( Log Out / If you want a say in what happens to your assets upon your death — and you should! Witnesses, competency in actions involving fiduciaries: RCW 5.60.030. — make a will. For the estate of the surviving spouse, the amount included in the estate's gross estate pursuant to section 2044 (a) and (b)(1)(A) of the Internal Revenue Code is deducted from, and the value of any property for which an election under this section was previously made is added to, the Washington taxable estate. Opinions expressed by Forbes Contributors are their own. Thus, for example, suppose Bill and Barb are married and Bill has $3 million while Barb has $1 million. This on-demand session was presented as part of the live seminar and webcast, 2018 Annual Fall Probate and Trust Seminar: Advanced Topics in Washington Estate Planning and Administration, recorded on December 12, 2018, in Seattle, WA. A QTIP election made on the Washington return is irrevocable, and a surviving spouse who is the lifetime beneficiary of property for which a Washington QTIP election was made must include the value of the remaining property in his or her gross estate for Washington estate tax purposes. Edit them in the Widget section of the Customizer. The exemption amount is adjusted for inflation each year. If the fair market value of the trust assets is $2 million or less as of the date of the decedent's death, or, if applicable, the alternate valuation date, the trust must comply with Treas. Identification of the assets is necessary when reviewing the surviving spouse's return, if a return is required to be filed.
. Upon your death, it is transferred to your designated beneficiaries. This results in an estate tax marital deduction for Maryland estate tax purposes but not for federal estate tax purposes. In the past, I have also served as Vice-Chair or Chair on a number of committees including the Asset Protection Planning Committee of the Real Property, Probate and Trust Section of the ABA.
State. I am an attorney (www.lewissaret.com) practicing in the area of federal taxation, with particular emphasis on estate and business succession planning, based in the…. Don’t be a statistic. Typically you would appoint a spouse, family member, or close friend to handle your affairs when you are unable to. Attorney fees - amount estimated/agreed upon/paid.
Disclaimer. The AB Trust system can be set up under the couples' Last Will and Testaments or Revocable Living Trusts.The "A Trust" is also commonly referred to as the "Marital Trust," "QTIP Trust," or "Marital Deduction Trust." A Disclaimer Trust only takes effect after the testator’s (i.e.
Married couples can maximize the use of both of their federal exemptions from estate taxes by using AB Trusts as part of their estate plan. If Form 706-QDT is required to be filed with the Internal Revenue Service with respect to a taxable event, a copy of such form shall be provided to the department. We’ll cover more on that later. Bill passes away. (Strike out the words that do not apply.)
https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax, http://dor.wa.gov/content/FindTaxesAndRates/OtherTaxes/Tax_estatetaxtables.aspx. © 2020 Forbes Media LLC. Related products that might be of interest... 2018 Annual Fall Probate and Trust Seminar: Advanced Topics in Washington Estate Planning and Administration. A basic Will is suitable for most people. Credit shelter trusts are becoming increasingly popular as an estate planning tool. Fred’s Gross Estate + $10,000,000 + $10,000,000. Don’t be overwhelmed by estate planning. Washington qualified domestic trust (QDOT) election. (IV) The trust must meet the additional requirements intended to ensure the collection of the Washington QDOT tax set forth in (c)(iv)(D) of this subsection. In many cases, no estate tax is actually owed as a result of tax planning in the decedent’s will. For example, suppose Bill and Barb are married, and Bill dies leaving a $3 million estate. Washington State claimed that the QTIP Trust was subject to state estate tax.The Bracken Estate took the case to the Washington Supreme Court. However, laws (especially those regarding estate taxes) are subject to change. Note that a disclaimer must be made within 9 months of the testator’s passing. As a result, Fred’s taxable estate equals $1 million [$10 million (gross estate) – $4.25 million (marital deduction for excess exemption QTIP trust) – $4.75 million (marital deduction for marital QTIP trust)], which is offset by the Maryland applicable exclusion amount. The value of Ginger’s gross estate for Maryland estate tax purposes is $9,000,000, the value of the Marital QTIP trust and the excess QTIP trust, which are includible in Ginger’s estate for Maryland estate tax purposes. 2. However, suppose Barb then passes away and her $11 million in assets (her original $5 million plus Bill’s $6 million) passes to her and Bill’s son, Tom. There are many different types of powers of attorney that vary in scope, duration, and circumstances. It’s important to note that you can grant healthcare power of attorney and financial power of attorney to different individuals if you’d like. (A) Washington is a community property state and under.
Both the federal government and Washington State allow a person to pass unlimited amounts of assets to his or her spouse without paying estate tax. Thus, estate tax issues tend to arise with the death of the second spouse. Also, I am not a tax professional or Certified Public Accountant, so I cannot give specific tax-related advice. In short, a living trust can help protect your assets from being drained by court and legal costs. For accessibility or accommodation requests, or other questions, please email ondemand@wsba.org. Photo credit: Anupam_ts via VisualHunt.com / CC BY-SA, Vancouver, WA
Each spouse can set up a QTIP trust, leaving assets to the other in trust. Reg. RCW 83.100.047(1)(a). The "applicable exclusion amount" is adjusted annually and is defined in WAC. Fortunately, Washington State has one of the simplest probate systems in the country: Learn more about the probate and trust law in the state of Washington.
Federal estate tax threshold: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax, Washington State estate tax threshold: http://dor.wa.gov/content/FindTaxesAndRates/OtherTaxes/Tax_estatetaxtables.aspx. We might as well plan for both, right? The tax is computed using Table W. The tax is due on the date specified in IRC section 2056A (b)(5). (For deaths occurring on or after January 1, 2014), (For deaths occurring before January 1, 2014), (b) Each year the department will publish each calendar year's "applicable exclusion amount." Federal and state tax laws are constantly changing. The remainder of Fred’s estate, which totals $5.25 million of value, is included in Fred’s estate for federal estate tax purposes. . Similarly, a QDOT election made on the Washington estate tax return is irrevocable. QTIP, by the way, is an abbreviation for “Qualified Terminable Interest Property.” You can see why people prefer the catchy acronym to the full name. However, assets passing to someone other than one’s spouse counts against the exemption amount. Note, however, that this does not apply to spouses who are not U.S. Citizens. An estate plan is made up of several different documents.
(A) A personal representative may choose to make a larger or smaller percentage or fractional QTIP election on the Washington return than taken on the federal return in order to reduce Washington estate liability while making full use of the federal unified credit.
QTIP Election of a Washington Exemption Trust (December 2018), QTIP Election of a Washington Exemption Trust.
This contrasts with most jurisdictions, such as the District of Columbia, which generally require consistency between the federal and state estate tax marital deduction. In short, your estate is everything you own and everything you owe. Reg.
Planning for the future doesn’t have to be a touchy subject. (II) The value of the property remaining in the QDOT on the date of the death of the surviving spouse (or the spouse's deemed date of death under IRC section 2056A (b)(4)). Kalama, WA, 8 Ways to Maximize Your Year-End Planning in 2019, The Importance of Separating Business and Personal Finances, How to Hire the Right Accountant for Your Small Business, CPA or Software? In this article, I will further explain why a Will with a Disclaimer Trust is needed and how it works.
Recent studies have shown that less than half of Americans have wills. It goes without saying that you should trust your power of attorney with your life. If you die in the state of Washington without a will, the state will appoint an administrator to distribute your assets according to state succession laws. Also, Barb may use Bill’s unused $2.49 million exemption, in conjunction with her own $5.49 million exemption, for a total exemption of $7.98 million for Barb. State Death Tax Gap and Use of ABC Trust Planning . Therefore, no federal estate tax is imposed on Fred’s estate.