Law Office of John S. Palmer Attorney at Law

(425) 455-5513

Domestic Partners and Estate Taxes

Posted Friday, May 17, 2013 by John S. Palmer

As part of the expansion of domestic partnership rights passed by the legislature in 2009, registered domestic partners in Washington will be eligible to claim an unlimited marital deduction for Washington estate tax purposes starting in 2014. They will also be able to avoid or defer Washington estate tax on property left to a non-citizen partner in a qualified domestic trust (QDOT).

This is because effective January 1, 2014, the following provision will be added to RCW 83.100.047:

The [Washington Department of Revenue] shall provide by rule that a state registered domestic partner is deemed to be a surviving spouse and entitled to a deduction from the Washington taxable estate for any interest passing from the decedent to his or her domestic partner, consistent with section 2056 or 2056A of the Internal Revenue Code but regardless of whether such interest would be deductible from the federal gross estate under section 2056 or 2056A of the Internal Revenue Code.

IRC section 2056 creates an unlimited marital deduction for federal estate tax purposes; section 2056A defers, and potentially avoids entirely, federal estate tax on property left in a QDOT for the benefit of a noncitizen spouse.

The Federal Defense of Marriage Act (DOMA) limits the application of 2056 and 2056A to heterosexual married couples. (The US Supreme Court is expected to rule on the constitutionality of DOMA next month). Even if DOMA is struck down, and same-sex couples are able to claim both the state and federal marital deduction for estate tax purposes, the estate tax benefit extended to registered domestic partners in Washington will not be moot because Washington’s domestic partnership law will remain in effect for both heterosexual and same-sex couples in which at least one party is 62 years of age, in recognition of the fact that older couples often do not want to marry to avoid losing social security or pension benefits tied to a previous marriage. Same-sex domestic partnerships that do not meet this new age requirement would be automatically deemed to be a marriage on June 30, 2014 unless dissolved or converted to a marriage before then.

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Law Office of John S. Palmer11911 NE 1st St, Ste. B204,Bellevue, WA 98005-3056