Originally posted 1/16/2018 and updated 3/1/2022
Did you know that Washington state has its own estate tax, and that it starts at a much lower dollar threshold than the federal tax? Your “estate” is essentially the property you own when you die, and an estate tax is the portion of your estate that the government will collect. As of January 2022, the federal estate tax only applies to estates that are over $12,060,000, but Washington’s estate tax starts at $2,193,000. Above those threshold amounts, both Washington and the federal government impose taxes at rates that increase as the value of your estate increases.
While you may not think you’ll have a taxable estate, you might be surprised. Both Washington and the federal government include more types of assets in your “estate” than you may realize. Two notable examples are the death benefits on your life insurance and the value of your IRA or 401(k). When you add these to your home and other assets, you may have to pay estate taxes to the State of Washington.
If you think you might have a taxable estate, you should talk to an estate planning attorney. In many cases, you may be able to minimize, or even eliminate, those taxes.