The federal government and most states levy a tax on a person’s accumulated net worth at death. Because some States and the federal government provide a partial exemption from these taxes if your net worth is below a certain threshold, most people are exempt from these taxes, but when they do “hit” they hit hard with rates as high as 45% or more. These taxes can be avoided or reduced with proper estate planning.  Connecticut, which amended its estate and gift tax rules in 2005 to create a $2 million exemption, amended its rules again in 2009 so that, starting in 2010, the gift and estate tax exemption will be $3.5 million.  This was done, in part, to lessen the incentive for Connecticut residents to relocate to more "tax friendly" states, such as Florida.