Estate taxes are an unavoidable reality in many states, including Washington. Although the federal estate tax has been eliminated, Washington still has a state estate tax. This tax is imposed on the estates of all deceased Washington residents, regardless of the size of the estate. The good news is that there are a number of ways to minimize or even avoid the Washington state estate tax. In this article, we’ll look at some of the steps you can take to reduce or eliminate your exposure to the Washington estate tax.

Understand the Tax

The first step in avoiding the Washington state estate tax is to understand the tax itself. The Washington estate tax is imposed on the value of all assets held by a deceased Washington resident, including real estate, personal property, stocks, bonds, and other assets. The tax rate ranges from 10-20%, depending on the size of the estate.

Use Exemptions

Washington offers a number of exemptions that can be used to reduce or eliminate the estate tax liability. The most common exemption is the federal estate tax credit, which exempts the first $5.45 million of an estate from the tax. Other exemptions include exemptions for spousal transfers, charitable donations, and transfers to qualifying trusts.

Create an Estate Plan

Creating an estate plan is one of the best ways to reduce or eliminate your exposure to the Washington estate tax. An estate plan can be crafted to maximize the use of exemptions and minimize or eliminate the amount of taxes owed. An estate plan can also help ensure that your assets are distributed according to your wishes.

Use Tax Planning Strategies

Tax planning is an important part of any estate plan. There are a number of strategies that can be used to reduce or eliminate the Washington state estate tax, such as gifting assets, creating trusts, and using life insurance. A financial advisor or tax professional can help you identify the best strategies for your situation.

Consider Relocation

For some, relocation may be an option for avoiding the Washington state estate tax. Moving to a state that does not have an estate tax can significantly reduce your estate tax liability. However, it is important to consider any potential downsides of relocation before making a decision.

Conclusion

The Washington estate tax can be a significant burden for those who are not prepared. Fortunately, there are a number of steps you can take to reduce or eliminate your exposure to the tax. By understanding the tax, taking advantage of exemptions, creating an estate plan, using tax planning strategies, and considering relocation, you can minimize or even avoid the Washington state estate tax.