Speaker 1: Hey everybody, this is Christopher Smolt with CMS Law Firm. We do estate planning, we do probate, we do it well. And today I wanted to talk to you about estate taxes in a nutshell. This can be quick and dirty. Estate tax 101, just so that you understand what's going on, you know if you are susceptible to estate taxes, if you may be paying some estate taxes, and then I think maybe tomorrow we're going to talk about how to reduce some of your estate taxes very, very easily. Before we get to that though, if this information helps you and you want to know more, if you have additional questions, if you just found this video and you have other estate planning questions, feel free to go to estatemeeting.com and book a time to talk with me for free. We can do it over the phone or in person, whichever you would prefer. That is estatemeeting.com. All right, let's talk about estate taxes. In Washington State, which is where I am and where we're talking about, there are really two estate taxes that you need to worry about. Estate tax number one is at the federal level. This estate tax at this point in time is $11.2 million. What that means is, when I say that, is that you don't pay any taxes unless your assets are over $11.2 million. Under that, it's free and clear. No one's paying any taxes on that when you die. If you are married, it's even better because each person, every person in the United States gets $11.2 million. If you are married, you can check a box when the first spouse dies and that deceased spouse can give their estate tax exemption to their spouse. If you're married, essentially you're at about $22.4 million. For the majority of people, the top 99% of people, they are going to fall under that federal estate tax level. If you are over that estate tax level, you need to do some planning anyway. That's outside of the purview of this sort of quick and dirty talk. That's number one. The other thing that you need to know, by the way, when it comes to federal estate taxes is that there also is a gift limit. That gift limit is $15,000 every year. You can give $15,000 away to as many people as you want and you don't have to do anything. You don't have to file it on your taxes. You don't have to record it. You don't have to do anything. If you're looking to give some money away, give it to me. What many people will do is they'll begin to gift it to their kids. Each person can give $15,000. If you're married, you can give $30,000. You can diminish your estate relatively rapidly with that method over time. You can also give to charity without many restrictions. If you go over that $15,000, that's okay. You're not going to pay any taxes on that. You just have to file a gift tax to let the government know that you've paid over that threshold in any given year. That will reduce your estate tax exemption amount in proportion to however much you went over. To make this clear, I know it's probably fuzzy right now, $11.2 million is your estate tax exemption. If in a given year you would give $215,000 to someone, you would file an estate tax return noting that and then your estate tax exemption would go from $11.2 million down to $11 million because the government recognizes that you've already used up $200,000 of that exemption. Hopefully that made sense. If it didn't, it's fine. Just watch this again and it will make sense. Or call me. It's fine too. Now, if you live in Washington State, there's another estate tax that you have to worry about. It's the Washington State estate tax. If you know we don't have income tax here, that's why our sales tax is high, our property taxes are high, our property recording fees are high, and we have an estate tax to make up for that difference. They nickel and dime you everywhere instead of just cutting you deep with that income tax. The way the estate tax works in Washington State is that it starts at a much, much lower level. It starts at $2.193 million, at least right now. It goes up a little bit with inflation. There is no portability. What that means is if you are married, there is no box to check to give your exemption to your spouse. You can double your estate tax exemption if you are married. You can do some different things, but it takes some trust planning. It takes some actual estate planning work. You can't just check a box like you can at the federal level. The way that the taxes work in Washington State is anything over $2.193 million is taxed at 10% on the first million, then 14% on the next million after that, then 15%, 16%, 17%, up until you get to a flat 20% at about $9 million, which adds up very, very quickly. Another important thing to remember is that when we're talking about estate taxes, everything is included, so your retirement accounts are included, even if they have a beneficiary designation that goes straight to someone. Life insurance proceeds are counted, and all of your Washington properties counted when it comes to this Washington State estate tax. If you have a house in California, for example, it doesn't count toward the estate tax that you will pay, although if that puts you over the threshold, you're going to have to file estate taxes. Now, that may already be too complicated. That's fine. I just wanted to let you know that $2.193 million is that number that you need to worry about. It includes life insurance. That's something that most people don't realize. If you have these problems, if you're over $2.193 and you don't have an estate plan, you should. If you're under $2.193 and you don't have an estate plan, you should. No matter what, go to estatemeeting.com, set up a time to talk with me so we can figure this out for you. I'll give you some solutions. You pick what you want. It's up to you. That's sort of the quick and dirty on estate taxes. You may have some additional questions. Maybe I think in the next video, I'll talk about some ways that you can reduce those estate taxes and we'll break it up that way. That way, you know, just have little bite-sized pieces of estate planning that you can take in, you can digest, you can learn, and then you can make great decisions to protect yourself, protect your family, create legacy, create generational wealth, do all these different fun things that we can do with estate planning. All right. That is it. I'm Christopher Small, CMS Law Firm. We do estate planning. We do probate. We do it well. Thank you for listening. If you like this, hit the like button if there is one. If you know someone that needs to hear this, share it with them. And if there is a subscribe button anywhere else, if you're listening to it on the podcast, on YouTube, subscribe so you don't miss these. I'm trying to give this helpful information often and you don't want to miss it. All right. That's it. Thank you so much for your time and I will talk to you again tomorrow.