Connecticut’s evolving landscape for estate and trust planning

The Connecticut Uniform Trust Code and Uniform Directed Trust Act

A major inflection point in Connecticut trust law occurred with the adoption of the Connecticut Uniform Trust Code, which has been in effect since 1 January 2020. For the first time, Connecticut implemented a comprehensive statutory framework governing testamentary trusts, revocable trusts, irrevocable trusts, charitable trusts and private trusts. Prior to this enactment, Connecticut trust law was governed largely by a combination of common law principles and piecemeal statutes. The Uniform Trust Code introduced clarity, consistency and predictability by providing default rules governing trust administration, fiduciary duties and beneficiary rights.

Although the Uniform Trust Code permits significant flexibility through trust drafting, Section 45a-499e of the Connecticut General Statutes establishes that, unless modified by the terms of a trust instrument, the Code governs “the duties and powers of a trustee, relations among trustees and the rights and interests of a beneficiary.” This statutory framework has enhanced Connecticut’s appeal by providing a modern baseline that trustees, beneficiaries and courts can rely upon, while still preserving the grantor’s ability to tailor the trust’s terms to specific family or business objectives.

Building on the Uniform Trust Code, Connecticut adopted the Uniform Directed Trust Act, further expanding the state’s trust-planning toolkit. The Directed Trust Act allows for the separation of powers and responsibilities traditionally vested in a single trustee among a trustee and one or more trust directors. Under this framework, a trustee may retain responsibility for administrative functions, while investment authority may be delegated to an investment director and distribution authority delegated to a distributions director. This separation of functions reflects the practical reality that different individuals or institutions may be best suited to handle different aspects of trust management.

Unless a trust instrument provides otherwise, those with fiduciary positions are subject to the same fiduciary duties and potential liabilities in the exercise or non-exercise of their powers as a trustee would have under similar circumstances. Directed trust structures therefore allow grantors to retain trusted advisers, family members or investment professionals in key decision-making roles, as appropriate, while still leveraging the administrative capabilities of a corporate trustee. For families with concentrated investments, operating businesses or unique governance needs, the Directed Trust Act provides meaningful flexibility without sacrificing fiduciary accountability.

Self-settled asset protection trusts

Connecticut has also entered the asset protection trust arena through the enactment of the Connecticut Qualified Dispositions in Trust Act, becoming the nineteenth state to authorise self-settled asset protection trusts. Under this statute, a grantor may transfer assets to a trust for their own benefit while potentially limiting the reach of future creditors, subject to important statutory safeguards. In particular, property transferred to a Connecticut asset protection trust remains subject to creditor claims in two key circumstances: first, for claims that arose before the transfer, if an action is brought within four years of the transfer; and second, for claims that arise after the transfer, if brought within four years of the transfer.

Because assets transferred to a Connecticut asset protection trust remain exposed to creditor claims during this statutory window, such transfers are not treated as completed gifts for gift tax purposes and do not achieve estate tax protection until the creditor claim period has expired. As a result, asset protection trusts under Connecticut law are not a short-term planning solution. Instead, they require early implementation and careful integration with broader estate and tax-planning strategies, particularly where significant gifting or estate tax minimisation is a primary objective.

Connecticut courts have also made clear that asset protection trusts created under the laws of other jurisdictions will not necessarily be respected if enforcement is sought in Connecticut. In Netter v Netter, the Connecticut Appellate Court held that Connecticut will not enforce another jurisdiction’s self-settled spendthrift trust laws if doing so would violate Connecticut public policy. The court concluded that if a self-settled trust does not satisfy the requirements of the Connecticut Qualified Dispositions in Trust Act, or if sustaining the trust would substantially prejudice the rights of interested parties, Connecticut common law applies and the trust may be deemed void as a matter of public policy. Individuals who have established self-settled asset protection trusts under the laws of another state or country should therefore be aware that, if a Connecticut court is asked to enforce such a trust, it will be evaluated under Connecticut law rather than the law of the trust’s original jurisdiction.

Extension of the perpetuities period

Another significant development enhancing Connecticut’s appeal for long-term planning is the extension of the state’s perpetuities period. Under the Uniform Statutory Rule Against Perpetuities, Connecticut now permits trusts to last for up to 800 years. This extended duration allows for the creation of dynasty trusts designed to preserve family wealth, provide creditor protection, and achieve transfer tax efficiency across multiple generations. Because Connecticut’s estate tax exemption generally matches the federal exemption, a grantor can fund an irrevocable trust with up to USD15 million today, remove those assets from the transfer tax system, and allow them to remain outside of any beneficiary’s estate for centuries, assuming proper structuring and administration.

Trust “decanting”

The most recent major statutory addition to Connecticut trust law is the adoption of the Uniform Trust Decanting Act, which has been in effect since 1 January 2025. The Decanting Act permits a trustee of a trust that is not created under a will to transfer trust assets from an existing trust into a new trust without court approval or beneficiary consent, provided statutory requirements are satisfied and the perpetuities period of the original trust is respected. Decanting offers trustees and advisers a powerful mechanism to modernise older trusts, respond to changes in tax law, refine administrative provisions, or address evolving family circumstances without the delay, expense, or uncertainty associated with judicial modification proceedings.

Electronic signatures

Connecticut does not permit electronic signing of wills or other core estate‑planning documents. A valid Connecticut will must be in writing and signed in the physical presence of two witnesses, meaning electronic signatures and remote witnessing are not legally recognised. Although Connecticut has adopted the Uniform Electronic Transactions Act (UETA) under Connecticut General Statutes Section 1-266 et seq, which generally gives electronic signatures the same effect as handwritten ones, Connecticut explicitly exempts wills and testamentary trusts from electronic execution. Connecticut has legalised remote online notarisation (RON) for many documents, but the statute specifically prohibits remote notarisation for wills, trusts, powers of attorney, and other key estate‑planning instruments. This means documents requiring notarisation as part of an estate plan must still be executed with traditional, in‑person notarisation. 

While a Connecticut revocable or irrevocable trust is not required to be in writing to be valid (unless it contains real property, the statute of frauds requires a written, executed and notarised trust), an irrevocable trust should be in writing to expressly provide that the trust is irrevocable. A revocable or irrevocable trust does not need to be witnessed or notarised (unless it contains real property). However, it is common to have trust agreements signed by at least two disinterested witnesses and to have the settlor’s and trustee’s signatures be notarised. If necessary, witnesses can testify to the settlor’s capacity (and regarding any undue influence or fraud) and a notarised trust gives a presumption of validity.

Cross-state considerations

Beyond trust and estate law, Connecticut has also made notable changes affecting closely held businesses and individuals earning income across state lines. Connecticut fundamentally restructured its Pass-Through Entity Tax (PTET) beginning in 2024. Once mandatory, the PTET is now elective on an annual, irrevocable basis. Partnerships and S corporations must affirmatively choose each year whether to elect into the PTET regime, with outcomes varying depending on owner residency, income sourcing, and federal State and Local Tax deduction considerations. For many closely held businesses, this change has transformed PTET analysis from a one-time compliance exercise into an ongoing strategic decision that must be revisited annually.

Connecticut has also responded to the growing prevalence of remote work and multi-state employment arrangements. Connecticut enacted a targeted income tax credit for Connecticut residents who successfully obtain refunds from other states that taxed income earned while the taxpayer was physically working in Connecticut. Although the credit is narrow in scope, it reflects Connecticut’s increasing engagement with cross-border wage taxation and questions arising from “convenience of the employer” rules imposed by other jurisdictions.

Taken together, these developments reflect a Connecticut legal environment that has become significantly more sophisticated and flexible from a trust-law perspective, while remaining assertive with respect to tax enforcement. Connecticut offers the structural tools traditionally associated with leading trust jurisdictions, including directed trusts, decanting, extended perpetuities and asset protection planning. At the same time, its estate tax, gift tax, residency rules and income tax regime require planning and ongoing attention to detail and contemporaneous documentation supporting a bona fide rationale for planning with economic substance.