Estate Tax Upon Death in Washington
Upon death, a Washington State estate may be subject to an estate tax. The rate ranges from 10% to 20%. There are a number of options for reducing the tax, such as irrevocable life insurance trusts (ILITs).
ILITs are not part of your estate
ILITs, or irrevocable life insurance trusts, are an estate-planning tool. They help you bypass the probate process and avoid paying estate taxes. They are also an excellent way to protect your beneficiaries from creditors. They can help you preserve government benefits for your heirs. They can be an asset that pays for funeral and other estate settlement costs.
The main reason to use an ILIT is to prevent the proceeds from your life insurance policy from being included in your estate. When you purchase a policy, you usually receive a contract that dictates the premium. When you die, the contract is reassessed, and the premium is changed. Upon your death, the proceeds are deposited into your ILIT.
An ILIT is a great estate planning tool for people who have children who are minors, or for those who need financial protection for special needs family members. An ILIT can also be helpful to families with second marriages. You can choose a trustee to administer the ILIT, or you can leave the choice to your spouse.
Creating an ILIT is an excellent way to manage your assets in Washington State. You can transfer up to $10 million to an irrevocable trust, which can help to reduce your overall estate tax burden. You can also leave the money to your children tax free.
Rates range from 10% to 20%
Unlike the federal estate tax, Washington State does not impose an inheritance tax on residents. However, it does have an estate tax, which is imposed on the assets of the deceased person’s estate. It is calculated after deductions and credits.
Washington state has the highest top marginal rate at 20 percent. This is the highest of any state, and the rate is expected to remain there until late 2025. Those with net assets of more than $2,193,000 in Washington should consider moving to another state. Those with a net worth under that amount are not subject to the state’s estate tax.
The Washington State Department of Revenue has an estate planning section. It can help you find the right financial advisor for your needs. If you have any questions, don’t hesitate to contact one of the experts at Orbitwills.com.
There are several different kinds of taxes to be aware of when you plan your estate. In addition to the state death and inheritance tax, you may also be subject to the federal gift and estate tax.
The IRS Form 706 is an easy way to calculate the value of your estate. It can be used to determine the size of your exemption. The exemption in Washington is $2.193 million, and this is subject to an inflation adjustment.
If you have any questions about Estate Taxes in Washington and your will please contact the attorneys at Orbitwills.com.