A Guide to Connecticut Estate Tax Laws
As of August 2018, Connecticut residents, as well as nonresidents who own real estate or tangible personal property in the state, are subject to gift taxes and state estate taxes under the following guidelines.
Note: State laws change frequently, and the following information may not reflect recent changes in the laws. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.
What Is Connecticut's Taxable Estate?
The Connecticut taxable estate is based on the total value of the deceased individual’s federal gross estate minus allowable deductions other than the deduction for state death taxes; and the total amount of Connecticut taxable gifts made by the deceased individual during her lifetime.
When Is an Estate Subject to the Connecticut Estate Tax?
If the Connecticut taxable estate exceeds $2.6 million, then Connecticut estate tax is due and payable on the value of the taxable estate, including the first $2.6 million. Connecticut actually caps the estate tax, so the wealthiest residents within the state will pay a maximum of $20 million in estate tax. That cap will be reduced to $15 million in 2019.
What Forms Must Be Filed?
All estates subject to the Connecticut estate tax must file Form CT-706/709, Connecticut Estate and Gift Tax Return, with the Connecticut Department of Revenue Services, and also file a copy of Form CT-706/709 with the appropriate Connecticut probate court.
Are Transfers to a Surviving Spouse Taxable?
No matter how large the amount is, assets left to a spouse are nontaxable.
A married decedent's estate is authorized to make an election on Form CT-706/709 to treat the property as marital deduction qualified terminable interest property (QTIP) only for purposes of calculating the Connecticut estate tax (this is called a state QTIP election).
The result is that if the estate is passing to a surviving spouse through an ABC Trust scheme, which is different from the AB Trust, then the payment of both Connecticut and federal estate taxes can be deferred until after the death of the surviving spouse. An ABC Trust is also referred to as a QTIP Trust. These are designed for married couples whose estates are above the estate tax exemption. The main difference between an AB Trust and an ABC Trust is that the latter sets apart assets that may be taxable when the second spouse dies from taxes that are not.
Do Nontaxable Estates Have to File Any Tax Forms?
However, all Connecticut estates must file Form CT-706 NT, Connecticut Estate Tax Return (For Nontaxable Estates), with the appropriate Connecticut district probate court. Do not file Form CT-706 NT with the Department of Revenue Services. Form CT-706 NT must be filed with the appropriate Connecticut district probate court.
When Are the Estate Tax Return and Any Payment Required Due?
The return must be filed with the probate court within a six-month time frame after the date of death. If the individual was a Connecticut resident, the return has to be filed within his district. If he was a nonresident, then the return has to be filed within the probate court for the district in which the property was located.
Use Form CT-706/709 EXT, Application for Estate and Gift Tax Return Filing Extension and for Estate Tax Payment Extension, to apply for an extension of time to file.
Payment of the Connecticut estate tax is due at the same time as Form CT-706/709, unless an extension of time to pay has been granted.
Where Is the Return Filed?
Mail the Connecticut estate tax return, Form CT-706/709, and all other required forms to:
Department of Revenue Services
P.O. Box 2978
Hartford, CT 06104-2978
Do not mail your Connecticut nontaxable estate return, Form CT-706 NT, to the Department of Revenue Services. Instead, this form gets filed with the appropriate Connecticut district probate court.