If you're a resident of Connecticut and leave behind more than $9.1 million (for deaths occurring in 2022), your estate might have to pay Connecticut estate tax. The Connecticut tax is different from the federal estate tax, which is imposed on estates worth more than $12.06 million (for deaths in 2022). So even if your estate isn't large enough to owe federal estate tax, it might still owe Connecticut estate tax.
But it's not just state residents who might owe Connecticut estate tax. If you're a nonresident but own real estate or other tangible assets (a boat or plane, for example) located in Connecticut, your estate might also need to file a Connecticut estate tax return.
If the taxable estate of a Connecticut resident has a value of more than $9.1 million, it will owe estate tax, and the personal representative or executor of the estate must file the CT-706 state estate tax return. Generally, your taxable estate is equal to your "gross estate" minus any deductions your estate is allowed to take.
Your gross estate will include just about all of the property you own at your death:
Your estate might be able to take certain deductions, such as:
Co-ownership. If you own assets with someone else, generally only your share will be included in your estate. In other words, if you and your spouse own your house, half of its value would be included in your estate.
Non-probate assets. Notably, your gross estate also includes non-probate assets. For example, the property you hold in a revocable living trust avoids probate, but it does not avoid estate taxes, and is counted in your gross estate.
Portability. The federal estate tax regime allows a surviving spouse to use the deceased spouse's unused portion of the exemption—a feature called "portability." However, Connecticut's estate tax does not offer portability between spouses; each spouse has a separate exemption amount of $9.1 million.
The nontaxable estate return. Even if your taxable estate is under $9.1 million, Connecticut still requires an estate tax return. Form CT-706 NT is filed with the Probate Court rather than the Department of Revenue Services.
If your estate owes estate tax, how much will it actually owe? In Connecticut, the tax rate currently ranges from 10.8 to 12% depending on the size of the estate. In 2023, the Connecticut estate tax is set to become a flat-rate tax of 12%. (Compare these rates to the current federal rate of 40%.) See the Connecticut statute for the exact estate tax rates.
A Connecticut estate tax return must be filed after your death, regardless of the size of your estate. It will be your executor's responsibility to file either Form CT-706 (for taxable estates) or CT-706 NT (for nontaxable estates). Both the return and any tax owed are due six months after the death. Downloadable estate tax returns and instructions are available from the Connecticut Department of Revenue Services, but your executor will likely require expert help. Your executor can hire an experienced lawyer or CPA and pay the fee from your estate's assets.