Change of Estate Tax Law

Wednesday, August 19th, 2009

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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