Maybe you have big plans for your estate in Washington. You probably want to know that you’re doing what’s right. But before you get too deep into those grand aspirations, it’s important to make sure you have a full understanding of which estate taxes apply.
When should you strategize your estate plan taxes?
It’s never a bad time to re-evaluate your estate planning strategy, especially if you haven’t thought a lot about what the tax implications may be. No matter what kind of legacy you want to leave behind, planning your estate taxes strategically is a helpful way to make the most of it while ensuring your plans are realistic.
Taxes are an essential part of strategic estate planning. And because your tax situation is subject to change over time, diligence is key to managing your future tax liability and making the most of your legacy for your loved ones.
What kind of estate taxes are there?
There isn’t just one blanket estate tax that you have to worry about. It’s a variety of taxes that may apply depending on your situation. Certain states, although not Washington, impose an inheritance tax that must be paid by any beneficiary who resides in such a state and who receives assets under a decedent’s will.
There are federal estate taxes you have factor into your strategy, which will likely be the most significant tax burden your estate will face. These alone may go as high as 40% if you’ve gone over the estate tax exemption.
The federal exemption limit is a combination of estate tax and gift tax. The latter is when you give an asset like money to someone and don’t expect to get anything back.