PHASE-OUT OF CONNECTICUT SUCCESSION TAX CONTINUES

Spring/Summer 2000 volume 2/number 5

4.1.2000

The repeal of the Connecticut succession tax, begun in 1997, continues apace. If you are a Connecticut resident, all transfers by your estate to a surviving spouse or a charity are free of the succession tax. If you survive until January 1, 2001, you can also pass your entire estate to your children and grandchildren absolutely free of the Connecticut succession tax. Property left to siblings and other family members and to friends is still subject to tax as shown on the chart, below. The remaining succession tax rates range from 11.44% to 20.02%. The Connecticut succession tax is imposed on transfers that:

  • are made by will;
  • are effected under the laws of intestate succession;
  • are made in contemplation of death; or
  • take effect at the death of the transferor, provided, that the property transferred is:
  • real property located in Connecticut;
  • tangible personal property of a resident, if not located outside the state;
  • tangible personal property of a non-resident, if located in Connecticut; or
  • intangible personal property (e.g., stocks and bonds) of a resident.

Wealthy individuals should keep in mind that the repeal of the succession tax leaves in place the Connecticut estate tax. This tax, which is similar to the estate tax in almost all other states, generally applies only to estates that have to pay a federal estate tax. Usually the Connecticut estate tax does not increase an estate's overall tax bill, but merely reallocates to the state certain tax amounts that would otherwise be payable to the federal government.

The succession tax is being phased out by gradually increasing the amount that can pass to each class of beneficiaries (in the aggregate) free of the tax.

Exempt Transfers to Spouses, and Charitable Beneficiaries

  • all transfers

Exempt Transfers to Parents, Children and Grandchildren

  • As of January 1, 2000: $2 million or less
  • As of . January 1, 2001: all transfers

Exempt Transfers to Siblings, Nieces, Nephews and Stepchildren

  • As of January 1, 2000:  $400,000 or less
  • As of January 1, 2001:  $600,000 or less
  • As of January 1, 2002:  $1.5 million or less
  • As of January 1, 2003:  all transfers

Exempt Transfers to Cousins, Aunts, Uncles and Friends

  • As of January 1, 2000:  $1,000 or less
  • As of January 1, 2001:  $200,000 or less
  • As of January 1, 2002:  $400,000 or less
  • As of January 1, 2003:  $600,000 or less
  • As of January 1, 2004:  $1.5 million or less
  • As of January 1, 2005: all transfers
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