USA – CONNECTICUT Law and Practice Contributed by: William Kambas, Lawton Leung and Samantha Kopf, Withers
other states, Connecticut does not recognise transfer- on-death deeds for real estate. Lifetime gifts using the Connecticut lifetime exemp- tion amount reduce the size of the taxable estate at death and are useful when the value of assets is tem - porarily depressed. Individuals commonly transfer marketable securities, business interests, real estate and interests in family entities (often discounted) via lifetime gifts. Gifts can be made directly to individu- als or to irrevocable trusts (including grantor trusts and complex trusts, dynasty trusts, spousal lifetime access trusts and self-settled asset protection trusts), to family limited partnerships and/or to entities, such as LLCs. Connecticut law allows for directed trusts. Lifetime gifts or sales, or a combination thereof, of life insurance policies to grantor trusts that are drafted to specifically own and maintain life insurance policies are also commonly used to transfer wealth to the next generation and to provide liquidity to an estate. 6.2 Tax and Regulatory Constraints Connecticut statutory law provides that Connecticut real property and tangible personal property that is owned by a limited liability company that is disregard- ed for federal income tax purposes is to be treated as being personally owned by the decedent and there- fore subject to Connecticut estate tax. Accordingly, the use of a single-member limited liability company, or other pass-through entity, to own real property located in the state of Connecticut will not avoid Con- necticut estate tax.
The term “digital asset” refers to an electronic record in which an individual has a right or an interest. Digital assets can broadly be thought of as something cre- ated or stored digitally, such as online accounts, email accounts, social media accounts, cryptocurrencies, online written records and websites. 7.2 Planning Considerations When planning for the succession of digital assets, an individual should co-ordinate between the spe- cific user guidance of the platform where the digital asset is accessed, and the individual’s estate planning documents. Without co-ordination, access to certain digital assets may be blocked. An online tool can be used to direct the person who maintains the elec- tronic platform of the digital asset (referred to as the “custodian”) to disclose to a designated recipient the individual’s digital asset, including the electronic com- munications. Access to digital assets can be granted in whole or in part. Where a fiduciary seeks to access a digital asset, he or she will be required to furnish: • a written request for disclosure; • a certified copy of the death certificate of the user; • a certificate of appointment as the fiduciary; • a copy of the will, trust, power of attorney or other records evidencing the user’s consent to the disclosure of the content of the electronic commu- nicates (unless otherwise already directed by the user through an online tool); and • the account identifier for the user’s account, evidence linking the account to the user, or a court order identifying that the user had a specific account with the custodian. For best results, an individual should clearly state in a last will and testament or a will substitute (such as a revocable trust) the digital assets to which the appointed fiduciary is granted or denied access. Detailed information regarding account names and identifying information should be provided in a sepa- rate non-public document.
7. Succession of Digital Assets 7.1 Legal Framework
In the current and evolving virtual landscape, it is important to broaden the scope of succession plan- ning to include digital assets. Connecticut has adopt- ed the Connecticut Revised Uniform Fiduciary Access to Digital Assets Act, which enables an individual to grant a fiduciary access to digital assets. A fiduciary appointment under the act can be made by a last will and testament, by trust document, or by a power of attorney.
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