Will The Washington Estate Tax Applicable Exclusion Amount Ever Change?
The “applicable exclusion amount” is the amount of a deceased person’s estate that passes free of Washington estate tax. This differs from the unlimited marital deduction that applies when one spouse dies and transfers his or her interest in property to their surviving spouse. In 2013, the state of Washington amended the statute concerning the applicable exclusion amount to provide for an annual adjustment based on changes in the consumer price index. As the result of application of the annual adjustment, the amount of a Washington estate that passes free of Washington estate tax to someone other than the surviving spouse increases. There is no adjustment if the applicable exclusion amount would be the same as or less than the applicable exclusion amount for the immediately preceding calendar year.
For purposes of the statute and applicable Washington regulations, the consumer price index is specifically defined as the consumer price index for all urban consumers, all items, for the Seattle-Tacoma-Bremerton metropolitan area as calculated by the U.S. Bureau of Labor Statistics. From 2013 through 2018, there were annual adjustments in Washington’s applicable exclusion amount. In January 2018, the U.S. Bureau of Labor Statistics, based on the 2010 Census, discontinued the Seattle-Tacoma-Bremerton metropolitan area from the applicable consumer price index table and replaced it with the Seattle-Tacoma-Bellevue metropolitan area. Unfortunately for Washington residents, the state of Washington has not amended the statute or the applicable regulations to make this change. As a result, the applicable exclusion amount remains the same today as it was in 2018 and Washington residents do not benefit from what should have been a rising applicable exclusion amount.
The applicable regulations cannot change until the applicable statute has been amended by the Legislature. Currently, there is no legislation pending to make the necessary change.
If you need assistance with your estate planning, contact Per Oscarsson or one of the other attorneys in Beresford Booth’s Estate Planning and Probate Group.