Cummings & Lockwood

Client Alert - Connecticut Changes Estate and Gift Tax Exemption - Final Answer?

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September 7, 2018

In 2018, the Connecticut exemption amount from estate and gift tax has been increased from its prior level of $2,000,000 per individual to $2,600,000.  It is slated to increase to $3,600,000 beginning on January 1, 2019.

However, there has been some confusion as to what is to occur in 2020 and future years because in May of this year Governor Dannel P. Malloy and the Connecticut legislature enacted two different bills with respect to the Connecticut estate and gift tax.  Senate Bill 11  was passed by the Connecticut House of Representatives and signed by the Governor which would cap the Connecticut exemption amount at $5,490,000 as of January 1, 2020 and succeeding years rather than matching the federal exemption of $10,000,000 indexed for inflation beginning on January 1, 2020.  This bill was passed by the Connecticut House of Representatives on May 9, 2018 at 10:42 p.m.

However, 39 minutes later, Senate Bill 543 passed the Connecticut House of Representatives and was later signed by the Governor.  Senate Bill 543 was passed on May 9, 2018 at 11:21 p.m.  Senate Bill 543 would raise the Connecticut estate and gift tax exemption more dramatically over a period of years.  Under this Bill, the Connecticut exemption amount will be $5,100,000 in 2020, $7,100,000 in 2021, $9,100,000 in 2022 and will match the federal exemption amount effective January 1, 2023.  

Due to the conflict in the two Senate Bills, the Legislative Commissioner’s Office which resolves legislative conflict and publishes the official laws of Connecticut is expected to rule that Senate Bill 543 will be the governing law as it was passed by the House of Representatives later than Senate Bill 11.  C.G.S. Section 2-20b indicates that such conflicts shall be resolved by using the act which is passed last in the second house of the General Assembly.  While we expect that Senate Bill 543, with the higher exemption amounts, will be the law of the land, until we receive official word, we continue to plan for either contingency.  We will, of course, publish further alerts as the process progresses.

It is important to note that, regardless of which bill is ultimately determined to be the official law, the estate and gift tax cap, the maximum amount an individual is liable to pay to Connecticut in combined estate and gift tax, is still scheduled to be reduced from $20,000,000 to $15,000,000 effective January 1, 2019.