[WSBARP] Estate Tax Avoidance

[John J. Sullivan, Esq.]

Jim:

 

If they are both citizens each enjoys a lifetime exemption this year of $2.193M. So as long as you design their wills/RLT to not waste the exemption of the first decedent you are almost home. Also, WA has no gift tax, so the second decedent can gift near death. 

 

A TOD deed most certainly does not remove the real property from either estate and could make it difficult to implement the common “disclaimer trust” strategy for capturing the first decedent’s lifetime exemption. Same with the financial assets. The gross estate includes everything the decedent had control of at the moment of death. 

 

The $30,000 figure? I’m guessing you mean the $15,000 annual exclusion for each of them to any one recipient from federal gift taxes. So they can gift up to $30,000.00 to any one recipient together without filing a gift tax return. But again, there is no WA gift tax. 

All they need is a standard plain vanilla disclaimer trust design that QTIPs the credit shelter trust for federal purposes to secure a second step up in basis. Every married couple plan should be able to shelter up to $4,386,000 without doing anything fancy or aggressive. They’re only $214,000.00 over the combined threshold. Consider having the survivor make gifts as near as death as necessary to assure not running out of funds.

 

I’m coming to this late, so if anyone has already set this out, I apologize for repeating.

 

John J. Sullivan

 

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Jim Doran
Sent: Monday, May 10, 2021 12:45 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Estate Tax Avoidance

 

Death and Taxes:

 

Married clients are getting old.  They want to know what they can do to shelter their assets from inheritance tax here in Washington.  They have a home worth $600,000.00 and financial assets of roughly $4,000,000.00.  When we do the calculations the inheritance tax would be $301,050.00 upon the death of the second spouse if they do not dispose of any of the assets.  We need to shelter $2,407,000.00.  

 

I have two questions off the bat.  All this talk of Transfer on Death Deeds makes me wonder if they do a TODD will that keep the real property out of the "estate" for purposes of the estate tax?  The second question is if they make specific beneficiaries for $2,407,000.00 worth of their financial investments, will that keep that amount out of the estate tax calculation?

 

And I do know that as a married couple they can gift $30,000 per year per person, but they don't want to do that for personal reasons.

 

I am sure there are other ways to do this.  Any ideas that are not too complicated would be appreciated.

 

I appreciate it.

 

Jim Doran

 

James R. Doran

Attorney at Law

100 E. Pine Street -  Suite 205

Bellingham, WA 98225
(360)393-9506

jim at doranlegal.com <mailto:jim at doranlegal.com> 

www.doranlegal.com <http://www.doranlegal.com> 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20210510/75f1927a/attachment-0001.html>