Happy Sunday!

This week we’re doing something fun! One of you readers emailed me with a scenario and a question, so I thought I’d answer it here.

Ready? Here we go!

Very good letter and explained in a very clear and understandable way. Love the solution but, I won’t be getting married to get the exemption. SO, what can an 79 year old do so my kids can avoid having to pay close to $1mil+ in WA estate taxes when I die (not planning on dying too soon but it will happen!)? Short of moving out of State and declare a residence in a friendly State. There are too many folks in my situation – what are they doing in their planning to avoid this problem, without having to give to charity or gifting. I expect I have at least another 15+ years left in me!

Okay, so what can we do with this?

Short answer – not much! :)

Why?

Reducing and avoiding estate taxes is a lot like reducing and avoiding income taxes – to get a little you have to give a little.

To get the benefit of paying less tax, you have to take some action the government wants to promote.

When it comes to income taxes, it’s often investing in the community (that’s why business owners get a lot of tax breaks) or your future self (that’s why retirement contributions get tax breaks).

When it comes to estate taxes, it’s giving up control of your assets, either by gifting them or assigning their use to someone else (i.e. a trust).

In this scenario, Fred (my hypothetical people are always named Fred, or Suzy if a lady) doesn’t have a lot of options.

One thing you could do, so long as you don’t die suddenly, is death bed gifting. As the time approaches, you could make gifts to whomever you want in such an amount that gets your estate value down to $3m.

But other than that, you have to give a little to get a little.

Hope this makes sense (I know it doesn’t help much, but sometimes the answers to our questions aren’t exactly what we want to hear).

Have a great week!

Cheers,

Christopher Small
Owner
CMS Law Firm LLC

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

PPS – ANNOUNCEMENT – our last in person signing day of the year for our Kent office will be December 18; for our Kirkland office – December 22!

PPPS – if you made it this far there is ONE other thing that might be done… but I didn’t want to make this super long. I’ll talk about it next week…