Most people dread thinking about taxes, whether they are estate tax, property taxes or income taxes. However, careful planning now can help avoid or decrease tax obligations passed on to beneficiaries of an estate. This is especially true when you consider Washington estate taxes.

The estate tax is a tax imposed on someone’s estate after they pass away. Estate taxes in Washington are higher than in most areas of the country. The effective tax rate ranges from 10% to 20%. As a result, understanding the estate tax now and how it will affect your family after you pass can save loved ones significant amounts of money. An experienced Estate Planning attorney can help navigate the best way to organize your assets. 

Below are a few key items that you should know about the Washington estate tax.

1. It Only Affects Large Estates.

The estate tax in Washington is based on the overall value of someone’s estate when they pass away. An estate is valued through appraisals and an inventory of every asset within the estate.

Washington has an exemption that affects most estates. Essentially, an estate must have a value of at least $2.193 million to trigger an estate tax obligation. For planning purposes, individuals could consider decreasing the size of their estate throughout their life to potentially avoid or decrease the potential estate tax imposed.

2. The Estate Tax is Progressive.

Washington has a progressive estate tax. That means that the percentage of tax imposed will increase as the value of the estate increases. The high end of the tax is 20%. Although the calculation is somewhat complicated, it is helpful to know that the rate increases with every million dollars of value. In general, the highest rate of 20% is imposed on estates that have a total value of over $11 million.

3. You May Need to File an Estate Tax Return Even If No Tax is Due.

The estate tax is calculated by completing and filing an estate tax return. Often, the decedent’s spouse will complete this return, but it might also be completed by an individual’s executor or personal representative who may not be the decedent’s spouse.

The estate tax return must be completed if the value of the estate meets the filing threshold. The filing threshold changes from time to time, but the filing threshold has generally been the same as the applicable exclusion amount for several years, which is $2.913 million in 2023.

4. Estate Tax Is Imposed on All Property, Regardless of Whether It Is Located in Washington.

Estate taxes apply to the full value of an estate. Someone’s estate includes all property they owned, regardless of where it is located. All property must also be reported on the estate tax return. However, there may be an apportionment calculation that is used to reduce the amount of the estate tax for some property located outside of the state of Washington.

Get Help with Estate Taxes and Estate Tax Planning from the Law Offices of Dan Kellogg

Estate taxes can be complicated, and proper estate planning can have a direct positive effect your loved ones. Having an experienced estate planning attorney help assist you with wills and trusts can help decrease or avoid estate taxes in Washington. Call today to set up an appointment or learn more about our services: 425-227-8700.