2025 Connecticut Estate‑Tax Survival Guide

If you’re a Connecticut family with $2 to $6 million in investable assets, 2025 presents a unique and possibly fleeting, opportunity to preserve more of your legacy.

With Connecticut’s estate tax exemption set at a record-high $13.99 million per person in 2025, and the federal exemption expected to drop by nearly half in 2026, this is the year to reevaluate your estate strategy. Unlike federal law, Connecticut does not offer “portability” between spouses, meaning any unused exemption from a deceased spouse is lost forever.

This guide walks you through what’s changing, why it matters, and the most effective planning tools available, so you can take action before the rules shift again.

Why This Guide Has Significance in 2025

• The Connecticut estate-tax exemption goes up to $13.99 million for each person when death occurs in 2025.
• However, on January 1, 2026, the federal exemption is set to fall by about half (to around $6.2 million adjusted for inflation) if Congress doesn’t act (cga.ct.gov).
• Connecticut doesn’t allow a living spouse to use the unused CT exemption of a deceased spouse (“no portability”) this can lead to unexpected taxes for mid-sized estates.

Bottom line: 2025 gives you a prime chance to revamp your estate while the current record-high exemptions remain in effect.

Connecticut Estate Tax at a Glance (2025)

How the Federal & Connecticut Taxes Work Together

1. Federal portability vs. CT non‑portability: Federal law allows a surviving spouse to claim any unused federal exemption, but Connecticut doesn’t. Couples should balance ownership so each spouse can use their full $13.99 M CT shield.
2. Sunset cliff: If the federal exemption drops to about $6 M in 2026, Connecticut might keep its higher limit, or lawmakers might reset. Planning now prevents last‑minute rushes.
3. Credit ordering: You can deduct any CT estate tax paid for federal purposes; the effective combined rate for CT residents in 2025 is 47.2% on dollars above both exemptions.

Planning Strategies to Use Before 2026

#1: Lifetime‑Gifting Tactics

• Annual Exclusion Gifts – $19,000 per recipient in 2025, no limit on number of recipients.
• Spousal Lifetime Access Trust (SLAT) – One spouse gives assets to an irrevocable trust to benefit the other securing exemption while maintaining indirect access.
• Dynasty Trusts – Use your exemption plus valuation discounts to protect growth for several generations.

#2: Trust‑ & Entity‑Based Moves

• Irrevocable Life‑Insurance Trust (ILIT) – keeps insurance payouts out of both estates.
• Qualified Personal Residence Trust (QPRT) – locks in home value while you continue living there.
• Family Limited Partnership (FLP)/LLC – groups assets, applies minority discounts, and moves appreciation to heirs.

#3: Charitable & Community‑Minded Planning

• Donor‑Advised Fund (DAF) – Give to charity and cut your taxable estate.
• Charitable Remainder Trust (CRT) – Get income for life, give the rest to charity, and enjoy a tax break now.
• Art & Cultural Gifts – Give to Hartford Stage, Mystic Seaport or Yale museums to match your taxes with your legacy.

#4: Domicile Considerations

Moving to Florida might wipe out CT estate tax, but watch out:

• 183‑day rule + “closer connection” test.
• You’ll still owe CT income tax on money you make in CT.
• It costs money to follow laws in two states. Sometimes it’s cheaper to stay put and plan.

Illustrative Tax Scenarios (Single Person)

(This assumes death in 2025, no lifetime gifts, and no IRS portability election to keep things simple.)

2025 Estate-Tax Action Timeline

Here is your Estate-Tax action timeline:

Q2 2025:

• Key Deadlines:
  • 6/30 – Submit 2024 gift-tax return if you got a 6-month extension

• To Do’s:
  • List all assets (include real estate, LLCs, retirement accounts)
  • Write or update wills & revocable trusts

Q3 2025:

• Key Deadlines:
  • 9/15 – Pay calendar-year LLC estimated taxes

• To Do’s:
  • Set up SLAT or other irrevocable trusts
  • Start appraisals for assets that are hard to value

Q4 2025:

• Key Deadlines:
  • 12/31 – Last day to make 2025 gifts

• To Do’s:
  • Complete large exemption gifts
  • Put money into ILIT/QPRT
  • Check beneficiary designations

Q1 2026:

• Key Deadlines:
  • 1/01/26 – Exemption might drop

• To Do’s:
  • Turn in portability election (Form 706) for any 2025 deaths within 9 months
  • Look at remaining exemption space again

Your Connecticut Estate‑Planning Checklist

☑  Calculate net worth including life‑insurance death benefit.
☑  Equalize spouses’ ownership for non‑portable CT exemption.
☑  Max out $19 k annual gifts (use 529 accounts for grandchildren).
☑  Decide on SLAT vs. outright gifting; coordinate with CPA for basis step‑up issues.
☑  Update powers of attorney & health‑care proxies.
☑  Confirm digital‑asset access (password managers, crypto keys).
☑  Hold family meeting to explain legacy goals.

How Fuchs Financial Can Help

The Best Time to Act Is Before the Deadline Hits

Estate planning laws are changing, and for mid-sized estates in Connecticut, the difference could mean hundreds of thousands of dollars lost or saved.

The strategies in this guide aren’t just for the ultra-wealthy. With smart planning, through trusts, gifting, tax-aware entity structures, and legacy conversations, you can protect more of what you’ve built and pass it on with confidence.

At Fuchs Financial, we specialize in helping Connecticut families navigate these critical decisions with clarity and care. If you’d like help reviewing your options or creating a plan before the 2026 exemption changes, we invite you to schedule a 15-minute Fit Call to see if we’re the right partner for you.

Frequently Asked Questions