An Overview of Rhode Island Estate Tax Laws in 2018

Understanding How Rhode Island Estate Taxes Affect an Estate

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Rhode Island is one of 12 states, plus the District of Columbia, that collects a state estate tax. It does not impose an inheritance tax or a gift tax, however, and this simplifies the "death tax" equation to some extent.

Beneficiaries don't have to worry about paying an additional inheritance tax on gifts they receive, nor do you have to concern yourself with keeping track of lifetime gifts you've made so they can be calculated as part of your Rhode Island estate tax. A portion of the value of your estate might be liable for state estate taxes, however, depending on how much it's worth.

When Is a Rhode Island Estate Tax Return Required to Be Filed?

Form 100A, the Rhode Island estate tax return, must be filed when the decedent's gross estate exceeds $1,537,656 as of 2018. A nonresident estate must file Form 100A if it includes real or tangible personal property located in Rhode Island and its value exceeds this amount.

The first $1,537,656 of an estate's value is exempt from taxation. The Rhode Island estate tax exemption increased from $675,000 to $850,000 on January 1, 2010, and it was indexed for inflation beginning in 2011 so it can increase incrementally from year to year.

A signed copy of the federal estate tax return, IRS Form 706, must accompany Form 100A if the estate is required to file Form 706 with the federal government.

When Are the Rhode Island Estate Tax Return and Estate Tax Payment Due?

Form 100A must be filed and any Rhode Island estate tax that's due must be paid within nine months of the decedent's death.

An extension of time to file Form 100A can be requested, but it won't delay the time for payment of any tax owed if it's granted.

Where Is the Rhode Island Estate Tax Return Filed?

Mail the Rhode Island Estate Tax Return, a $50 filing fee as of 2018, any payment due, and all other required forms to:

Rhode Island Division of Taxation
Estate Tax Section
One Capitol Hill
Providence, RI 02908

Make checks payable to "RI Division of Taxation."

What Is the Rhode Island Estate Tax Rate?

The tax rate is a progressive rate that maxes out at 16 percent for the amount above $10,040,000 after applying the estate tax exemption. There are 20 separate rates and tax brackets for estates as of 2018, beginning with a .8 percent rate on estates valued at $40,000 over the exemption amount.

Are Transfers to a Surviving Spouse Taxable?

Outright transfers to a surviving spouse are not taxable, but the Rhode Island estate tax exemption is not portable between spouses as it is at the federal level. When the first spouse dies, she can leave her property to her spouse without its value being subject to tax if it falls within the exemption amount, but she cannot transfer to him any unused portion of her exemption to protect that property from taxation when he passes it on to his own heirs.

Married couples who have used traditional AB Trust planning to reduce their federal estate tax bill might find that a Rhode Island estate tax is due on the B Trust after the first spouse's death. This is due to the gap between the Rhode Island estate tax exemption and the federal estate tax exemption, which is $11.18 million as of 2018. 

A married decedent's estate is authorized to make an election on Form 100A to treat property as a marital deduction qualified terminable interest property ("QTIP") for Rhode Island purposes, however. Married Rhode Island couples can defer payment of both Rhode Island estate taxes and federal estate taxes until after the death of the surviving spouse by using an ABC Trust scheme instead of AB Trust planning.

Do Nontaxable Estates Have to File Any Forms?

For gross estates valued at the exemption amount or less, Form 100, Estate Tax Credit Transmittal, can be filed to obtain a discharge of the automatic statutory lien. This lien automatically attaches to all Rhode Island real estate a person owns at the time of death. The estate will then receive a Notice of No Tax Due for probate administration purposes, and this allows the sale of Rhode Island securities.

Rhode Island securities include incorporated Rhode Island stock, Rhode Island state and municipal bonds, and mutual funds organized as business trusts that do business in Rhode Island.

Form 100 should be signed by the executor, administrator, trustee, or heir at law of the deceased person. It should be mailed along with a death certificate and a $50 filing fee to the address listed for Form 100A.

Does Rhode Island Impose a Lien on the Deceased's Property?

Form T-77, the Discharge of Lien form, must be filed along with Form 100A or Form 100 if the decedent had any interest in real estate located in Rhode Island. Form T-77 must be filed in triplicate and the description of the real estate must be stated as the tax assessor's description. This can usually be found on the property tax bill issued by the applicable city or town.

Form T-79, the Estate Tax Waiver form, must be filed along with Form 100A or Form 100 if the decedent had any interest in a security of a Rhode Island incorporated business requiring an estate tax waiver. Form T-79 must be filed in duplicate.

Where Can I Find Additional Information About Rhode Island Estate Taxes?

You can refer to the Rhode Island Division of Taxation website for more information about Rhode Island estate taxes.

The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect the most recent changes. Please consult with an accountant or an attorney for current tax or legal advice.