Estate and Gift Tax Planning
One essential element of an estate plan is tax planning. Federal estate can be levied after a person’s death. The federal estate tax exemption amount for 2017 is $5.49 million for an individual, and $10.98 million for a married couple who elect portability. Because of the large federal exemption amount, many couples feel that they will not have to worry about paying estate taxes. In some cases, this may be true. However, if you reside in Washington State, and if you have assets (including retirement accounts and life insurance death benefits) approaching or exceeding $2 million, you could have a false sense of confidence. Washington has a separate estate tax with much lower exclusion amounts–$2.129 million per person, with no ability for a married couple to elect portability to double that. However, with a tax-sensitive estate plan, a married couple can effectively pass double the Washington State exclusion amount to their loved ones without exposure to Washington State estate tax.
Another way to help mitigate your estate tax exposure is to implement a gifting program to loved ones or to charity in the most efficient manner. Currently, the gift tax exclusion is $14,000 per recipient per year. If you make lifetime gifts over that amount, however, while it reduces your federal estate tax exemption amount, the impact on your Washington State exclusion amount is extremely limited.
An attorney can help you make sure you take full advantage of your estate and gift tax exemptions. Please contact a Mercer Island or Seattle estate planning attorney at our office for guidance and assistance.