If your main residence is in the Seattle area, you are probably already thinking about Washington’s assets. And wondering what the burden of compliance will be for loved ones that survive. If not, see our most detailed discussion of Washington’s assets tax here.
A quick review. Washington requires a return when the value of everything he owns on the date of his death exceeds $ 2,193,000. So, with current real estate prices in Washington? Your house probably puts you quite close to that number.
But a proposed amendment could finally fix the strange legislative failure that prevents the amount of exclusion from staying up to date with inflation. Even better, a recently promulgated change to the Washington Estate Tax Statute could allow you to exclude the value of your home if you go to your surviving spouse to your death.
Let’s see what has changed and has not changed (yet) that could determine if your assets must submit a Washington Washing Tax Declaration.
First, what has not changed: the amount of applicable exclusion of $ 2,193,000.
Initially established at $ 2,000,000, the law requested to update the exclusion amount annually to take into account inflation. And the BLS index was specifically appointed to be used to calculate the new amount of each year. It sounds quite fair.
The problem? That index no longer exists. In 2018, the BLS reviewed its geographical sampling methods and now publishes the relevant IPC data under a new name. So when the income department prepares to issue guidance on a new amount of exclusion every year? Find changes in the index named very specifically. Not finding any change, the DOR has no choice but to require returns for gross properties worth more than $ 2,193,000.
The legislature has recognized the issue. Bill from the camera 1484First introduced at the beginning of 2023, it would update the exclusion amount applicable to $ 2,659,000 for farms of deceased that die on August 1, 2023 or later.
It would also eliminate any reference to a specific index. On the other hand, the amended statute would adopt a more general approach to the adjustment of inflation. It would simply refer to the relevant statistics of “the geographical area sample that includes Seattle and the surrounding areas.” That should prevent the failure from happening again.
Unfortunately, bill 1484 of the Chamber did not leave the Chamber of WA representatives in 2023. And although legislators tried again during the regular session of 2024, no more measures were taken. But the regular session of 2025 of the house begins on January 13, 2025. So, maybe the third time is the charm?
The result: If the value of its gross heritage exceeds $ 2,193,000 on the date of his death? His assets still owe a Washington tax declaration. But keep reading for a small good news.
That main residence that puts its heritage above the presentation threshold? You can probably exclude it if you are married when you die and your heritage meets some other requirements.
While the bill sets the amount of exclusion to a new inflation rate languished in the Chamber, a separate proposal flew through both legislative bodies during the 2024 session. Draft Law of the House of Representatives 1867 He arrived at the Governor’s desk and under his pen in March 2024.
The new law updates the Patrimony Tax Statute That determines when a heritage must present a return. Specifically, it modifies the statute to provide that no return is required if three conditions are met.
First: your heritage should not have a separate requirement to present a specific choice. For example, if your patrimonial planning anticipates making a QTIP choice at the state level? His executor must even present if the exclusion of his main residence would put his heritage under the threshold.
Second: Your surviving spouse must receive your interest in the main residence after your death. For example, if the house passes to someone other than your spouse? Or if you finance a derivation trustee aimed at preserving its exclusion from the state of Washington? Your heritage must include the value of the house. Keep in mind that Washington’s law treats couples of domestic association registered as spouses.
Third: The value of its gross heritage After excluding the main residence It must fall below the applicable exclusion amount. If your other assets put it in excess before considering your main residence? It is a return. And its gross assets, as reported in that statement, will include the value of its main residence.
Dor has additional information and some good examples, here.
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