Washington Estate Planning Considerations
Community Property State
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is an opt-in community property state that gives both parties the option to make their property community property.
Domicile is a person’s legal permanent residence and may not be where they currently live. For those in the military, people who have homes in several states, or those who have moved frequently, figuring out which state is their proper domicile is critical.
IRS Publication 555 provides guidance and states that generally, community property is property:
- That you, your spouse, or both acquire during your marriage while you and your spouse are domiciled in a community property state.
- That you and your spouse agreed to convert from separate to community property.
- That cannot be identified as separate property.
Guidance is also given regarding what is considered separate property:
- Property that you or your spouse owned separately before your marriage.
- Money earned while domiciled in a noncommunity property state.
- Property that you or your spouse received separately as a gift or inheritance during your marriage.
- Property that you or your spouse bought with separate funds or acquired in exchange for the separate property during your marriage.
- Property that you and your spouse converted from community property to separate property through an agreement valid under state law.
- The part of property bought with separate funds was purchased with community funds and amount with separate funds.
A premarital agreement is an agreement that may change the result of the property division.
Last Will and Testament and Trusts
The minimum age of a person competent to make a will is 18. The number of witnesses necessary to execute a will is two.
The custodial arrangement terminates when:
- The minor child reaches age 21 for custodial transfers made by irrevocable lifetime gift, will, or trust, or exercise of a power of appointment (donor may extend the terminating age to 25 under certain circumstances).
- The minor child reaches age 18 concerning other custodial transfers.
- The minor child dies.
Dying without a Last Will, the Washington Laws of Intestacy
The estate goes to the surviving spouse or domestic partner (DP), as follows:
- 100% of the decedent’s share of the net community estate
- If no surviving descendants, parent(s) or descendants of a parent(s)—100% of the separate estate
- If the decedent is survived by descendants, —50% of the separate net estate
- If there are no surviving descendants, but the decedent is survived by the parent(s), or by descendants of the parent(s)—75% of the separate net estate
If there is no surviving spouse or D.P., or if a portion of the estate does not go to the spouse or D.P.:
- 100% to descendants, equally if in the same degree of kinship, or if of unequal degree, by representation (see RCW §11.02.005(13))
If there is no surviving spouse/D.P. or descendant:
- 100% to surviving parent or parents equally
If there is no surviving spouse/D.P., descendant, or parent:
- 100% to surviving descendants of parents equally in the same degree of kinship to the decedent, or if of unequal degree, by representation (see RCW §11.02.005(13))
If none of the above:
- Intestacy laws outline further distribution steps to the level of grandparents and related individuals. See RCW §11.04.015(2)(d), (e).
- If no legally described recipient can be found, estate assets go to the state of Washington.
Death with Dignity
The Washington Death with Dignity Act has been in effect since March 5, 2009. Similar to the Oregon model legislation, the Washington Death with Dignity has worked flawlessly and as intended (see Reports below).
In the 2020 session a bill was introduced seeking to study barriers to using the Washington Death with Dignity Act. SB 2419, in a substitute form, passed in the House of Representatives 67 to 31 and in the Senate 36 to 13; on April 3, 2020, Governor Inslee vetoed the bill citing the need for the state to conserve resources to deal with the COVID-19 pandemic and the economic challenges as a result of the pandemic.
Washington follows the Revised Uniform Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition.
Washington does not impose an inheritance tax.
Washington imposes a “stand-alone” estate tax not dependent on the credit permitted for paid state estate and inheritance taxes under the federal tax code.
The exemption amount is $2,193,000 (in 2020, subject to future indexing in 2025).
The tax rate is progressive, starting at 10% on the initial $1 million and increasing to 20% on the taxable estate over $9 million.
The estate tax deduction is permitted for property used for farm purposes.
Washington state QTIP election permitted.
Generation-Skipping Transfer Tax (G.S.T. Tax)
Washington does not impose a G.S.T. tax.
Washington does not impose a gift tax.