[WSBAPT] Wash Estate Tax - Credit Shelter Trust Wills

[Diane J. Kiepe]

Joshua,

Washington State only includes the full value of a QTIP trust in it’s WAC calculation of the second to die.  If it is a true credit shelter trust for federal, it should be in the estate of the second to die.  With that being said,  it is possible where the first spouse dies and the federal credit shelter is funded in a greater amount then the state exemption so a tax is due on the first death or a partial QTIP election has to be made to cover the overage.

If you read WAC 458-57-115  you will see that the calculation would not pull back in a Federal Credit Shelter trust.  I think what you have heard is that the QTIP property gets pulled in – that is why, under current fed/state exemptions it is important to consider having a 100% QTIP for Federal (if you want second step up) but 0% for state and use the state exemption in full.  It’s complicated but I have worked under QTIP Fed no state on a couple of occasions – so far so good.  Of course the second spouse is still living 😉

Diane J. Kiepe

Diane J. Kiepe
Douglas Eden
717 W. Sprague Ave.
Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Josh Grant
Sent: Monday, February 1, 2021 3:35 PM
To: wsbar trust <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Wash Estate Tax - Credit Shelter Trust Wills

I have a client with wills written in early 1990.  They are credit shelter wills.  Estates total about $4,00,000.  I have heard that the Washington  department of revenue, considers the full value as taxable to the surviving spouse, notwithstanding the federal estate tax would allow the second to die to be “sheltered” from taxing the 1st to die’s part that went into a credit shelter trust for the benefit of the surviving spouse.  Anyone have any details on this? Authority? Thanks
Joshua F. Grant
[advocates]
P. O. Box 619
Wilbur, WA 99185
509 647 5578
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