How state death taxes apply to property in other states
Key takeaway
Washington apportions estate tax according to property location and the decedent’s domicile, while other states differ.
Start your review with the person’s domicile, the location of each asset and the documents showing who owns it. Keep deeds and entity ownership records together so your adviser can compare the relevant state rules.
Washington property and apportionment
In Washington, estate tax applies to transfers of property located in Washington. A resident is someone domiciled in Washington at death.
If an estate contains property outside Washington, Washington multiplies the tax otherwise computed under RCW 83.100.040(2)(a) by Washington property value divided by gross estate value. Property qualifying for the RCW 83.100.046 deduction is excluded from both values.
This describes the apportionment rule, without determining eligibility for that deduction.
Washington business entities
In Washington, business entities, including LLCs and corporations, are intangible assets for estate tax purposes even when they own real estate. The real estate is not separated from the entity when determining whether the asset is tangible or intangible.
For a decedent domiciled in Washington at death, intangible property is located in Washington. For a decedent domiciled elsewhere at death, intangible property is located outside Washington.
Connecticut nonresident documentation
A Connecticut nonresident estate involves a decedent who was not domiciled in Connecticut at death but owned Connecticut real or tangible personal property.
An estate claiming Connecticut nonresident status must also file the State of Connecticut Domicile Declaration with the Department of Revenue Services or the Probate Court, depending on which has jurisdiction.
Oregon resident and nonresident ratios
Oregon uses different apportionment ratios for residents owning real or tangible personal property outside Oregon and nonresidents owning Oregon real or tangible personal property. Resident status depends on Oregon domicile at death.
For a resident, the numerator includes Oregon real property, Oregon tangible personal property and intangible personal property. It excludes intangibles subject to another state’s or country’s tax resulting from death, and the ORS 118.145 exemption.
For a nonresident, the numerator is Oregon real and tangible personal property, less the ORS 118.145 exemption. For both ratios, the denominator is the entire gross estate less that exemption.
Oregon multiplies the tax determined under ORS 118.010(4) by the applicable ratio. These descriptions do not determine eligibility for the ORS 118.145 exemption.
New Jersey inheritance tax scope
New Jersey inheritance tax depends on who receives the decedent’s assets and how much each beneficiary is entitled to receive.
For a New Jersey resident, its scope includes New Jersey real and tangible personal property and all intangible personal property. For a nonresident, its scope includes only New Jersey real and tangible personal property.
Those property categories do not establish that every covered transfer owes tax. Recipient exemptions and rates require separate review.
Two related terms
Domicile: In Connecticut, domicile means the intended permanent home to which an individual intends to return when absent.
Taxable situs: The place assigned to property for a particular tax rule. Washington’s property location and apportionment rules provide one state example.
EstatePlanner.com resources to open next
- Multistate estate facts and questions checklist
Use this checklist to organize domicile history, deeds, asset locations and entity documents before discussing the state comparisons above.
- What happens to marital property when spouses move states
If your property review follows a move, open this guide for the separate discussion of marital property.
- How lifetime gifts interact with state death taxes
Open this guide when your multistate review also includes property given away during life. It covers the lifetime gift topic separately.
A perspective on assets across borders
This talk’s international perspective offers a useful prompt for your own asset review: identify the people involved, who owns each asset and where it is held.
"When they have children or grandchildren who are potentially citizens outside of the country or live outside of the country, the need to see things from a global perspective is of high importance and planning around who owns what and where those assets are held."
Common questions
Does New Jersey require a nonresident return solely for a partnership interest or corporate stock when the entity owns New Jersey real estate?
No, for a bona fide partnership interest or corporate stock described in New Jersey’s nonresident guidance. It treats those interests as intangible property and requires neither a nonresident return for those interests nor a waiver.
This treatment does not establish the classification of every LLC or excuse filing because of other estate property.
Does living in Alaska eliminate possible estate tax in another state?
No. Although Alaska does not collect a state estate tax, Alaska court guidance warns that estate tax may be due elsewhere if the decedent was a resident of another state or owned property there.
Sources
- Washington RCW 83.100.040: Estate tax and apportionment, including the exclusion of property qualifying under RCW 83.100.046 from both parts of the fraction.
- Washington RCW 83.100.020: Resident definition.
- Washington Department of Revenue estate tax guidance: Property classification and business entity treatment.
- Connecticut Department of Revenue Services estate and gift tax information: Domicile and nonresident documentation.
- Oregon ORS 118.010: Resident and nonresident definitions and apportionment ratios. Exemption eligibility under ORS 118.145 is not determined here.
- New Jersey inheritance tax overview: Recipient and property scope.
- New Jersey nonresident inheritance tax FAQ: Bona fide partnership interests, corporate stock, returns and waivers.
- Alaska Courts tax guidance: Alaska does not collect a state estate tax. Estate tax may be due in another state if the decedent was a resident there or owned property there.