Taxpayers Win a Huge Victory against the Department of Revenue

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On October 18, 2012, the Washington Supreme Court provided taxpayers with a favorable ruling on the taxability of pre-2005 Marital Deduction Trusts (otherwise known as QTIP Trusts).

In 2005, Washington adopted a state estate tax and levied such tax on the estates of all Washington decedents. In addition to imposing this tax on all tangible property located in Washington as well as all intangible property regardless of location, the state imposed this tax on assets that had been left to deceased taxpayers in a QTIP Trust. The state failed to distinguish between trusts that had been established prior to the creation of the state estate tax and trusts that had been established after the creation of the tax.

Taxpayers asserted that the State had no authority to tax assets held in a trust that had been created prior to the effective date of the tax and, in a long awaited ruling, the Washington Supreme Court agreed.

About the Authors

Laura Hoexter

As chair of the firm’s estate planning and probate group, Laura Hoexter’s practice focuses on wills, trusts and estates. She works with individuals to help them establish foundational documents, such as tax-saving wills and living trusts, financial and health care powers of attorney, and health care directives. She addresses complex issues that may arise, including non-citizen status, retirement benefit planning and life insurance arrangements. Laura has significant experience helping clients meet their more advanced estate planning goals, including the formation of charitable trusts and private foundations, as well as all types of irrevocable trusts such as life insurance trusts, special needs trusts, and qualified personal residence trusts.

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