2015 Rhode Island Estate Tax Change, 0615 RIBJ, 63 RI Bar J., No. 6, Pg. 7

• Author: Anthony R. Mignanelli, Esq. Mignanelli & Associates, Ltd Providence.

2015 Rhode Island Estate Tax Change

Vol. 63 No. 6 Pg. 7

Rhode Island Bar Journal

June, 2015

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 May, 2015

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 Anthony R. Mignanelli, Esq. Mignanelli & Associates, Ltd Providence.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Rhode Island Legislature passed a new estate tax law in June of 2014 which effectively raised the Rhode Island estate tax exemption to $1, 500, 000 and also eliminated the cliff tax in the prior law. The effect of this new law for Rhode Island residents is that now spouses and domestic partners, with a collective net taxable estate of $3, 000, 000 or less, with proper estate planning, can fully eliminate the estate tax on these assets. This is a major change in Rhode Island law and significantly different from the prior estate tax law with a 2014 exemption of $921, 655, or $1, 843, 310 per couple.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0I) Analysis of the New Estate Tax Law

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The new estate tax law, as set forth in R.I. Gen. Laws 1956, § 44-22-1.1 is as follows:

For decedents whose death occurs on or after January 1, 2015, a tax is imposed on the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. Section 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall be allowed against any tax so determined in the amount of sixty-four thousand four hundred ($64, 400). Any scheduled increase in the unified credit provided in 26 U.S.C. Section 2010 in effect on January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016 and each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor and Statistics determined as of September 30 of the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) increment.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The cliff tax that existed under the previous Rhode Island law essentially removed the estate tax exemption in the tax calculation, once the value of the taxable estate exceeded the decedent's exemption for the year of death...