Understanding Inheritance and Estate Taxes in Washington State
When planning your estate, it’s important to understand how inheritance and estate taxes can impact your beneficiaries and your assets.
While Washington State does not have an inheritance tax, it does impose an estate tax on estates exceeding a certain value. In this post, we’ll break down the differences between inheritance tax and estate tax, explain the specifics for Washington State, and highlight how federal estate tax rules come into play.
1. Introduction: Inheritance vs. Estate Tax
Before diving into the details, it’s essential to clarify the difference between inheritance tax and estate tax:
- Inheritance tax is levied on the individual who inherits property from someone who has passed away. The tax is calculated based on the value of the inheritance and the relationship between the heir and the deceased.
- Estate tax is imposed on the estate itself before assets are distributed to beneficiaries. The tax is based on the total value of the deceased person’s estate.