Washington DC Estate Tax Planning

Secure your estate’s future with professional estate tax planning services from Kevin C. Martin, Attorney at Law, PLLC.


Estate Tax Planning in DC

One of the primary goals of estate tax planning is to ensure that you pay as little estate taxes as legally permissible. Depending on the value of your estate at the time of your death, your estate may be subject to Washington DC estate taxes, federal estate taxes, or both.

DC and federal estate taxes are calculated based on the net value of assets at the time of death, with the greatest impact felt by high-net-worth individuals and their families.

Federal estate tax is levied on all estates valued at or above $12,920,000, with rates ranging from 18% to 40%. In addition to federal tax, Washington, DC, imposes its own estate taxes on estates valued at $4,528,800 or higher in 2023. DC estate tax rates range from 11.2% to 16%. These taxes must be paid before your heirs can access their inheritance.

Estate planning laws and regulations are ever-changing, both at the federal and state levels. Having an experienced, up-to-date estate tax protection attorney on your side will simplify your mission of minimizing tax liability and maximizing your legacy.

What Is the Estate Tax in Washington, DC?

Estate tax is a tax on the right to transfer property at death. Both residents and non-residents with property within DC must pay estate taxes on qualified estates. The amount of tax owed depends on the estate’s size and the date of death.

DC estate tax exemption threshold in 2023 is $4,528,800. Estates valued at or higher than the threshold are liable for estate tax, and it applies to all assets in excess. DC has seven estate tax brackets, starting by 11.2% on estates valued above the threshold but less than $5 million to 16% on estates valued at $10 million and higher.

Taxable estate in DC includes:

  • Real estate, such as houses and lands

  • Tangible personal property, such as vehicles, furniture, appliances, and office equipment

  • Intangible personal property, such as bank accounts, securities, and bonds

What Is Federal Estate Tax?

Estates valued at $12.92 million or higher are subject to federal estate tax for deaths in 2023. Married couples who filed returns jointly have an estate tax exemption of up to $25.84 million.

There are 12 federal estate tax brackets. For every $0 to $10,000 above the exemption threshold, a tax rate of 18% applies. This rate increases to 40% for excess property of $1 million and above. This means that for every $1 million in excess, your estate will pay the IRS $400,000.

There are several legal tools that can help you protect your legacy and its future. A qualified and experienced estate planning lawyer can assist you in planning your estate in such a way that you reduce estate taxes. This translates to more value being available for distribution to your heirs.

How Can I Minimize Estate Tax Liability for My Heirs?

There are many things you can do to minimize or entirely eliminate the estate taxes you might owe. These strategies focus on decreasing the estate’s overall value to ensure it falls below the taxable thresholds. Some of these strategies include:

  • Gifting to family members: You can reduce the size of your estate by giving gifts to your heirs. However, you may be liable for federal gift tax if the value of the gifts is higher than the annual exclusion amount of $17,000 in 2023.
  • Setting up irrevocable trusts: Assets held in irrevocable trusts don’t count toward your taxable estate since the trustee becomes their legal owner.
  • Making charitable donations: Transferring assets to charities reduces your taxable estate and tax liability. Donations to qualified charities are deductible from the federal gift tax.
  • Establishing a family limited partnership (FLP): An FLP allows you to transfer partnership interests to your heirs, which reduces your estate’s value.

Federal Estate Tax Deductions

Deductions are another way to reduce potential estate tax liability. Before your taxable estate is calculated, all debts and estate administration expenses must be settled first. Property passing to qualified charities is also deducted from your gross estate.

Moreover, the unlimited marital deduction allows the transfer of any property to the surviving spouse without any restrictions or taxes.

Are There Any Tax Implications for Gifting Assets During Your Lifetime?

There is no local gift tax in Washington, DC. You can give anything to anyone in a year without paying a local tax.

However, the federal gift tax exclusion amount for 2023 is $17,000 for individuals and $34,000 for married couples. You must disclose any amount gifted to any person over this amount to the IRS. Gifts to your spouse or charities are excluded.

Kevin C. Martin, Attorney at Law, PLLC, Can Help You

The estate tax planning process is challenging and requires extensive legal and tax knowledge. The experienced and knowledgeable attorney at Kevin C. Martin, Attorney at Law, PLLC, is ready to help you. We are a DC-based estate planning law firm dedicated to helping you preserve what you worked hard for and protect your family’s future.

We are committed to building a comprehensive, water-tight estate plan that satisfies your needs. Our solutions are tailored to you and your estate but are always compliant with DC and federal laws.

Contact us today for a free consultation. The time to plan for the future is today.


Differences Between Estate Tax and Inheritance Tax

Estate taxes are levied on the deceased’s estate, whereas inheritance taxes are levied on the heirs. Residents of Washington are not required to pay inheritance taxes when they receive property or cash. However, all heirs are required to file an inheritance tax return (Form FR-19) for inherited assets above $1,000.

How Often Should I Review and Update My Estate Tax Plan?

An estate tax plan should ideally be reviewed once a year or following major life events. This is because circumstances, tax laws, and family relationships change over time. Being proactive is essential to ensure your estate plan reflects your current goals and desires.