USA – CONNECTICUT Law and Practice Contributed by: William Kambas, Lawton Leung and Samantha Kopf, Withers
spouse is the sole owner and the property is solely titled in their name. A spouse’s right of succession arises at death, not during life. A married owner can sell, gift, encumber or otherwise transfer assets during life even if doing so reduces what the surviving spouse will get at death. Con- necticut cases have historically noted that a spouse may dispose of property during life without consent; see, for example, Harris v Spencer , 71 Conn. 233, 41 A. 773, 774 (Conn. 1898) and Hartford-Connecticut Tr. Co. v Lawrence , 106 Conn. 178, 138 A. 159, 161 (Conn. 1927). Connecticut imposes a gift tax regime that generally follows federal gift tax principles; gifts to a spouse are tolerated with special marital gift tax rules. There is no state statute that invalidates gifts by one spouse to unrelated third parties merely because they reduce what the other spouse might inherit at death. Connecticut does not have a statutory provision that automatically voids or “claws back” lifetime gifts on the basis that they were made to defeat a spouse’s right to succeed at death. Unlike some jurisdictions with specific elective share augmentation statutes, Connecticut’s elective share statute does not express- ly invalidate pre-death transfers nor treat all lifetime gifts as part of the decedent’s estate. 4.2 Prenuptial and Postnuptial Agreements Connecticut has adopted the Connecticut Premari- tal Agreement Act, codified at Conn. Gen. Stat. §§ 46b-36a et seq, which governs the enforceability of prenuptial agreements executed on or after 1 October 1995. Under this statute, prenuptial agreements are generally enforceable and can be used to address a wide range of issues, including the making of a will, trust or other arrangement to carry out the provisions of the agreement, ownership rights in and disposition of the death benefit from a life insurance policy and any other matter. For a prenuptial agreement to be valid and enforce- able in Connecticut, it must be in writing and signed by both parties and entered into voluntarily, without duress, coercion or undue influence. Such an agree- ment is enforceable without consideration. Before
signing, each party must disclose their financial sit- uation to the other, covering assets, liabilities and income. Each party should be given a reasonable opportunity to consult with their own attorney. The agreement must be fair and equitable at the time it was executed and when enforcement is sought. Provi- sions that violate public policy (eg, those attempting to override child support rights) are unenforceable. Postnuptial agreements are not governed by a spe- cific Connecticut statute but are recognised and enforceable under common law as contracts. The Connecticut Supreme Court held in Bedrick v Bedrick , 300 Conn. 691, 707, 17 A.3d 17, 29 (2011), that post- nuptial agreements are valid if they meet standard contract principles and are fair and equitable when made, without unconscionability at dissolution. Post- nuptial agreements in Connecticut must be entered into voluntarily, without undue influence, fraud, coer- cion or duress. Each spouse must provide full, fair and reasonable disclosure of all financial information, including separate and joint property, obligations and income. The terms must be fair and equitable at the time the agreement is made and not unconscionable at the time of divorce or enforcement. General princi- ples of contracts apply. 5. Tax Treatment of Lifetime Transfers and Testamentary Dispositions 5.1 Lifetime Transfers Connecticut is currently the only US state with its own state-level gift tax. This means that transfers of property made during life – including real estate, cash, business interests and other assets – can trigger a Connecticut gift tax. For residents of Connecticut, the gift tax applies to all transfers of property, except the transfer of tangi- ble personal property and real property having a situs outside the state of Connecticut. For non-residents of Connecticut, the gift tax applies to all transfers of real estate or tangible personal property located within the state of Connecticut. Connecticut uses a unified estate and gift tax system, meaning that the same lifetime exemption applies to
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