The Who, What, When, and How of the New Washington Estate Tax

The Legislature enacted and the Governor signed into law a new Washington estate tax effective May 17, 2005. Estates of those who die on or after the effective date are subject to the tax. This is a stand-alone estate tax that incorporates some provisions of the Internal Revenue Code as of January 1, 2005; however, the Washington estate tax is not affected by the scheduled termination of the Federal estate tax in 2010.

WHO must file?
For those dying on or after May 17, 2005, a Washington Estate Tax Return must be filed by the personal representative if the decedent owned property located in the state of Washington and the gross estate exceeds the thresholds listed below.

WHAT are the filing thresholds?
The filing thresholds for May 17 – December 2005 are $1,500,000 and $2 million for 2006 and thereafter.

WHEN must the estate tax return be filed?
The estate return must be filed within nine months of the death. For example, if a person passes away on May 17, 2005, the estate tax return or an extension request must be filed by February 17, 2006.

HOW is the tax calculated?
The rate of tax ranges from 10-19% (on top of Federal tax) depending on the size of the taxable estate. The tax is progressive, so the larger the estate, the higher the rate of tax. Farmland and woodland interests are not taxed if they make up more than 50% of the estate. Property outside of Washington is excluded.
Note: Although Washington has adopted this new estate tax, our State does not have a gift tax. Therefore, gifts you make during your lifetime escape State tax.