Beginning January 1, 2025, certain estates can avoid filing a Washington state estate tax return if the deceased person had a surviving spouse and a “qualifying family residence.”
Return Filing Threshold; HB 1867
In general, when a Washington resident (or nonresident owning Washington property) dies, the estate is required to file a Washington state estate tax return if the value of the estate exceeds $2,193,000 as of the date of death. The filing requirement applies even if no tax is due. The most common reason an estate might exceed $2,193,000 but not owe any tax is if the entire estate is required to be distributed to the deceased person’s surviving spouse.
However, HB 1867, which was passed earlier this year, creates a new filing exemption. For individuals dying January 1, 2025 or later, the estate is not required to file a Washington state estate tax return if it meets the following narrow requirements:
- the decedent’s estate is not required to file a return to claim a specific election;
- the decedent was survived by a spouse;
- the decedent’s interest in the “qualifying family residence” passed from the decedent to the spouse; and
- the value of the decedent’s gross estate after deducting the value of the decedent’s interest in the qualifying residence is less than the applicable exclusion amount (currently $2,193,000).
What is a “Qualifying Family Residence?”
In order to be a “qualifying family residence,” the residence generally must be the married couple’s “principal place of residence” prior to the decedent’s death. This means the residence must have been occupied by the married couple for more than 6 of the 12 months immediately preceding the decedent’s date of death. Note there are certain exceptions for when the decedent or the decedent’s spouse resided in a hospital, nursing home, assisted living facility, or similar living arrangement prior to the decedent’s death.
Example
For example, imagine John Doe was a Washington resident who died in 2025 with a $3,000,000 estate. The estate includes John’s $1,000,000 interest in the qualifying family residence he owned with his spouse, Jane. Further imagine that John’s Will directed his entire estate, including the residence, to Jane at his death, and that John’s estate is not required to file a return to make a specific election.
Under the new law, John’s estate is not required to file a Washington state estate return, because (a) the estate is not required to file a return to make a specific election, (b) John had a surviving spouse, (c) the qualifying family residence passes to the surviving spouse, and (d) after deducting the $1,000,000 qualifying family residence interest, John’s estate is worth $2,000,000, which is less than the $2,193,000 Washington exclusion amount.
Takeaways
Because property values are always changing, it will likely be difficult to rely on HB 1867 in the estate planning process. However, whether HB 1867 might apply should be considered after an individual’s death if the individual has a surviving spouse. In the limited circumstances where HB 1867 applies, eliminating the filing obligation should save the estate considerable expense and allow the estate administration process to be completed faster.
If you have any questions regarding HB 1867, any other aspects of trust & probate administration, or Washington state estate tax, please contact an attorney in our estate planning practice group, including Matthew J. Hart or Kara Kalenius Novak.