USA – CONNECTICUT Law and Practice Contributed by: William Kambas, Lawton Leung and Samantha Kopf, Withers
12. Cross-Border Succession Planning 12.1 Taxation of Cross-Border Estates and Transfers Non-Resident Decedents and Connecticut Situs Rules For non-resident decedents, Connecticut taxes only real property and tangible personal property located within the state under Conn. Gen. Stat. § 12‑391 (g); it generally excludes intangible personal property unless that property has acquired a business situs in Con- necticut. The Department of Revenue Services’ Non- resident Estate Tax Guidelines reinforce that Connect- icut‑situs real estate and tangible property are taxable, while stocks, bonds, partnership interests and cash typically are not, unless connected to a Connecticut business. Connecticut employs a proportional appor- tionment formula, also codified in § 12‑391 (g), mul- tiplying the total computed estate tax by a fraction representing Connecticut‑situs property over the total gross estate. This ensures that Connecticut taxes only its jurisdictionally based share. Treatment of Foreign Nationals Holding Connecticut Assets Foreign nationals who die owning Connecticut‑situs property are generally required to open a Connecti- cut probate proceeding under Conn. Gen. Stat. §§ 45a‑287 and 45a‑303, which govern ancillary and original probate jurisdiction. Connecticut probate courts treat these matters as independent admin- istrations, to ensure proper payment of state credi- tors, assessment of state estate tax obligations and lawful transfer of in‑state property. Probate may be avoided where assets pass via trust (governed by the Connecticut Uniform Trust Code, Conn. Gen. Stat. §§ 45a‑499a to 45a‑529f), through business entities or via survivorship rights; however, tax liability may still arise if Connecticut‑situs assets are owned by the decedent at death.
Situs‑Based Estate Tax Exposure Non-residents (including foreign nationals) are taxed on Connecticut real estate and tangible personal prop- erty under § 12‑391 (g). This may include business assets, art, vehicles, boats and other watercraft, or equipment physically located in Connecticut, includ- ing on its shoreline. Probate Requirements for Foreign Nationals Connecticut probate courts generally require local administration of Connecticut‑situs assets under §§ 45a‑287 and 45a‑303, even when a foreign estate exists, unless ownership structures (trust, entity, sur- vivorship) avoid probate.
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