If someone you loved recently passed away and owned property or assets in Connecticut, you may have come across Form CT-706 and felt overwhelmed by the paperwork ahead. The Connecticut estate tax form CT-706 instructions can feel dense and confusing, especially when you're already dealing with grief. But understanding how to fill out this form correctly matters errors can lead to penalties, delays in settling the estate, or overpaying taxes. This article breaks down the CT-706 instructions step by step so you can file with confidence.

What Is Connecticut Estate Tax Form CT-706?

Form CT-706 is the Connecticut Estate and Gift Tax Return. The executor or administrator of a deceased person's estate uses this form to report the total value of the estate and calculate any Connecticut estate tax owed. Connecticut is one of a handful of states that levies its own estate tax separate from the federal estate tax, so filing this form is a state-level requirement not a federal one.

The form asks for detailed information about the decedent's assets, deductions, taxable gifts made during their lifetime, and any credits that apply. The full CT-706 instructions walk filers through each schedule and line item, but they're written in dense tax language that can be hard to parse without background knowledge.

Who Needs to File Form CT-706?

Not every estate in Connecticut needs to file Form CT-706. Whether you must file depends on the total gross estate value and the year of death. Connecticut has adjusted its estate tax exemption threshold over the years, so the applicable exemption depends on when the decedent passed away.

For deaths occurring in 2023 or later, the Connecticut estate tax exemption is indexed to the federal estate tax exemption amount. For 2024, the federal exemption is $13.61 million per individual, and Connecticut generally follows suit. If the gross estate combined with adjusted taxable gifts exceeds this threshold, a return must be filed.

Even if no tax is ultimately owed, filing may still be required to claim portability of the Connecticut estate tax exemption for a surviving spouse. When in doubt, check the documents required for Connecticut estate tax filing to understand the full scope of what's expected.

What counts toward the gross estate?

The gross estate includes nearly everything the decedent owned or had an interest in at the time of death:

  • Real estate in Connecticut and elsewhere
  • Bank accounts, stocks, bonds, and brokerage accounts
  • Retirement accounts and IRAs
  • Life insurance proceeds (in some cases)
  • Business interests
  • Personal property such as vehicles, jewelry, and art
  • Trusts the decedent had control over

If the decedent held an IRA, there are additional considerations. You may need to file specific forms for estate settlement with an IRA as part of the overall process.

When Is the CT-706 Due?

The CT-706 is due nine months after the date of death. This is the same deadline as the federal estate tax return (Form 706). If you need more time, you can request an extension, but this only extends the time to file not the time to pay any tax due. Interest will accrue on unpaid tax from the original due date.

Late filing can trigger penalties in addition to interest. If you're unsure about your timeline, review the details on when the Connecticut estate tax return is due to avoid missing critical deadlines.

How Do I Read the CT-706 Instructions Without Getting Lost?

The CT-706 instructions run through multiple schedules, and it's easy to lose track of what goes where. Here's a simplified breakdown of the major sections:

Schedule A Real Estate

List all real property owned by the decedent. Include the address, type of property, and fair market value as of the date of death. A professional appraisal is often needed for real property.

Schedule B Stocks and Bonds

Report all publicly traded securities, bonds, and mutual funds. Use the fair market value on the date of death not the purchase price. For publicly traded stocks, use the average of the high and low prices on the date of death.

Schedule C Mortgages, Notes, and Cash

Include bank account balances, CDs, money owed to the decedent, and any cash on hand. You'll also report mortgages the decedent held (as an asset, not a liability).

Schedule D Life Insurance

Report the full death benefit of any life insurance policy the decedent owned or had incidents of ownership over. This includes term, whole, and universal life policies.

Schedule E Jointly Owned Property

For jointly held property (such as a home owned with a spouse), report the full fair market value but note how much was included in the estate. Joint property between spouses is generally included at 50%.

Schedule F Other Miscellaneous Property

This covers anything that doesn't fit in the other categories personal effects, partnership interests, intellectual property, and similar assets.

Schedule G Transfers During Lifetime

Report any taxable gifts the decedent made during their lifetime that exceed the annual gift tax exclusion. Connecticut uses a cumulative gift tax system, so past gifts matter here.

Schedule U Deductions

This is where you claim deductions that reduce the taxable estate, such as funeral expenses, debts, administrative costs, and the marital deduction for assets passing to a surviving spouse.

What Are the Most Common Mistakes on Form CT-706?

Errors on the CT-706 can be costly. Here are the mistakes tax professionals see most often:

  • Undervaluing real estate. Executors sometimes use the property tax assessment rather than fair market value. These are rarely the same number. Get a proper appraisal.
  • Forgetting lifetime gifts. Connecticut requires you to report cumulative taxable gifts made after January 1, 2005. Missing these throws off your entire calculation.
  • Leaving out jointly owned property. Even if the surviving co-owner assumes full ownership, the decedent's share still belongs in the gross estate.
  • Misreporting life insurance. If the decedent owned the policy or could change the beneficiary, the full death benefit is part of the estate not just the cash value.
  • Missing the filing deadline. Nine months goes fast when you're handling probate, notifying beneficiaries, and dealing with grief. Set calendar reminders early.
  • Not filing when no tax is due. Even if the estate is under the exemption, you may still need to file to claim portability or satisfy probate court requirements.

Do I Need a Professional to Fill Out Form CT-706?

There's no legal requirement to hire a professional, but the CT-706 is not a simple form. If the estate includes real property, business interests, trusts, or large lifetime gifts, working with a Connecticut estate tax attorney or a CPA who handles estate returns is strongly recommended. The cost of professional help is usually an administrative expense of the estate meaning the estate pays for it, not you personally.

For straightforward estates with mostly bank accounts and a home, some executors handle the filing themselves. If you go this route, read the instructions line by line, keep copies of all supporting documents, and file the Connecticut estate tax return on time.

Where Do I Send Form CT-706?

Completed CT-706 forms and supporting documents are filed with the Connecticut Department of Revenue Services (DRS). You can file by mail or electronically through the DRS online portal. The mailing address is listed on the form itself and in the instructions. Keep a copy of everything you submit, along with proof of mailing if you file by paper.

You can find official forms and filing information on the Connecticut Department of Revenue Services website.

Does Connecticut Have a Gift Tax That Affects Form CT-706?

Yes. Connecticut is one of the few states with its own gift tax. Any taxable gifts made by the decedent after January 1, 2005, must be reported on Schedule G of the CT-706. These gifts are added back into the estate value to determine the total Connecticut estate tax. This is different from the federal system, where gifts reduce the estate tax exemption but aren't added back in the same way.

Annual exclusion gifts (up to $18,000 per recipient in 2024) don't need to be reported. But gifts above that amount to any one person in a given year should be tracked and included.

Checklist: What to Gather Before You Start Filing

  • Death certificate (certified copies)
  • Will or trust documents
  • Property appraisals for real estate
  • Statements for all bank accounts, investment accounts, and retirement accounts as of the date of death
  • Life insurance policy information and death benefit amounts
  • Records of any gifts made after January 1, 2005
  • Funeral and burial expense receipts
  • Outstanding debts and liabilities of the decedent
  • Prior Connecticut gift tax returns, if any were filed
  • Prior federal gift tax returns (Form 709), if applicable
  • Tax identification number for the estate (EIN)

Gather all of this before sitting down with the form or meeting with a tax professional. Having the documents ready will save time, reduce back-and-forth, and help you file an accurate return by the nine-month deadline.