October 15, 2009
By: Simon Lebo
In recent legislation, Connecticut has changed the State's estate and gift taxes effective as of January 1, 2010. The most significant changes include increasing the Connecticut estate and gift tax exemption to $3.5 million effective as of January 1, 2010 and making it a true exemption versus the current "cliff" structure, wherein if one exceeds the current amount of $2 million, then the State taxes the entire amount, including the first $2 million. Other changes include reducing the estate and gift tax rates by 25% effective as of January 1, 2010 and shortening the filing period from nine months to six months for the filing of estate tax returns.
It is important to note that the 2009 federal exemption is $3.5 million, but unless current tax law is changed, will be unlimited in 2010 (but with basis carry-over rather than a basis step-up in assets) and will revert to $1 million effective January 1, 2011. It is expected that the U.S. Congress will, prior to the end of this year, at least temporarily address this issue, but has not yet acted on this issue.
The changes in the estate and gift tax laws made by the State of Connecticut may have significant implications to the estate plans of many individuals. If you are interested in exploring what opportunities for tax savings exist in light of the recent changes, or to review and discuss your existing estate plan, please contact Simon J. Lebo, Esq. at 860-266-4278.