The marginal tax rate begins at 10% and increases up to 20% (the highest in the nation).
The first million of the taxable estate (amount above $2.193 million) is taxed at $100,000.
The amounts are cumulative.
So, the second million is taxed at $140,000 for a total tax of $240,000.
The third million is taxed at $150,000 ($390,000 total);
4th million is taxedat $160,000 ($550,000 total);
5th million is taxedat $180,000 ($910,000 total);
6th million is taxedat $190,000 ($1.1 million total);
7th and 8th million is taxedat $195,000 each ($1.49 million total); and
everything above $9 million is taxed at $200,000 per million.
Tax planning is specifically excluded by MetLife.
On the Covered Services Menu MetLife states(NO TAX PLANNING) after Trusts. However, since tax questions are common I have included links to the WA Department of Revenue and the IRS and pointed out tax issues based on publicly available information from the websites to give a basis for questions of a CPA. I cannot give tax advice per se, but I can tell you the issues my previous clients have had and discuss options for addressing the issues based on previous client’s experiences that form a basis for questions of a tax professional. If you don’t know enough to ask, you won’t. That is the benefit of knowing something about the issues involved. Whenever you considering doing something of significant tax consequence, it is prudent to contact a tax professional. Whenever you considering doing something of significant investment consequence, it is prudent to contact an investment advisor professional. Whenever you considering doing something of significant legal consequence, it is prudent to contact a legal professional. These areas are related to such an extent that prudent high net worth individuals frequently have teams of CPA’s, Investment/Business Advisors, and Lawyers who all communicate with each other to integrate their services, so that they are complementary and the clients goals of avoiding probate, avoiding estate tax, asset protection, income tax reduction, and care of surviving spouse and children, grandchildren, great grandchildren, elderly parents, disabled or addicted family members and young people are properly addressed in a way that minimizes the likelihood of disputes.
EXCISE TAX & GIFTS OF REAL ESTATE EQUITY
For Quitclaim Deeds in which money is exchanged or Quitclaim Deeds that are gifts of equity, three documents are needed:
A screen print from Zillow showing the estimated market price on a given date;
A screenprint of the Assessed value from the Assessor’s website if you don’t have the postcard mailed to you; and
The latest mortgage statement and documentation of any other liens.
This information is needed to calculate equity. Subtract all liens from the estimated market price. That is the amount of the gift if no money is exchanged, and the recipient is not a spouse. If money is exchanged, then subtract the amount paid from the equity to get the amount of the gift for the Recorder’s Gift Affidavit. If the gift is greater than the amount allowed for that year then the gift must also be reported on IRS Form 709 when the giver of the gift files their tax return.
The Assessed Value must be entered on the Real Estate Excise Tax Affidavit (REETA) which is required to be recorded with the Quitclaim Deed and the Gift Affidavit if applicable.
Excise Tax must be paid unless a valid exemption can be claimed on the REETA. Common exemptions are transfers between spouses (or x-spouses), transfers to Trusts, or transfers to LLC’s, or adding or removing a Joint Tenant for no consideration (no money changing hands). If money (or value) is exchanged, the Excise Tax is based on that money or value (currently the rate in King County is about 1.78%). If there is a difference, it is reported as a gift.
It is important to realize that these Affidavits are sworn under penalty of perjury and carry potentially stiff penalties for false statements. So, be honest about the money being exchanged, and pay the proper amount of tax. Be honest about the value of the gift, and report it to the County as well as the Federal Government. If you lie and sign a Gift Affidavit and money was exchanged, prosecuting you is easy because of your sworn statement clearly contrary to the facts.
It is a common misconception to describe the initial draft of estate planning documents to be “generic” or “boilerplate.” This could not be any farther from the truth. The draft of the documents that I prepare is from a template that I created and continuously revise and update based on client questions and experiences. The draft incorporates the collective experience of the several thousand estate plans that I have prepared.
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