Washington Residents May Owe Unanticipated Estate Tax
By Marcia K. Fujimoto
May 27, 2009
Washington residents may need to review their estate plans because of changes in estate tax laws. The current Washington state estate tax is no longer tied to the federal estate tax system. This unlinking of the tax systems means that estates of Washington residents may face unanticipated tax liabilities.
Many married couples still have Wills that were drafted when the two estate tax systems were integrated. Those Wills were designed so no estate tax would be due upon the death of the first spouse to die, but may now result in the surviving spouse paying up to $170,000 to the State of Washington. The Wills can be modified to delay that tax.
An unmarried person who passes away in 2009 with a taxable estate of $3,500,000 would pay no federal estate tax, but would pay up to $170,000 of State of Washington estate tax. If an individual is able to make lifetime gifts, this tax could be eliminated.
The chart below compares the amounts that can pass free of estate tax under both systems.
| Year of Death | State of Washington Statutory Deduction | Federal Applicable Exclusion Amount |
| Between January 1, 2006 and December 31, 2008 | $2,000,000 | $2,000,000 |
| 2009 | $2,000,000 | $3,500,000 |
| 2010 | $2,000,000 | REPEAL FOR ONE YEAR ONLY |
| 2011 and thereafter | $2,000,000 | $1,000,000 |
Here are samples of the tax payable by the estate of an unmarried Washington resident who dies in 2009.
| Federal Taxable Estate | State of Washington Estate Tax | Federal Estate Tax | Total Estate Tax |
| $3,500,000 | $170,000 | 0 | $170,000 |
| $5,000,000 | $390,000 | $499,500 | $889,500 |
| $10,000,000 | $1,255,000 | $2,360,250 | $3,615,250 |
Make sure that your estate plan takes into consideration the increases in the 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. Graham & Dunn’s wealth management attorneys can review your current estate plan to make sure that it is flexible and works to your advantage.
If you have any questions or wish to discuss this issue further, contact Marcia K. Fujimoto at 206.340.9637 or mfujimoto@grahamdunn.com, Wendy S. Goffe at 206.340.9633 or wgoffe@grahamdunn.com or any of the members of Graham & Dunn's Wealth Management Team.
