July 18, 2024
Washington State imposes an estate tax on estates greater than $2.193 million. Tax rates range from 10% to 20% of the amount over that threshold. Many estates in Washington could be subject to this tax. Decedents who own a personal residence and assets in a retirement account can easily leave an estate that exceeds the $2.193 million threshold.
The easiest way for Washington residents to avoid this tax is to establish residency in another state. The policy implications of this strategy have been brought to life recently, given the high-profile example of Jeff Bezos moving from Washington to the State of Florida.
Moving out of state is not as simple as it sounds in all cases. Suppose a Washington resident moves out of the state and retains assets in Washington. In that case, the estate tax may apply even if the Washington assets are less than the $2.193 million exclusion amount. This occurs when a decedent’s worldwide estate is greater than the exclusion amount, requiring an apportionment of in-state and out-of-state assets. Changing residency to avoid the Washington estate tax requires a special analysis of the requirements needed to establish out-of-state residency and how to hold any remaining Washington assets, such as a home, in a manner that will not trigger the tax.
Fulcrum Wealth Advisors will help its clients evaluate planning strategies for this tax and work with outside attorneys and accountants to develop an effective estate tax avoidance plan.
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DISCLOSURE:
Investment advisor representative of securities and investment advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a broker/dealer, and Registered Investment Advisor. Cetera is under separate ownership from any other named entity. In addition, some Investment advisory services are offered through Fulcrum Wealth Advisors, LLC. Fulcrum Wealth Advisors, LLC is a registered investment advisor in the State of Washington. Neither FWA nor Cetera Advisors Networks provides tax advice. Please consult your tax professional.
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