Washington Estate Tax

If you're a resident of Washington and leave behind more than $2,193,000 (for deaths occurring in 2023), your estate might have to pay Washington estate tax. The Washington estate tax is separate from the federal estate tax, which is imposed on estates worth more than $12.92 million (for deaths in 2023). So even if your estate isn't large enough to owe federal estate tax, it might still owe Washington estate tax.

But it's not just state residents who might owe Washington estate tax. If you're a nonresident but own real estate or other tangible assets (a boat or plane, for example) located in Washington, your estate might also need to file a Washington estate tax return.

Do You Need to File a Washington Estate Tax Return?

If you're a resident of Washington state when you die, the personal representative or executor of your estate must file the Washington estate tax return if your "gross estate" adds up to more than $2,193,000 (this is the exemption amount for deaths occurring in 2018-2023). Smaller estates won't have to file a return. The gross estate will include just about all of the property you leave behind at death, such as:

• Real estate
• Bank and investment accounts—retirement and non-retirement
• Vehicles and other items of personal property
• Proceeds from any life insurance policies on your life, if you owned the policies
• Business interests (sole proprietorship, limited liability company, or closely held corporation)

If you're a nonresident of Washington but own property in the state, your gross estate is still calculated the same way. All of your property—not just the property located in Washington—will be tallied up to determine your gross estate, and if it surpasses $2.193 million, the executor of your estate will have to file the Washington estate tax return. (The actual tax owed will then be apportioned based on the percentage of property actually located in Washington.)

Co-owned property. If you own assets with someone else, generally only your share will be included in your estate. In other words, if you and your spouse own your house, half of its value would be included in your estate.

Nonprobate assets. Notably, your gross estate also includes non-probate assets. For example, the property you hold in a revocable living trust avoids probate, but it does not avoid estate taxes, and is counted in your gross estate.

Portability. The federal estate tax regime allows a surviving spouse to use the deceased spouse's unused portion of the exemption—a feature called "portability." However, Washington's estate tax does not offer portability between spouses; each spouse has a separate exemption amount of $2.193 million.

It's your executor's duty to file any estate tax returns that are required. If your estate doesn't go through probate—meaning no executor is appointed by the probate court—then the people who inherit your property, or the trustee of your living trust, are responsible for filing the return.

Will Your Estate Owe Estate Tax?

Even if a Washington estate tax return must be filed, it doesn't necessarily mean that the estate will owe estate tax. Your estate might be able to take certain deductions that lower the value of your estate below $2.193 million, in which case no estate tax will be due. These deductions include:

• Marital deductions. Property left to a surviving spouse, no matter the amount, can be deducted from the gross estate.
• Charitable deductions. Gifts to qualified public, charitable, and religious organizations can be deducted from the gross estate.
• Debts and administration expenses. Debts owed and some administration expenses (funeral costs and attorney's fees, for example) can be deducted from the gross estate.
• Farm deduction. If more than half of the value of your estate comes from real estate (and related items) used for farming, the estate can take a deduction for the value of the farming property.
• Family-owned business interest deduction. The value of a family-owned business can also be deducted (capped at $2.5 million) if certain requirements are fulfilled, including that an inheritor of the business must continue it for at least three years following the death.

How Much Washington Estate Tax Will Be Due?

If your estate owes estate tax, how much will it actually owe? In Washington, the first $2.193 million of the taxable estate is not taxed. On the portion that exceeds $2.193 million, the estate tax rate ranges from 10% to 20%. (Compare these rates to the current federal estate tax rate of 40%.) To calculate the exact amount of tax owed, see Table W, Computation of Washington estate tax.

Deadlines for Filing the Washington Estate Tax Return

If a Washington state estate tax return is required, your executor will have to either file it nine months after the date of death or apply for an extension of six months. An extension gives your executor more time to file the completed return, but estimated tax must still be paid by the original due date. If payment is late, penalties and interest accrue on the unpaid amount. If your estate includes a small business, the estate tax can be paid in installments.

Your executor will likely have to hire professional help (an experienced lawyer or CPA) to prepare the estate tax return. The estate's funds can be used to pay for professional fees. Estate tax forms (there are two state forms; which one to use depends on the size of your estate) and instructions are available at the estate tax page of the Washington Department of Revenue.

For more on estate planning issues specific to Washington, see Nolo's Washington Estate Planning section.