Estate tax avoidance number 2: How to save $259,350 on your estate taxes with a little estate planning solution. There is a couple of things that need to be in place for this to work. Number one: you should live in Washington State because this is where estate tax comes into play. Number two: you need to be married. Number three: you’ve got to have a network of nearly 4 million dollars, although, if you get over two this will start to help.

In Washington State estate tax start at 2.129 million dollars. Anything you have over that is gonna get taxed. The first million over that is at 10%, the second million is at 14%, the third million at 15%. Everybody has their own 2.129 million dollars to use as a tax exemption. But when you die, you cannot give that to your spouse. It’s called portability. If your spouse passed away and everything went to you and you have more than 4 million dollars net worth and then you passed away, you would be paying at least $259,350.

The solution is called credit shelter trust, AB trust or marital trust. There are different names and different variations. The gist of it is when the first spouse passes away, a separate trust is created and their estate tax exemption 2.129 million dollars is put into that trust. The surviving spouse can get access the trust, can use the trust, can live off of the trust if they need to but when that surviving spouse dies, that 2.129 million dollars that’s been carved out of that trust remains outside of their estate. Essentially, you get to 4.258 million dollars before you have to pay estate taxes which saves you$259,350. This solution is not incredibly hard to implement. It will save you a ton money and has a small price to pay.

Christopher Small is the owner of CMS Law Firm LLC a Seattle estate planning law firm. Click here for a free strategy session.