“People are worried about what the government will do next.” “People are giving away bigger chunks of their wealth now that the rates permit it,” she says. Yates says that a lot of her firm’s clients are repeat clients. This means that folks who made substantial gifts before 2005 may still have their entire $2 million Connecticut exemption available to use to make gifts without paying state tax. 1, 2005 on towards the current $2 million exemption in effect since Jan. Now the Connecticut gift tax counts the aggregate amount of “lifetime” gifts from Jan. Before 2005, the tax was based on how much property was given away each year, and you had to pay tax at rates of 1% to 6% once you gave away more than $25,000 a year. To get to the full $5.12 million, you give away out-of-state assets.Ĭonnecticut’s gift tax dates to 1991. (But watch out-if the property is held in a limited liability company, it would be subject to Connecticut gift tax clients need to keep their estate lawyer up to date on what they own and where, and how it is titled.)įor the first $2 million, Connecticut residents can gift any kind of property but what makes the most sense is to transfer assets expected to appreciate or that can be valued at a discount (shares in a family business, for example). So if you’re a Connecticut resident but you own a Cape Cod (Mass.) beach house with an Alex Katz oil in the family room, you can make a gift of that property (the house and the painting) without paying gift tax.
Connecticut’s gift tax doesn’t apply to real property or tangible personal property located out-of-state. If Connecticut residents try to use the whole $5.12 million, it could mean an extra $240,000 of Connecticut gift tax, says Karen Yates, a private client/estate lawyer with Withers Bergman in New Haven and Greenwich.īut even Connecticut residents have the opportunity to use the full $5.12 million exemption without paying the extra Connecticut tax by giving away out-of-state assets. Connecticut taxes lifetime gifts totaling more than $2 million with a top rate of 12%. For Connecticut residents aiming to use the full $5.12 million federal exemption, the giveaway is complicated by the state gift tax.
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