House Bill 1867 is a Washington State law that alters the state’s estate tax filing requirements. The bill eliminates the requirement for certain estates, specifically those involving a qualifying family residence, to file an estate tax return. This applies to estates where the decedent’s spouse inherits the residence and the remaining estate value, minus the residence, is less than the applicable exclusion amount.
If a decedent passes on or after January 1, 2025, a Washington estate tax return is not required to be filed if:
- the decedent’s estate is not required to file a return to claim a specific election;
- the decedent was survived by a spouse and the decedent’s interest in the qualifying family residence passed from the decedent to the spouse; and
- the value of the decedent’s gross estate after deducting the value of the decedent’s interest in the qualifying residence is less than the applicable exclusion amount (currently $2.193 million).
Take the case where the Estate assets, including the value of the family home, are equal to $2.5 million dollars, with the home appraised at $750,000 on the date of death. In 2024, the Estate would be required to file an Estate tax return, as the total value of the Estate exceeds the Washington threshold of $2.193 million. Starting in 2025, however, if the family home is deemed a “qualifying family residence,” the appraised value of the home would be deducted from the Estate assets and the new total value of the gross estate, $1.75 million, would be below the Washington estate tax threshold, and no estate tax return would be required.
The law provides detailed definitions for “qualifying family residence” and “principal place of residence” to ensure clarity. These definitions address various living situations, including temporary absences for long-term care.
Importantly, HB 1867 doesn’t eliminate the estate tax itself. It simply removes the filing requirement for specific estates. If your estate exceeds the $2.193 million threshold, it is still recommended to consult with us to determine the potential tax implications and explore strategies to minimize your tax liability.
