Tax Planning for Your Washington State Estate
Jennifer C. Rydberg, Seattle Area Estate Planning Lawyer
While most people do not have a large enough estate to trigger Washington inheritance taxes, an estate may be subject to capital gains taxes if assets are transferred in the wrong manner. Proper tax planning is important to consider in setting up your estate plan. Attorney Jennifer C. Rydberg has the knowledge and experience to advise clients how to avoid unnecessary taxation.
Inheritance Taxes and Federal Estate Taxes
If the total value of real estate, retirement investments, and other assets meets a certain threshold, Washington inheritance tax and federal estate taxes would apply -- at nearly 50 percent. Placing assets in a living trust avoids probate, but does not automatically avoid these taxes. However, Ms. Rydberg can advise owners of larger estates on estate planning strategies to avoid or minimize these taxes. Contact her at 425-235-5535 to discuss whether inheritance or estate taxes would apply in your case.
Tax Planning for Capital Asset Step-Up
When you die, the basis of a capital asset (stock, bonds, mutual funds, real estate) steps up. This means that it changes from the purchase price to the value at the time of death. If the capital assets were sold prior to the spouse's death, the growth in value of the capital assets would be subject to federal income tax. For example, stocks purchased years ago at $30,000 that have appreciated to $1 million in value, have a $970,000 capital gain that is taxable before you die, but not taxable after you die.
AFTER a spouse's death, however, the surviving spouse inherits the full value of the growth of those assets, tax-free. The proceeds can then be reinvested.
For legal advice about tax exemption to a spouse at death, or inheritance or estate tax planning, contact Jennifer C. Rydberg. She has practiced in King County and Pierce County since 1978. Call her Kent, Washington, office at 425-235-5535.
