What is Portability in Estate Planning?

I’m often asked about portability in estate planning, though it isn’t usually by using the word “portability,” it’s usually by asking about estate taxes.

What’s important to remember at the outset is that Washington State has its own estate tax.

And that estate tax does not allow for portability.

What is Portability

The easiest way to talk about portability is with an example.

Imagine a husband and wife. They have $10 million dollars worth of assets to their name.

After some time, the husband dies. When the husband dies he leaves everything to his wife ($5 million of the $10 million dollars).

Some time later, the wife dies. Her estate at death is $10 million dollars (her $5 and his $5).

In this example estate taxes begin at $5 million dollars. Here’s a question for you: does the wife owe any estate taxes?

If there is portability the answer is no.

If there is not portability the answer is yes, estate taxes are due.

What portability allows one to do is “give” one’s estate tax deduction to their spouse. It essentially allows one to go from a $5 million dollar estate tax threshold to a $10 million dollar estate tax threshold.

How Does Portability Work in Washington State?

The short answer is, it doesn’t.

There is no portability in Washington State. That means if you don’t actively take steps to use your estate tax exemption it will be lost.

If you are married and your combined net worth is over $2 million (including life insurance, real estate, retirement, etc.) you should call me so we can chat.

Talk to you soon!

Cheers,

Christopher Small

P.S. Don’t forget to check out my free ebook: “7 Estate Planning Mistakes Every Family Needs to Avoid.” It’s packed full of helpful information to help you get everything you want out of life (and after life).

Christopher Small is a Seattle estate planning lawyer who helps people get rich and live forever. He is also the owner of CMS Law Firm LLC.