Community Property and estate tax

Financial Planning Tax Strategies
1

DH and I lived in Delaware, a non-community property state, for 15 years. We moved in together in 1988 and married in 1993. We always kept our finances separate except for a small joint “house” account into which we contributed monthly for household bills.

I bought DH’s house from him in 1990 which I eventually titled to my Revocable Living Trust. This trust has its situs in Delaware.

When we moved to Washington State in 2003, I sold the house and bought a different house which I titled to my Revocable Living Trust.

I am working on estate planning. WA’s estate tax exemption is not portable. A married couple can capture the exemption for each of them by using a Credit Shelter Trust (CST). I got a lawyer who modified my Revocable Living Trust to include a CST and QTIP Trust. But he didn’t seem 100% sure about tax questions.

https://dor.wa.gov/taxes-rates/other-taxes/estate-tax/estate-tax-faq

"For the estate of a married decedent, all of the community property and all of the decedent’s separate property are reported on the estate tax return. The community property assets are then reduced by 50% to reflect the decedent’s share of the property.

All property owned by a decedent must be included on the estate tax return. The estate tax is calculated on the entire estate as if all property is in Washington, then a calculation is done to apportion the tax between the Washington property and the out of state property.

The decedent’s state of domicile at the time of death is what determines if property is in state or out of state property. For a Washington domiciled decedent, any tangible personal property located outside of Washington and any real property located outside of Washington are considered out of state property. "

  1. Does community property date to our marriage in a non-community property state? (1993) This is problematic since DH has not kept records of his net worth going back 30 years. (I’m a record-keeping fanatic so I have records for myself.) Or does it date to when we moved into WA State in 2003?

  2. Are assets held in a Delaware trust considered out-of-state property? (The house is located in WA but the financial assets are not.)

Wendy