Changes to Connecticut Gift and Estate Taxes

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Connecticut gift tax. On or after January 1, 2005, persons making Connecticut taxable gifts (donors) will be required to file a return with the Department of Revenue Services (DRS) reporting even though no gift tax may (or may yet) be payable. Connecticut gift tax will not be payable until the sum of Connecticut taxable gifts made during all years beginning on or after January 1, 2005, exceeds $2 million. Connecticut taxable gifts are those federal taxable gifts that are gifts of real or tangible personal property situated within Connecticut (and, for donors who are Connecticut residents, gifts of intangible personal property).

Connecticut estate tax. The representatives of the estate of a decedent dying on or after January 1, 2005, must file a return with DRS if the decedent’s Connecticut taxable estate is more than $2 million. The Connecticut taxable estate is the sum of Connecticut taxable gifts made by the decedent during all years beginning on or after January 1, 2005, and the decedent’s taxable estate (generally as computed for federal estate tax purposes). If the decedent’s Connecticut taxable estate is $2 million or less, the representatives of the decedent’s estate must file the return with the probate court, not DRS. The Connecticut estate tax is no longer based on the credit allowable under 26 U.S.C. section 2011 for state death taxes.

Connecticut succession tax. The Connecticut succession tax does not apply to estates of decedents dying on or after January 1, 2005.
In addition, there is a unified credit against the Connecticut gift and estate taxes. The Connecticut gift tax return and the Connecticut estate tax return will now be combined into a single return.