Washington State’s Uniform Power of Attorney Act became effective January 1, 2017. The Act generally updates rules on how the power of attorney document is to be executed and the scope and duties of your agent, among other changes.
An important provision of the Act limits your agent’s power to make gifts on your behalf. By default, gifts are now limited to the amount of the federal annual gift tax exclusion — currently $14,000 per recipient, per year. If you become incapacitated and therefore unable to execute substantial gifts in excess of the annual amount, this limitation on your agent can result in unnecessary Washington State estate tax upon your death.
Given that Washington’s estate tax excludes most lifetime gifts from taxation, you may want to consider including provisions in your power of attorney that specifically allow for more expansive gifting. Doing so may help to minimize or even avoid this estate tax.
Note: If your power of attorney was created before January 1, 2017, it is still valid. However, it will be interpreted based on the current law and your agent will be held to the updated standards.
Still unsure of how the Washington Uniform Power of Attorney Act affects your estate tax?