Chapter 7.6 Apportionment of Estate Tax

• Jurisdiction: Washington

§7.6 APPORTIONMENT OF ESTATE TAX

The Washington Uniform Estate Tax Apportionment Act, Chapter 83.110A RCW, was adopted in 2005. When the assets of a decedent are subject to either federal or state estate tax, the Act provides the default rules that determine which shares in the estate will carry the burden of paying the tax and the percentage of the total tax each share will pay. The fiduciary in charge of paying the tax is responsible for making these determinations, whether a trustee of a revocable trust or the personal representative of the decedent managing the probate of the estate. The Act empowers a personal representative to reach assets that are not in the estate because of a nonprobate transfer of those assets, allocate tax burdens to those assets that may be found

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when other assets that should be available are not, and account for assets that are exempt or excepted from estate taxes.

If a decedent's will provides for the apportionment for estate tax, the terms of the will control. RCW 83.110A.020(1)(a). If the will does not provide for apportionment, then a decedent's revocable living trust may apportion estate tax. RCW 83.110A.020(1)(b). The most recently dated revocable living trust controls. However, a provision is ineffective if it apportions tax to a person having an interest in the gross estate over which the decedent had no power to transfer. RCW 83.110A.020(3). For example, if a decedent exercises a testamentary power of appointment over a third-party-created trust, a provision apportioning all estate tax to the third-party-created trust is ineffective.

A decedent may exempt certain gifts, certain types of assets, or certain classes of beneficiaries from estate tax. Tax will be equally apportioned amongst the non-exempted bequests. RCW 83.110A.020(2) . For example, if a decedent exempts all specific bequests from the payment of tax, then the residual beneficiaries will share the burden of estate tax equally. Note that if an apportionment provision provides that estate tax is to be apportioned to an interest in property a portion of which qualifies for...