How are Pensions Valued for Estate Tax Purposes?

 In Estate and Gift Taxes
pension valuation

Photo by Kenny Eliason on Unsplash


What percentage of present value of a pension is included in CT 706NT?


I don’t know about Connecticut in particular, but it likely follows the federal rules. Under those rules, the present value of anticipated pension payments must be included on the estate tax return. Your accountant or probate attorney should have software that can calculate this. But the pension company should also provide a more accurate calculation that factors in the age of the new annuitant, the likely payments during their life expectancy, and a discount given that the payments will be coming in the future rather than immediately. The discount is affected by current interest rates with the discount increasing as inflation increases since this reduces the value of future payments.

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