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Most states treat LLC units as “intangible personal property.” While intangible personal property is still part of your potentially taxable estate, Washington’s tax formula reduces the tax on such intangible “non-Washington assets,” depending on their value compared to the value of Washington assets. A transfer of individually owned assets into a business entity, such as a limited liability company, would create member units. If you don’t live in Washington State, but own real estate or store tangible personal property in Washington, consider restructuring the ownership to creating non-Washington intangible assets. Washington State does not have portability rules. This may not be the best solution with Federal portability rules and the fact that inherited assets continue to get a stepped-up basis. Many wills used formula clauses that might create more taxes or over fund the “Family Trust” (AKA By-pass or Credit Shelter Trust). Review your will or revocable living trust documents as a result of the tax law changes.
#Federal tax refund status professional
This option requires professional assistance and a gift tax return with proper appraisals. You could transfer your home (in advance) into a Qualified Personal Residence Trust, to remove that asset from your estate. Gifts to qualified charitable tax-exempt organizations are not limited to the annual $15,000 limits. These are not considered gifts if the check is not made payable to a family member they are also not limited to being less than $15,000. Make direct payments for family members for tuition to schools or medical care costs to the providers. Annual gifts above $15,000 to a donee requires a filing of a Federal gift tax return (but remember you have $11,580,000 of lifetime gift exemptions to use before there are any Federal gift taxes to pay). Use your annual gifting amount, currently $15,000 per person (donee), to reduce your net assets below $2,193,000. Unlike Federal law, Washington State does not add back lifetime gifts in determining their taxable estate value. Remain a Washington State resident, but make lifetime gifts of high basis property either outright or funding certain trusts to reduce the value of your estate to below the $2,193,000 threshold. This would include spending the majority of your time at your non-Washington residence to establish residency in that state. Here are some suggestions of things to do:Ĭonsider moving to another state that has no estate tax, and little or no income taxes. Washington residents with net assets of more than $2,193,000 ($4,386,000 for married couples) are advised to speak to estate planning professionals to find ways to minimize the Washington estate tax. While the Washington state death taxes are deductible against the Federal estate taxable income, if there are no Federal estate taxes due, then the state estate tax is effectively increased. If you hold Washington property, it is subject to both Federal and State estate tax at the time of your death. In 2020, Washington is one of 12 states that collects death taxes and six other states have an inheritance tax. Washington’s estate tax rate continues to be the highest estate tax rate in the nation and so factoring it into your overall estate plan is important. The graduated tax rates range from 10 percent to 20 percent (over $1,490,000).Ĭurrently, Washington and Oregon are the only western states with a death tax. When a Washington State resident or someone that owns property in Washington dies with net assets worth more than $2,193,000, they are liable for Washington death taxes, also known as estate taxes. As a result, most taxpayers may have no Federal gift /GST/death taxes in the next 5 years, but the Washington State death tax still is in play. If a person’s estate or taxable lifetime gifts exceed this amount, there is a 40% tax on the excess.Īfter January 1, 2026, the pre-Act laws will resume (effectively slashing the exemption in half).
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This exemption can be used to reduce gift / generation skipping taxes (GST) or Federal estate taxes. The Tax Cuts and Jobs Act of 2017 provides a window of opportunity before 2026 to make use of your personal gift / estate exemption of $11,580,000 (2020-adjusted annually for inflation). Planning for Washington State’s Death Tax