New State of Washington Estate Tax Withstands Repeal Effort
By Marcia K. Fujimoto
November 9, 2006
The citizens of Washington have apparently defeated Initiative 920, which would have repealed the Washington state estate tax that Governor Gregoire signed into law on May 17, 2005.
Unlike prior law, the current Washington state estate tax is no longer tied to the federal estate tax system. For example, the chart below compares the amounts that can pass free of estate tax over the next several years. The differences in the two systems present challenges that require careful planning and coordination.
| Year of Death | Federal Applicable Exclusion Amount | State of Washington Statutory Deduction |
| Between January 1, 2006 and December 31, 2008 | $2,000,000 | $2,000,000 |
| 2009 | $3,500,000 | $2,000,000 |
| 2010 | REPEALED FOR ONE YEAR ONLY | $2,000,000 |
| 2011 and thereafter | $1,000,000 | $2,000,000 |
Here are illustrations of estate tax that would be payable for hypothetical estates of decedents dying in 2006.
| 2006 Tax Obligation | |||
| Federal Taxable Estate | Federal | State | Total |
| $2,500,000 | $207,000 | $50,000 | $257,000 |
| $3,000,000 | $414,000 | $100,000 | $514,000 |
| $5,000,000 | $1,200,600 | $390,000 | $1,590,600 |
| $10,000,000 | $3,102,700 | $1,255,000 | $4,357,700 |
Make sure that your estate plan takes into consideration the increased amounts that can pass free of estate tax and the coordination required because of the differences in the federal and State of Washington estate tax systems.
Please contact Marcia K. Fujimoto (206.340.9637 or mfujimoto@grahamdunn.com) or Wendy S. Goffe (206.340.9633 or wgoffe@grahamdunn.com) for more information of if you would like to review your current estate plans ensuring they are flexible and work to your advantage.
