Estate tax is a tax on the transfer of a person’s property when the person dies. It is paid by the person’s estate. In the United States, there is a federal estate tax that applies to all states. In some states, including Washington State, there is also a state-level estate tax, which is separate from the federal estate tax.
In Washington State, the estate of a deceased Washington resident, or the estate of a non-resident that owns property in Washington, is subject to the Washington State estate tax if the gross value of the estate exceeds $2,193,000. In contrast, the federal estate tax has a much higher threshold and is likely to be owed only if the value of the estate plus the value of taxable gifts the decedent gave during life exceed $12.92 million.1 When estate taxes apply, they are at relatively high marginal rates and can be very costly. There are many estate planning techniques that knowledgeable estate planning attorneys can use to minimize or avoid estate tax liability.
The rules (and nuances of the rules) for calculating the value of an estate for purposes of determining whether estate tax is due are extremely complex and are often counter-intuitive. For example, for tax purposes, a person’s estate might include assets the person never had access to during life, such as life insurance proceeds and powers of appointment over property. Any person who believes it is possible that their estate might be taxable should seek the advice of an estate planning attorney with tax planning knowledge to assist them in determining whether their estate will be taxable, and, if appropriate, preparing an estate plan that minimizes or avoids estate tax liability.
Estate taxes should not be confused with income taxes every estate must pay for income the decedent earned during his or her last year of life and on income generated by the estate.
- Note that these figures are only applicable for estates of persons who died in 2023. The value thresholds that determine whether or not an estate is subject to state and/or federal estate tax change from year to year. ↩