Estate and Gift Tax Planning

 

An essential element of an estate plan is tax planning. The federal estate tax can be levied after a person’s death. The federal estate tax exemption amount for 2024 is $13,610,000 for an individual and $27,220,000 for a married couple with the use of election (called a “portability” election) or certain planning methods in their estate documents. 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: $2.193 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 charity. Currently, the gift tax exclusion is $18,000 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.

At Three60 Law Group, we can help you understand, evaluate the options and take full advantage of your estate and gift tax exemptions while maintaining full compliance with the changing tax laws.

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Disclaimers: This material is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this material does not create an attorney-client relationship. The opinions expressed here are the opinions of the individual author and may not reflect the opinion of the firm or any other individual attorney. Any tax advice contained in this communication is not intended to be sided, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties.