Rhode Island Estate Tax Planning
Last updated: 16 Oct 2025
Rhode Island Estate Tax — Planning Guide
Practical strategies to reduce, allocate, and fund Rhode Island estate tax. Use this page with our Overview, Nonresident Guide, Forms & Deadlines, Cases, and Calculator.
Top planning moves (at a glance)
Reduce the taxable base
- Marital/charitable planning. Structure outright bequests or trusts to maximize deductions.
- Credit shelter (bypass) trust. Capture the state-level credit/exemption at first death to shelter growth for the survivor.
- Lifetime gifts. Shift future appreciation out of the estate; coordinate basis and federal gift/GST considerations.
- Valuation & discounts. Consider FLP/LLC interests, minority/lack-of-marketability discounts where appropriate and well-documented.
Allocate who pays
- Tax apportionment clauses. Align will/trust language with Rhode Island’s apportionment statute so the burden matches intent.
- Nonresident coordination. For out-of-state domiciliaries owning RI real property/tangibles, specify who bears the RI share (see Nonresident Guide).
- Specific vs. residuary gifts. Prevent inadvertent over-burdening of the residue by charging tax proportionally or as directed.
Liquidity planning (funding the bill)
ILIT & cash sources
- ILIT-owned life insurance to create outside liquidity and avoid probate delays.
- Entity distributions/lines pre-arranged for closely held businesses.
- Coordinate with federal §6166 (if applicable to the business) and confirm state-level expectations.
Closings & transfers
- Plan for T-77 (discharge of lien on RI real property) at or before closing.
- Identify securities needing a T-79 waiver to avoid transfer-agent holds.
- Keep escrow options open where timing is tight.
Residency & situs considerations
- Primary residence & domicile evidence. Maintain clear records supporting your home-state domicile.
- RI-situs exposure. Real property and tangibles located in Rhode Island remain within the RI estate tax scope; entity interests are typically intangibles.
- Title & entity structuring. Evaluate ownership forms (e.g., titling, entities) mindful of estate inclusion, basis, and creditor concerns—substance over form applies.
Document design (clauses & elections)
| Clause / tool | Purpose | Practice note |
|---|---|---|
| Credit shelter trust (CST) | Use decedent’s state credit/exemption; shelter future growth. | Coordinate with federal portability; model survivor cash flow. |
| QTIP trust | Defer state tax to survivor while controlling remainder. | Track state vs. federal QTIP alignment; maintain election evidence. |
| Tax apportionment | Allocate who bears the state tax across assets/beneficiaries. | Harmonize with Rhode Island’s apportionment statute to avoid conflict. |
| Charitable planning | Leverage the charitable deduction; integrate with income-tax goals. | Consider CRT/CLT structures and beneficiary income profiles. |
| ILIT for liquidity | Provide non-probate cash to pay state tax and expenses. | Observe transfer-for-value and three-year lookback rules federally. |
Suggested planning workflow
- Inventory assets, debts, titling, and beneficiary designations (probate & non-probate).
- Model federal vs. RI exposure with our calculator.
- Choose structure (CST/QTIP/charitable/ILIT, titling changes) and draft apportionment clauses.
- Plan liquidity for the nine-month due date; map T-77/T-79 requirements.
- Execution: retitle assets, fund trusts, update beneficiary forms, and set review reminders.
Checklists
Pre-mortem plan
- Asset & debt schedule with estimated values and growth rates.
- Draft/update will, revocable trust, and apportionment clause.
- Decide CST vs. QTIP (or both) and charitable components.
- Consider ILIT or alternative liquidity sources.
- Review RI-situs property exposure and documentation.
Post-mortem actions
- Select valuation date; order appraisals (real property and key tangibles).
- Confirm if RI-706 is required; align with federal schedules.
- Prepare for T-77/T-79 as needed; coordinate with title agents.
- Schedule payment by nine months; consider extension to file.
FAQs
Is portability alone enough for Rhode Island?
Portability is a federal concept. Rhode Island uses its own state credit/exemption; many couples still use a credit shelter trust to capture state-level shelter and future growth.
Should I gift or wait for step-up in basis?
It depends on asset growth, basis, and your RI exposure. High-growth, low-basis assets may still justify lifetime transfers—model both scenarios before acting.
How do nonresidents plan around RI estate tax?
Limit RI-situs exposure (or align ownership/insurance for liquidity), and include clear apportionment instructions. See the Nonresident Guide.
Do T-77/T-79 affect whether tax is due?
No; they are administrative gatekeepers for transfers. They require proof of compliance or non-requirement and should be planned into the timeline.