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<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif">ALL READERS BEWARE: In re
<span style="background:yellow;mso-highlight:yellow">Anna’s note in yellow below</span>: I am “fixing” this for more than one client right now whose prior lawyers had absolutely no idea what they were “doing” by doing this exact thing. In one case the tax burden
would be stunning to the Washinton resident holding LLC interests for an entity with not a lick of Washington presence, property, history, or even a tiptoe across the border into our fine state. Wild and crazy!<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:11.0pt;mso-ligatures:none">From:</span></b><span style="font-size:11.0pt;mso-ligatures:none"> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Anna Cashman<br>
<b>Sent:</b> Wednesday, October 22, 2025 8:22 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] Nonresident estate taxes<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif">Hello Mimi. You are correct that the threshold for filing an estate tax return in Washington is the decedent’s gross estate, not just the value of property in Washington. This is because the
tax is prorated based on the amount of assets in Washington. Many people are surprised to learn that a $500,000 property in Washington will result in estate tax due if the gross estate is $5 million ($4.5 million outside of Washington). The WSBA deskbook
on estate tax has a few examples of this as well </span><span style="font-family:"Segoe UI Emoji",sans-serif">😉</span><span style="font-family:"Aptos",sans-serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif">The DOR no longer applies the business purpose test for LLCs. This can work in your favor if you have a non-domiciliary with Washington real estate. If you put the real estate into an LLC,
then you are converting real property into personal property, which would be taxed in the decedent’s home state.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif;background:yellow;mso-highlight:yellow">But note that this also works in the inverse if you are working with Washington residents with out of state property. If a Washington resident owns a cabin
in Montana that they rent out, if you put the cabin in an LLC, then the LLC is personal property that can be taxed by Washington.</span><span style="font-family:"Aptos",sans-serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif">Anna<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="background:white"><b><i><span style="font-family:"Times New Roman",serif;color:black">Anna M. Cashman</span></i></b><span style="color:black;mso-ligatures:none"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="color:black;mso-ligatures:none"><img width="86" height="62" style="width:.8988in;height:.6428in" id="Picture_x0020_1" src="cid:image001.jpg@01DC432E.453FD4C0"></span><span style="color:black"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:10.0pt;font-family:"Times New Roman",serif;color:black">Tel (206) 382-4414 ext. 234 / Fax (206) 382-4412 / </span><span style="font-family:"Aptos",sans-serif;color:black"><a href="mailto:acashman@khbblaw.com"><span style="font-size:10.0pt;font-family:"Times New Roman",serif;color:black">acashman@khbblaw.com</span></a></span><span style="color:black"><o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;background:white">
<span style="font-size:10.0pt;font-family:"Times New Roman",serif;color:black">705 Second Avenue / Suite 800 / Seattle, WA 98104 / </span><span style="font-family:"Aptos",sans-serif;color:black"><a href="http://www.khbblaw.com/"><span style="font-size:10.0pt;font-family:"Times New Roman",serif;color:black">www.khbblaw.com</span></a><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-family:"Aptos",sans-serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:11.0pt;mso-ligatures:none">From:</span></b><span style="font-size:11.0pt;mso-ligatures:none">
<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Mimi Wagner<br>
<b>Sent:</b> Tuesday, October 21, 2025 4:41 PM<br>
<b>To:</b> <a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBAPT] Nonresident estate taxes<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Hello, Listmates, <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">A few weeks ago someone raised a question about WAC 458-57-125 and I did not notice any answer. If the nonresident decedent’s only asset in WA was a house in her own name valued at well less than the WA exclusion,
I am surprised to see that the entire non-WA estate of the nonresident decedent is pulled into WA for calculations, with the result that WA estate tax would nonetheless be due (in the hypothetical below). Can anyone comment on this? <o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:11.0pt"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:11.0pt">“</span></b><span style="font-size:11.0pt">(b)
<b>Example – Nonresident decedent.</b> A widow dies during 2013 leaving a gross estate of $6 million. The decedent was a Colorado resident at death and all of the decedent's property is located in that state, except for a vacation home located in Washington
valued at $650,000. The estate had $100,000 in expenses deductible for federal estate tax purposes. The applicable exclusion amount for 2013 is $2,000,000.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Under the facts of this example, the estate owes Washington estate tax on a Washington taxable estate of $3,900,000, computed as shown below:<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">Gross estate:<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">$6,000,000<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">Less allowable deductions:<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">($100,000)<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">Less applicable exclusion amount:<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">($2,000,000)<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">Washington taxable estate:<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">$3,900,000<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt">The preapportionment Washington estate tax for this estate, using the table provided in WAC
<a href="http://app.leg.wa.gov/WAC/default.aspx?cite=458-57-115">458-57-115</a> (3)(a), equals $534,000, computed as follows: $390,000 + ($900,000 x 16%) = $534,000.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Because the decedent owned property located outside Washington, the tax due to Washington is calculated by multiplying the amount of preapportionment tax computed above by the fraction described in this subsection
(2). Also, because the decedent was not a Washington resident at death, the numerator of the fraction does not include the value of decedent's intangible personal property. The denominator of the fraction is the value of the decedent's gross estate. Using
the facts in this example, the tax owed to Washington equals $57,850, computed as follows: ($650,000/$6,000,000) x $534,000 = $57,850.”
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">A related query is: <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Nonresidents want to put WA real estate in LLCs to convert them to intangible, non-WA situs property under the newer DOR guidance. Understandable. But the guidance is scarce.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Is anyone aware of any concerns about making the nonresident’s Trust a Member of the LLC (instead of a natural person)? I don’t know why this would be a problem, but there isn’t much guidance and the stakes
are high. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Thank you,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none">Mimi M. Wagner
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none">Wagner Law Offices P.C.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none">385 Court Street, Suite 4
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none">P.O. Box 3019<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none">Friday Harbor, WA 98250<br>
</span><span style="font-size:11.0pt"><a href="mailto:mimi@sanjuanlaw.com"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:blue;mso-ligatures:none">mimi@sanjuanlaw.com</span></a></span><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none"><br>
Phone (360) 378-6234<br>
Fax (360) 378-6244<br>
</span><span style="font-size:11.0pt"><a href="http://www.sanjuanlaw.com/"><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:blue;mso-ligatures:none">www.sanjuanlaw.com</span></a></span><span lang="EN" style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D;mso-ligatures:none"><o:p></o:p></span></p>
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