Connecticut Estate & Gift Tax Law Update

In the final days of October, 2017, Connecticut passed legislation significantly impacting upon the Connecticut estate and gift tax exemption. Connecticut has had a flat estate and gift tax exemption of $2,000,000.00 for a number of years, which created a disparity with the Federal estate and gift tax exemption (currently $5,490,000.00 in 2017, but indexed for inflation). The amount exceeding the Connecticut exemption was subject to a tax of up to 12%.

Connecticut’s estate and gift tax exemption will increase to $2,600,000.00 on January 1, 2018, $3,600,000.00 on January 1, 2019, and then match the federal exemption in 2020. It is important to note that Connecticut may make changes to the exemption, especially if the Federal government eliminates or significantly increases the Federal estate and gift tax exemption, which is seriously being considered at present. It should also be noted that unlike the Federal exemption, there is no spousal portability option for the Connecticut exemption.

Finally, the maximum annual federal gift tax exclusion (which does not count against the estate and gift tax exemptions above) is increasing to $15,000.00 per recipient effective January 1, 2018. Connecticut’s annual gift tax exclusion mirrors the federal gift tax exclusion, thus also being $15,000.00 come January 1, 2018.