Now that the April 15 tax deadline has passed, it is time to sit back, relax … and talk about the Washington state estate tax? Bear with me, I’m keeping this short and sweet.
Back at the beginning of tax season, the New York Times published a “Your Money” column about <gasp> state estate taxes. The article highlights the often-overlooked fact that although the federal estate tax will only impact estates valued at more than $5.34 million in 2014, many states have estate or inheritance taxes that kick in at much lower thresholds and can surprise the families of a lot of middle-class folks who thought their nest eggs left them well outside estate tax territory. The article doesn’t mention it, but Washington is one of those states with an estate tax. (Curious about other states with estate or inheritance taxes? Check out this nifty interactive graphic.)
Do you need to worry about the tax? Legislation passed by the Washington state legislature during the 2013 session that became effective in January 2014 set the amount exempt from the state’s estate tax at $2 million for this year (the same level as in previous years), but that exclusion amount is now scheduled to increase in step with the consumer price index.
While the majority of Washingtonians in fact do not need to be concerned about either state or federal estate taxes, a number of people in our state may find themselves subject to the state’s estate tax even if they are within the federal estate tax’s exclusion limits. No need to panic – or move, as the Times article suggests – but it may be time to update your estate plan to reduce or eliminate the tax burden for your estate.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.