There’s an old joke that the only certainties in life are death and taxes. In a sense, estate taxes combine the two. An estate tax is a tax on a deceased person’s estate that must be paid before the heirs can receive their shares of the inheritance
As you probably already know, estate taxes are controversial. The good news is, most people in Connecticut don’t have to worry about them. And they are fairly easy to avoid using estate planning.
What is the estate tax rate in Connecticut?
For Connecticut residents who died in 2022, the state estate tax ranges from 11.6 to 12 percent. However, the law contains a fairly generous exemption. For 2022, the first $9.1 million in an estate’s assets are exempt.
Similarly, the IRS has set the exemption for the federal estate tax at $12.92 million for 2023, though it could go down to $5 million in 2026. Still, these exemptions mean that the vast majority of Connecticut residents won’t have to worry if their asses will be subject to estate taxes after they pass away.
How to use estate planning to minimize tax bills
Those who have amassed enough wealth may still have concerns. Most people want as much of their assets to go to their loved ones, favorite charities and other heirs as possible. Business owners especially can want to preserve the company they worked so hard to build. Fortunately, estate planning tools can help keep key assets out of probate and subject to estate taxes. Asset protection trusts are one of the primary strategies for accomplishing this.
Doing this properly so that your will and trust will be accepted by the probate court someday means working with an experienced estate planning attorney. Your lawyer will help you design a plan tailored to your goals, including minimizing the impact of taxes.