Rhode Island Estate & Gift Tax Overview
Rhode Island is one of twelve states (plus D.C.) that impose a state-level estate tax. With a CPI-indexed exemption of $1,774,583 for 2024 decedents, Rhode Island's threshold is significantly lower than the federal exemption ($13.61 million), meaning many estates that owe no federal tax face substantial state liability.
I handle Rhode Island estate and gift tax matters regularly — particularly Form 709 gift tax reporting for RI real property transfers, deed reconciliation when recording anomalies arise, adequate disclosure compliance, conveyance tax analysis, and audit binder preparation. Rhode Island's relatively low exemption makes proactive planning essential for property owners with even moderate wealth.
Key advantage: Rhode Island has no state gift tax and no gift clawback rule. Unlike New York (which claws back gifts made within 3 years of death), Rhode Island permanently excludes lifetime gifts from the taxable estate. This makes systematic gifting one of the most powerful tools for reducing RI estate tax exposure.
Rhode Island Estate Tax Calculator
Estimate the RI estate tax using the current CPI-indexed exemption and graduated rate structure based on the IRC Section 2011 credit table.
Rhode Island Conveyance Tax Calculator
Calculate the RI real estate conveyance tax under R.I. Gen. Laws Section 44-25, including the mansion surcharge on transfers exceeding $800,000 (effective October 2024).
Form 709 Adequate Disclosure Audit Checklist
Use this interactive checklist to verify that your Form 709 filing meets all adequate disclosure requirements under Treas. Reg. Section 301.6501(c)-1(f). Adequate disclosure starts the 3-year statute of limitations — without it, the IRS can challenge the gift indefinitely.
Rhode Island Estate & Gift Tax Deep Dive
The CPI-Indexed Exemption: How It Works
Rhode Island's estate tax exemption is adjusted annually for inflation under R.I. Gen. Laws Section 44-22-1.1(a). The base amount of $850,000 was set for 2010 decedents and increases each year by the CPI-U percentage change. This automatic indexing ensures the exemption keeps pace with inflation without requiring legislative action — a significant advantage over states like Massachusetts (frozen at $1 million for over two decades) and New York (which requires periodic legislative updates).
| Year | RI Exemption | Federal Exemption | Gap |
|---|---|---|---|
| 2020 | $1,579,922 | $11,580,000 | $9,998,078 |
| 2021 | $1,595,156 | $11,700,000 | $10,104,844 |
| 2022 | $1,648,611 | $12,060,000 | $10,411,389 |
| 2023 | $1,733,264 | $12,920,000 | $11,186,736 |
| 2024 | $1,774,583 | $13,610,000 | $11,835,417 |
| 2025 (est.) | ~$1,830,000 | $13,990,000 | ~$12,160,000 |
No Cliff Provision — A Critical Distinction
Unlike New York's devastating 105% cliff (where the entire exemption vanishes if the estate exceeds 105% of the exemption), Rhode Island uses a straightforward exclusion model. The exemption generates a credit that offsets tax on the first $1,774,583. Only amounts above the exemption are subject to tax. This means exceeding the exemption by $1 triggers tax only on that $1 — not on the entire estate.
Graduated Rate Structure
Rhode Island's estate tax rates follow the federal credit table from IRC Section 2011 (pre-EGTRRA). The effective rates are graduated:
| Taxable Estate Bracket | Marginal Rate |
|---|---|
| $0 – $40,000 above exemption | 0.8% |
| $40,001 – $90,000 | 1.6% |
| $90,001 – $140,000 | 2.4% |
| $140,001 – $240,000 | 3.2% |
| $240,001 – $440,000 | 4.0% |
| $440,001 – $640,000 | 4.8% |
| $640,001 – $840,000 | 5.6% |
| $840,001 – $1,040,000 | 6.4% |
| $1,040,001 – $1,540,000 | 7.2% |
| $1,540,001 – $2,040,000 | 8.0% |
| $2,040,001 – $2,540,000 | 8.8% |
| $2,540,001 – $3,040,000 | 9.6% |
| $3,040,001 – $3,540,000 | 10.4% |
| $3,540,001 – $4,040,000 | 11.2% |
| $4,040,001 – $6,540,000 | 12.0% |
| $6,540,001 – $8,540,000 | 14.4% |
| Over $8,540,000 | 16.0% |
No State Gift Tax — A Major Planning Advantage
Rhode Island does not impose a state-level gift tax. Combined with the absence of a gift clawback provision, this creates a powerful planning opportunity: every dollar gifted during life permanently and irrevocably reduces the RI taxable estate. Compare this to:
- New York: Gifts within 3 years of death are clawed back into the taxable estate
- Connecticut: Has its own state gift tax with a $13.61M lifetime exemption
- Minnesota: Three-year gift clawback for estates within 110% of exemption
For Rhode Island, once a gift is made, it is permanently removed from the estate for state tax purposes. Annual exclusion gifts of $18,000 per donee (2024) are especially effective because they reduce both the federal and RI estate tax exposure without using any lifetime exemption.
RI Estate Tax Filing Requirements
Form RI-706 must be filed for every decedent who was a Rhode Island domiciliary (or owned RI real/tangible personal property) and whose gross estate exceeds the filing threshold (equal to the exemption amount). Key deadlines:
- Due date: 9 months from the date of death (same as federal Form 706)
- Extensions: Automatic 6-month extension available upon request
- Payment: Tax is due at the original filing deadline regardless of extension
- Interest: Accrues from the original due date on any unpaid balance
When Form 709 Must Be Filed for RI Property Gifts
IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) must be filed when a donor makes a gift of Rhode Island real property and any of the following apply:
- The gift exceeds the annual exclusion ($18,000 per donee in 2024)
- The gift is of a future interest (regardless of amount)
- The donor and spouse elect to split gifts under IRC Section 2513
- The gift is to a trust (even if under the annual exclusion, if no Crummey powers)
- The donor is transferring a partial interest in real property
Critical deadline: Form 709 is due April 15 of the year following the gift. A gift of RI property made on December 15, 2023 requires a Form 709 filed by April 15, 2024. An automatic extension to October 15 is available if you file Form 4868 (individual extension) or Form 8892 (gift tax extension).
The Narrative Statement: Why It Matters
For gifts of Rhode Island real property, I always prepare a detailed narrative statement attached to Form 709. This is not a formal IRS requirement but is a best practice that dramatically strengthens the filing's adequate disclosure. The narrative should include:
- Transaction summary: Date of gift, donor identity, donee identity, relationship
- Property description: Full street address, municipality, tax plat and lot, legal description from the deed, property type (residential, commercial, vacant land)
- Valuation methodology: How FMV was determined — qualified appraisal, comparable sales, assessment ratio analysis
- Discount analysis (if applicable): Detailed explanation of any fractional interest discount, lack of marketability discount, or lack of control discount with supporting data
- Deed reconciliation: If there is any anomaly between the deed and the intended gift (nominee, incorrect grantee, wrong consideration), explain it fully with supporting affidavits
- Conveyance tax confirmation: State the conveyance tax paid and reference the tax stamps or receipt
- Trust details (if applicable): Trust name, formation date, EIN, trustee(s), governing law, situs
Adequate Disclosure Under Treas. Reg. Section 301.6501(c)-1(f)
Adequate disclosure is the gateway to the 3-year statute of limitations. Without it, the IRS can challenge a gift's valuation at any time — even 20 years later. For real property gifts, adequate disclosure requires all of the following:
- Description of the property: Sufficient detail to identify the property (address, legal description, parcel number)
- Identity of parties: Full legal names, Social Security numbers or EINs, and the relationship between the transferor and each transferee
- Valuation information: Either a qualified appraisal or a detailed description of the method used to determine FMV, including financial data and discount analysis
- Consideration: A statement of any consideration received, or a statement that the transfer was a gift with no consideration
The penalty for inadequate disclosure: The statute of limitations NEVER starts running. The IRS can revalue the gift decades later, asserting additional gift tax plus interest and accuracy-related penalties (20% under IRC Section 6662). For real property, the IRS frequently challenges discounts and can impose a substantial gift tax deficiency years after the original transfer.
Gift Splitting (IRC Section 2513)
When a married couple gifts RI property, they may elect under IRC Section 2513 to treat the gift as made one-half by each spouse. This effectively doubles the annual exclusion to $36,000 per donee. Both spouses must file Form 709 with consistent reporting and both must consent to the split. If split gifts push one spouse's cumulative gifts above the lifetime exemption, gift tax becomes payable by that spouse.
Reporting Partial Interests
Gifts of partial interests in Rhode Island real property (e.g., a 50% tenancy-in-common interest, a remainder interest, or a life estate) require careful valuation on Form 709. The IRS scrutinizes fractional interest discounts closely. Common issues include:
- Discount percentages that are not supported by market data or recognized valuation methodologies
- Failure to account for IRC Section 2702 rules when transferring interests to family members
- Inconsistent reporting of the same property across multiple years' Form 709 filings
- Failure to disclose prior gifts of interests in the same property
What Is a Deed Anomaly?
A deed anomaly occurs when the recorded instrument does not accurately reflect the intended gift transaction. In my practice, I encounter these issues regularly with Rhode Island property gifts. The most common anomalies include:
1. Nominee or Straw-Party Deeds
A nominee deed names a person or entity on the deed who is not the actual intended donee. This often happens when:
- An attorney or family member is named on the deed as a placeholder while a trust is being formed
- The donor wanted to gift to a trust but the trust had not yet been executed at the time of recording
- A parent transfers property to one child with an oral understanding that the child will re-convey to siblings
The tax implications are significant. The IRS may treat this as two separate gifts: (1) from the original grantor to the nominee, and (2) from the nominee to the intended donee. To avoid this, I prepare an affidavit or agency agreement confirming the nominee arrangement, and include a detailed explanation in the Form 709 narrative. If the nominee deed can be corrected, I prepare and record a confirmatory deed from the nominee to the actual donee, accompanied by a scrivener's affidavit.
2. Incorrect Consideration on the Deed
Rhode Island deeds typically state the consideration. If the deed recites a nominal amount (e.g., "$10 and other good and valuable consideration") when the actual transfer was a gift of property worth $500,000, this creates a discrepancy with the Form 709 reporting. The narrative statement should explain that the $10 nominal consideration is customary in RI gift deeds and that the actual FMV was determined by qualified appraisal.
3. Transfer to an Unformed or Incorrectly Named Trust
A common scenario: the donor signs a deed transferring property to "The Smith Family Irrevocable Trust" but the actual trust document names the entity "John Smith 2023 Irrevocable Trust." Or worse, the deed is dated before the trust was executed, meaning the trust did not legally exist at the time of transfer. These issues require:
- A confirmatory deed from the grantor (if still living and competent) to the correctly named trust
- If the grantor is deceased or incapacitated, a petition to the probate court may be required
- A title insurance endorsement confirming the chain of title
- Detailed narrative explanation in the Form 709 or amended Form 709
4. Missing or Defective Legal Description
RI deeds must contain a legally sufficient property description. If the deed references an incorrect plat/lot, omits a parcel, or contains a scrivener's error in the metes and bounds, the deed may be voidable. Corrective measures include recording a scrivener's affidavit (R.I. Gen. Laws Section 34-13-2) or a confirmatory deed with the correct legal description.
5. Deed Date vs. Gift Date Discrepancy
The IRS gift date is typically the date the deed is delivered, which may differ from the date of execution or the date of recording. For RI conveyance tax and Form 709 purposes, the recording date creates a rebuttable presumption of the transfer date. If the actual gift date differs, contemporaneous documentation (correspondence, email confirmations, attorney notes) should be preserved in the audit binder.
My approach to deed anomaly resolution: I follow a four-step protocol: (1) obtain and review the original deed plus the full chain of title; (2) interview all parties to determine intent; (3) prepare corrective instruments (confirmatory deed, scrivener's affidavit, nominee acknowledgment) and record them; (4) draft a comprehensive narrative for Form 709 that fully explains the anomaly and its resolution, supported by all documentation in the audit binder.
Rhode Island Real Estate Conveyance Tax — Complete Guide
The RI conveyance tax under R.I. Gen. Laws Section 44-25 applies to virtually all transfers of Rhode Island real property, including gifts. Understanding the tax is critical for both planning and compliance.
Base State Rate
The state conveyance tax rate is $2.30 per $500 of consideration (or portion thereof). This equates to an effective rate of $4.60 per $1,000 or 0.46% of the transfer value. For gift transfers, the "consideration" is the fair market value of the property transferred.
Mansion Surcharge (Effective October 1, 2024)
Effective October 1, 2024, an additional surcharge of $2.50 per $500 applies to the portion of the consideration (or FMV for gifts) that exceeds $800,000. This effectively doubles the state rate on the amount above $800,000 to $4.80 per $500 ($9.60 per $1,000 or 0.96%).
Planning alert: The mansion surcharge was enacted in 2024 and significantly increases the conveyance tax on high-value properties. For a $2 million gift, the surcharge adds $6,000 to the total conveyance tax. Clients planning large gifts of RI real property should factor this into their cost-benefit analysis.
Municipal Local Tax
Rhode Island municipalities may impose an additional local conveyance tax. Rates vary by municipality but commonly range from $0.70 to $2.20 per $500. Examples:
| Municipality | Local Rate (per $500) | Effective per $1,000 |
|---|---|---|
| Providence | $1.40 | $2.80 |
| Newport | $1.10 | $2.20 |
| Warwick | $1.10 | $2.20 |
| Cranston | $1.10 | $2.20 |
| Barrington | $0.70 | $1.40 |
| East Greenwich | $1.10 | $2.20 |
| Narragansett | $1.10 | $2.20 |
| Westerly | $1.10 | $2.20 |
Exemptions from Conveyance Tax
Certain transfers are exempt from the RI conveyance tax under R.I. Gen. Laws Section 44-25-1:
- Transfers between spouses (including transfers incident to divorce)
- Transfers by the United States, Rhode Island, or any political subdivision
- Transfers to effectuate a mere change of identity or form of ownership with no change in beneficial interest (e.g., from an individual to their wholly-owned LLC)
- Transfers by tax deed or foreclosure deed
- Transfers by will or intestate succession (death transfers)
Gifts are NOT exempt. A gift of Rhode Island real property from a parent to a child, or from a grantor to a trust (other than a revocable grantor trust with the same beneficial ownership), triggers the full conveyance tax based on fair market value. This is different from some states that exempt intra-family transfers.
Conveyance Tax on Transfers to Trusts
Transfers to a revocable living trust where the grantor retains beneficial ownership are generally treated as a "mere change of form" and may be exempt. However, transfers to an irrevocable trust — particularly one that shifts beneficial interest to other parties — will trigger the conveyance tax based on FMV. This includes transfers to:
- Irrevocable life insurance trusts (ILITs)
- Generation-skipping trusts
- Qualified personal residence trusts (QPRTs)
- Grantor retained annuity trusts (GRATs) — though the retained interest may reduce the taxable amount
Dynasty Trusts and Rhode Island's Rule Against Perpetuities
Rhode Island follows the common-law rule against perpetuities (RAP), which limits the duration of trusts to lives in being plus 21 years. This means Rhode Island does NOT allow perpetual dynasty trusts. For clients seeking multi-generational tax protection, I recommend establishing the trust in a jurisdiction that has abolished or significantly extended the RAP:
| Jurisdiction | Trust Duration | Key Advantage |
|---|---|---|
| Delaware | Perpetual (no RAP) | DAPT, directed trusts, no state income tax on non-resident trust income |
| South Dakota | Perpetual (no RAP) | No state income tax, strong asset protection, domestic trust-friendly courts |
| Nevada | 365 years | No state income tax, strong DAPT provisions |
| Alaska | Perpetual (no RAP) | Community property trust option, asset protection |
| Wyoming | 1,000 years | No state income tax, low filing requirements |
Important: A trust sitused in another state (e.g., a Delaware dynasty trust) can still hold Rhode Island real property. The trust's governing law and situs determine the perpetuities period and administrative rules. However, the RI real property itself remains subject to RI conveyance tax on transfer into the trust, RI property taxes, and potential RI estate tax implications for the grantor.
Credit Shelter Trust Planning for RI Couples
Rhode Island does not allow portability of the estate tax exemption between spouses. This makes credit shelter trusts essential for married couples. The optimal strategy:
- At the first spouse's death, fund a credit shelter trust with assets equal to the RI exemption ($1,774,583 for 2024)
- The surviving spouse receives income from the trust and may have access to principal under an ascertainable standard
- At the second death, the trust assets pass to beneficiaries free of RI estate tax
- The surviving spouse's estate uses their own RI exemption for their remaining assets
Without this planning, the first spouse's RI exemption is permanently wasted, and the entire combined estate is taxed against only one exemption at the second death.
Qualified Personal Residence Trust (QPRT)
A QPRT is an effective tool for transferring a Rhode Island home at a reduced gift tax value. The donor transfers the home to the trust, retains the right to live in it for a term of years, and at the end of the term, the home passes to the beneficiaries. The gift value is the FMV minus the value of the retained interest, which is calculated using IRS Section 7520 rates. Key considerations for RI:
- RI conveyance tax applies on the initial transfer to the QPRT based on the full FMV (not the discounted gift value)
- If the donor dies during the retained term, the property is included in the estate at full FMV — the QPRT fails
- At the end of the term, the beneficiaries own the home and the donor must pay fair market rent to continue living there (but this rent is a tax-free way to transfer additional wealth)
Irrevocable Life Insurance Trust (ILIT)
For estates that will face RI estate tax, an ILIT provides liquidity to pay the tax without increasing the taxable estate. The trust owns the life insurance policy, and the death benefit passes to beneficiaries outside the estate. Key rules:
- The insured must not retain any incidents of ownership in the policy
- Transfers of existing policies trigger a 3-year lookback under IRC Section 2035 — if the insured dies within 3 years, the proceeds are included in the estate
- Premium payments are gifts to the trust; Crummey withdrawal powers ensure annual exclusion treatment
- RI has no state gift tax, so Crummey notices only affect federal gift tax reporting
Systematic Lifetime Gifting Strategy
Given RI's low exemption ($1.77M) and absence of a gift tax or clawback, I typically recommend a systematic gifting program for clients with estates above the RI threshold:
- Annual exclusion gifts: $18,000 per donee (2024); married couple can give $36,000 per donee without using any lifetime exemption
- Direct educational payments: Tuition paid directly to educational institutions under IRC Section 2503(e) — unlimited and not counted as gifts
- Direct medical payments: Medical expenses paid directly to the provider — unlimited and not counted as gifts
- Gifts of appreciating assets: Transfer assets expected to appreciate, locking in today's lower value for gift tax purposes and removing all future appreciation from the estate
- GRATs for business interests: Zero or near-zero gift value transfers that pass appreciation to beneficiaries
The Gift Tax Audit Binder: Why It Matters
An audit binder is a comprehensive document package that supports a Form 709 filing. While not required by the IRS, a well-prepared audit binder is the single best defense against an IRS challenge to a gift valuation. For Rhode Island real property gifts, I prepare a binder that includes everything an IRS examiner would need to verify the gift, making it easy for the examiner to close the case without adjustment.
Complete Audit Binder Contents for RI Property Gifts
- Form 709 and all schedules (complete copy as filed)
- Narrative statement explaining the gift transaction
- Qualified appraisal report (USPAP-compliant, dated as of the gift date)
- Appraiser credentials and qualifications
- Recorded deed (original recording stamp visible)
- Corrective deed or scrivener's affidavit (if applicable)
- Nominee acknowledgment or agency agreement (if applicable)
- Title report or title insurance commitment
- Full chain of title for the property
- RI conveyance tax stamps/receipt and calculation worksheet
- Municipal property tax card (shows assessed value, lot size, improvements)
- Property photographs (interior and exterior, dated)
- Survey or plot plan (if available)
- Comparable sales data supporting the appraisal conclusion
- Discount analysis memorandum (if fractional interest or other discounts applied)
- Trust document (if donee is a trust) — complete executed copy with amendments
- Trust EIN assignment letter (IRS CP 575 or SS-4 copy)
- Gift-splitting election documentation (if applicable) — both spouses' Forms 709
- Power of attorney (if Form 709 signed by agent under POA)
- Prior years' Forms 709 (to show consistency and cumulative gift history)
- Correspondence with RI Division of Taxation regarding estate tax implications
Common IRS Audit Triggers for RI Property Gifts
Based on my experience, the IRS is most likely to examine Form 709 filings that exhibit:
- Large valuation discounts: Discounts exceeding 25-30% for fractional interests or lack of marketability attract scrutiny
- Inconsistent deed and Form 709 reporting: Any discrepancy between the deed's stated consideration and the reported gift value
- Gifts near the end of life: Gifts made by elderly or ill donors, suggesting potential deathbed transfers
- Related-party transactions: Gifts between family members, especially to entities controlled by family
- Missing appraisals: Real property gifts without a qualified appraisal, or appraisals that are not USPAP-compliant
- Prior year omissions: Form 709 not filed in prior years when gifts were made
- Nominee or multi-step transfers: Deeds that show a chain of transfers suggesting a nominee arrangement
Statute of Limitations Strategy
With adequate disclosure, the statute of limitations on gift tax assessment is 3 years from the date the Form 709 is filed (or the due date, if filed early). My approach:
- File Form 709 by the due date (or extended due date) with full adequate disclosure
- Retain the audit binder for a minimum of 7 years from the filing date
- For gifts that may be challenged (large discounts, complex structures), retain the binder indefinitely
- If the IRS contacts the donor, produce the audit binder immediately — this often prevents a full examination
Related Resources
Frequently Asked Questions — Rhode Island Estate & Gift Tax
Yes. Rhode Island imposes a state estate tax under R.I. Gen. Laws Section 44-22. The exemption is CPI-indexed and was $1,774,583 for 2024 decedents. Unlike New York, Rhode Island does NOT have a cliff provision — only amounts above the exemption are taxed. Rates are graduated from 0.8% to 16%.
$1,774,583 for decedents dying in 2024. This amount is adjusted annually for inflation (CPI indexing) under R.I. Gen. Laws Section 44-22-1.1(a). The base was $850,000 in 2010.
No. Rhode Island does not impose a state-level gift tax. And unlike New York, there is no gift clawback provision. Gifts made during life permanently reduce the RI taxable estate, making lifetime gifting one of the most powerful RI estate planning strategies.
No. Rhode Island does not impose an inheritance tax. The estate tax is levied on the estate itself, not on individual beneficiaries. This differs from states like Pennsylvania and New Jersey which tax recipients based on their relationship to the decedent.
Yes. The RI conveyance tax applies to gift transfers based on fair market value. The base rate is $2.30 per $500. For transfers after October 1, 2024, a mansion surcharge of $2.50 per $500 applies to amounts above $800,000. Transfers between spouses are exempt, but parent-to-child gifts are not.
Form 709 is due April 15 of the year following the gift. For example, a gift made in December 2023 requires a Form 709 filed by April 15, 2024. Extensions to October 15 are available by filing Form 4868 or Form 8892.
Adequate disclosure under Treas. Reg. Section 301.6501(c)-1(f) starts the 3-year statute of limitations on gift tax assessment. Without it, the IRS can revalue the gift and assess additional tax at any time — even decades later. For RI real property, adequate disclosure requires a detailed property description, party identities, valuation methodology, and appraisal.
A deed anomaly occurs when the recorded deed does not accurately reflect the intended gift. Common examples: nominee grantees, incorrect trust names, wrong consideration amounts. Resolution involves recording a corrective/confirmatory deed, preparing affidavits, and including a detailed narrative in the Form 709 filing.
A nominee deed names a person or entity on the deed who is not the actual intended donee — they act as a straw party or placeholder. This creates complications for Form 709 because the IRS may treat it as two gifts. An agency agreement and detailed narrative are essential to establish it was a single intended transfer.
A comprehensive audit binder includes: Form 709 copy, qualified appraisal, recorded deed (plus corrective deeds), nominee agreements, title report, conveyance tax receipts, property tax cards, photographs, comparable sales, discount analysis, trust documents, and a narrative statement explaining the entire transaction.
No. Rhode Island follows the common-law rule against perpetuities (lives in being plus 21 years). For multi-generational planning, I recommend establishing the trust in Delaware (perpetual), South Dakota (perpetual), or Nevada (365 years). The trust can still hold RI real property — the situs determines the perpetuities period.
No. Rhode Island does not allow portability of the estate tax exemption between spouses. A credit shelter trust is essential for married couples to fully utilize both spouses' exemptions. Without it, the first spouse's exemption is permanently wasted.
Effective October 1, 2024, an additional $2.50 per $500 surcharge applies to the portion of consideration (or FMV for gifts) exceeding $800,000. This nearly doubles the effective rate on high-value transfers to approximately 0.96% on the amount above $800K, up from 0.46%.
Yes. Non-residents who own Rhode Island real property or tangible personal property may owe RI estate tax on that property. The tax is calculated on the entire estate as if the person were an RI resident, then prorated based on the percentage of RI-situs property.
Rhode Island's exemption ($1,774,583, CPI-indexed) is nearly double Massachusetts' ($1,000,000, frozen). RI has no cliff provision; MA eliminated its cliff in 2023 but the exemption is still much lower. Both states have graduated rates up to 16%. RI's CPI indexing is a significant advantage — the exemption grows automatically with inflation.
Form RI-706 is due 9 months from the date of death (same as federal Form 706). A 6-month extension is available. Tax is due at the original deadline regardless of any extension. Interest accrues on unpaid balances from the original due date.
Yes — and this is one of the most effective strategies because RI has no gift tax and no clawback. Every dollar gifted permanently reduces the taxable estate. Annual exclusion gifts ($18,000/donee), direct tuition payments, and direct medical payments are especially powerful because they also avoid federal gift tax.
If the federal exemption drops from ~$14M to ~$7M after the TCJA sunset (expected 2026), many more estates will face both federal AND RI estate tax. Currently, only estates above $13.61M face the federal tax. After sunset, estates above ~$7M face the federal tax while RI continues to tax estates above ~$1.8M. This makes pre-sunset gifting especially urgent.
For gifts of real property with a value exceeding $5,000, a qualified appraisal is required to be attached to Form 709. The appraisal must be USPAP-compliant, prepared by a qualified appraiser, and dated no earlier than 60 days before the gift and no later than the due date of the Form 709. Without it, adequate disclosure may be insufficient.
Failure to file Form 709 when required can result in: (1) a failure-to-file penalty of 5% per month up to 25% of the tax due; (2) a failure-to-pay penalty of 0.5% per month; (3) interest accruing from the original due date; (4) accuracy-related penalties of 20% under IRC Section 6662 if the valuation is substantially understated. Most critically, without a filed Form 709, the statute of limitations never starts running on the gift.
Schedule a Rhode Island Estate & Gift Tax Consultation
I handle Form 709 gift reporting, deed reconciliation, adequate disclosure compliance, audit binder preparation, conveyance tax analysis, and comprehensive RI estate tax planning. $240/hour for attorney consultations.