Happy Sunday!

Last week we talked about how a Credit Shelter Trust (sidenote – miss a newsletter? They’re ALL on our website – https://cmslawfirm.com/blog) can help married couples take their WA state estate tax exemption from $3m to $6m.

This week we’re going to talk about what to do after that to further reduce your estate taxes (these will also work if you are not married).

A couple of notes before we get going though.

Note 1 – if you are married you probably don’t need to really worry about these until after the first spouse dies.

Note 2 – there is no gifting limit or penalty in WA state, so you don’t have to worry about timing these like you might with the federal estate tax.

Okay, here are a few strategies. We’re going to go high level here because, well, this is a newsletter. Maybe I’ll go more in depth on each one in future newsletters.

1. Move out of WA State.

This one’s simple – if you don’t live here, you don’t have to pay taxes here.

There’s one caveat – if you own real estate here you might still get sucked in – but I can also show you how to get around that.

2. Irrevocable Life Insurance Trust.

If you know you’ll have substantial estate tax liability (or you already own a lot of life insurance) you can move that policy into an irrevocable trust and it will not count as part of your estate when you die.

Those funds can then be used to pay your estate tax obligations at a significant discount OR simply fund your legacy without tax liability.

3. Deathbed Gifts.

Like I said before, there are no gifting limitations in WA state, so you could technically give away your assets to get you below $3m right before you die.

Two not great things about this.

First, it’s hard to time when you die.

Second, if you give before you die you don’t get a step-up in basis on those gifts – meaning there could be some capital gains taxes for your heirs.

4. Give to the irrevocable trust created by your Credit Shelter Trust.

If you create a Credit Shelter Trust, at the death of the first spouse, you’ll have an irrevocable trust in place.

You can always gift into that, maintain control, and reduce your estate tax liability.

That’s it for today!

High level and quick hitting as promised.

Have a great day!

Cheers,

Christopher Small
Founder/CEO
CMS Law Firm LLC

PS – we love referrals! If you know someone that could use our help, please let them know about us!