Change of Estate Tax Law

Wednesday, August 19th, 2009 at 1:31 am

Wealthy residents from Connecticut usually flee to Florida in avoiding the estate tax in the state.  But now, they don’t need to do that because there’s a new law (House Bill 6802) enacted on Sept. 8.  The law states that deaths occurring from January 1, 2010 onwards, as much as $3.5 million worth of estates and gifts will be exempt from tax.  This raised the threshold for taxable gifts and estates from the existing $2 million level.

In Connecticut today, when the estate is exactly $2 million, there will be no estate taxes paid.  However, an estate of $2,000,001 pays Connecticut $101,700 in taxes.  Fortunately, this will change beginning 2010.  The new legislation will not only increase the threshold exemption, it will also reduce the rates by 25%.  For instance, a $5.1 million estate which currently pays Connecticut $402,800 will only pay the state $130,200 if the death occurred after year-end. 

This means that you can now stop avoiding Connecticut in planning and establishing your residence.  State Rep. (R-149^th Dist.) Livvy Floren said, “These changes may be considered good step toward the right direction.”  So if you’re a resident of Connecticut or you have real property there, you might want to revisit and make current your estate plan with an attorney soon.  

Tags: attorney, Connecticut, estate plan, estate tax, Florida, gifts, law, Livvy Floren, state, wealthy

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