Let’s start with the good news. The vast majority of us are not subject to federal estate taxes because the current (2021) threshold is $11.7 million for individuals and $23.4 for couples filing jointly. However, assets in excess of these amounts could be subject to federal estate tax.
The states of New York and Connecticut also levy their own estate taxes. The basic exclusion amount for New York in 2021 is $5.93 million. If a New York resident’s federal gross estate, plus the amount of any includible gifts, exceeds this amount at the date of death, a New York estate tax return must be filed. The New York estate tax rate starts at 5% and increases to a maximum of 16%. In Connecticut, the basic exclusion amount in 2021 is $7.1 million. The rate starts at 10.8% and increases to 12% depending on the size of the estate.
With proper planning, it is possible minimize or even eliminate both state and federal estate taxes.
