As you may know, several tax law changes resulted from the legislation signed into law by Governor Malloy on May 4, 2011, as part of the budget compromise. The following summarizes a few of the key changes.
CONNECTICUT ESTATE AND GIFT TAX LAWS
Estate and gift tax exemption reduced to $2,000,000.
The Connecticut estate tax exemption amount has decreased from $3,500,000 to $2,000,000. The estates of decedents dying on or after January 1, 2011, that are over $2,000,000 are now subject to Connecticut estate tax.
There is a parallel change to the Connecticut gift tax exemption, which was also reduced to $2,000,000, effective January 1, 2011. Connecticut residents are now limited to making lifetime gifts of up to $2,000,000 without incurring Connecticut gift tax. (However, the federal gift tax exemption remains at $5,000,000 for 2011 and 2012.) For Connecticut gift tax purposes, the aggregate amount of all gifts made on or after January 1, 2005, (the year when Connecticut originally adopted its "unified" estate and gift tax structure) "count" against the Connecticut gift tax exemption.
The estate and gift tax rates are unchanged, with a maximum tax rate of 12 percent. The rate schedule is summarized below.
Amount of Total Connecticut Taxable Transfers
(add Col. C and Col. D)
But not over
Tax rate on excess over Col. A
What does this mean to you?
If your documents have been updated to take into account the potential difference between state and federal estate tax exemptions (which is relevant now with the $5,000,000 federal estate tax exemption), no further changes should be needed to your documents. However, without appropriate planning, married couples may be subject to tax that could otherwise be avoided. Properly drafted estate plans and proper ownership of assets by married couples are necessary for maximum use of the available exemptions. Please contact us if you would like to discuss how these changes may affect you. If you have not updated your documents in the last few years, this may be an appropriate time for a more comprehensive review of your estate plan to ensure that it still meets your estate planning needs and objectives.
In addition, if you made Connecticut taxable gifts earlier this year in an effort to capture some of the current $5,000,000 federal gift tax exemption, you should be aware that those gifts, even if made prior to the enactment of the new Connecticut tax exemption, will be subject to the lower exemption and therefore could result in higher Connecticut gift tax than you might have expected. For example, a $5,000,000 Connecticut taxable gift in 2011 for an individual with her full Connecticut gift tax exemption will cause $229,800 in Connecticut gift tax under present law, as compared to $121,800 in tax under the law previously in effect.
INCREASE IN INDIVIDUAL INCOME TAX RATES
The legislation increased the marginal income tax rates for those with taxable incomes over $100,000 for joint filers, $50,000 for single filers and married filing separately, and $80,000 for heads of household. The number of tax brackets has been increased from three to six. In addition, the highest marginal income tax rate was increased to 6.7% for those with taxable incomes over $500,000 for joint filers, $250,000 for single filers and $400,000 for heads of household.
SALES TAX CHANGES
The general sales and use tax rate has been increased to 6.35%. A higher "luxury" tax rate of 7% now applies to the full sales price of motor vehicles (costing more than $50,000), boats (costing more than $100,000), jewelry (costing more than $5,000), and clothing (costing more than $1,000). The sales tax was extended to certain new services, including motor vehicle storage and salon services.
These are some general points about the new Connecticut tax laws.
Dina Kapur Sanna will be speaking on two panels at International Estate & Tax Planning 2019, a conference presented by the Practising Law Institute and held in New York, NY.
Carl Merino spoke on a panel, "Non-Residents Acquiring Real Estate: Compare & Contrast Between the U.S. & UK," at the U.S.-UK Tax Planning conference, presented by KNect365 and held in New York, NY.
Day Pitney LLP hosted its annual invitation-only Palm Beach Family Office Forum at the Eau Palm Beach.
On March 27, Warren Whitaker will be speaking on "Passing Down Your Prized Possessions: How to Avoid Fights and Fees In Your Estate," a seminar hosted by the New-York Historical Society's Planned Giving Advisory Council and held at the Robert H. Smith Auditorium in New York City.
Warren Whitaker will be serving as chair of the 15th Annual International Estate Planning Institute, hosted by the New York State Bar Association and The Society of Trust and Estate Practitioners USA (STEP USA).
Tina Albright and Rebecca Tunney were quoted in an article, "USA Update: Engaging Women in Wealth Management," published by Citywealth.
Day Pitney attorneys Tina Albright and Rebecca Tunney have been shortlisted for "Best Female Advisors & Managers in the USA" for New York and Boston, respectively, as part of the U.S. Powerwomen Awards by Citywealth.
Day Pitney Press Release
Day Pitney's Family Office and Trusts and Estates practices have been shortlisted in two categories, "Best Private Client Law Firm" and "Best Trusts and Estates Division," for the 2019 Private Asset Management Awards.
Day Pitney's Family Office and Trusts and Estates practices have been shortlisted in the "Legal Team of the Year" private client category for the 2019 Family Wealth Report Awards.