lawyer
Nirenstein, Horowitz & Associates has helped many clients to protect their family business and their other assets. You do not want to leave less to your heirs because of the high burden of taxation if there is a way for you to avoid or reduce estate taxes. If you live in Hartford, Westport, or surrounding areas, we will help you to determine if Connecticut estate taxes will be assessed and will help you to find out how to try to prevent this from occurring.
To learn more about estate tax planning, you can join us for a free seminar. You can also give us a call at 860-548-1000 or contact us online to find out more about the personalized assistance we can provide to you.
- Engage an Attorney During the Living Trust Administration Phase - October 19, 2021
- Has Your Property Appreciated? Estate Taxes May Be a Factor - October 14, 2021
- Medicaid Answers: Can a Spouse Keep a Beneficiary’s Income? - October 12, 2021