Washington vs Montana | Community Property vs Common Law

While capable of practicing law in both Washington and Montana, our firm would like to spend a moment in pointing out some key differences in the laws governing estate planning and probate that may exist for those who may have assets in both states. Understanding these laws fully will assist you in determining which state is best to complete/open your case in.

In Washington, the laws are governed by the Revised Code of Washington (RCW) and the Washington Administrative Code (WAC), while Montana follows the Montana Code Annotated (MCA). Our firm is uniquely positioned to practice law in both states, offering experience in multi-state matters. Typically, a firm would need to engage in what is known as "ancillary" representation to acquire the partnership of a local attorney who is certified to practice law within that state. At Cornerstone Legal, our attorneys are capable of operating seamlessly in matters concerning both Washington and Montana.

Estate Planning Differences

One of the most significant differences between estate planning in Washington and Montana lies in how each state views marital property. Washington is a community property state, meaning that most assets acquired during a marriage are considered to be owned equally by both spouses, 50/50 (RCW 26.16.030). This can be a game-changer when it's time to draft a will, as a spouse can only legally leave their half of the community property to an heir. In contrast, Montana is a common law state. Here, assets are typically owned by the individual who acquired them, though a surviving spouse still has certain rights under state inheritance law if a will isn't in place to specify clearly. This community property vs common law distinction is critical for couples, as it directly impacts what can and can't be included in each spouse's will, as well as which assets qualify. In the event of remarriages and divorce, it is important to think about the impact that the prevailing marital property law will have on your plans.

Holographic Wills

When you picture a will, you likely imagine a professionally typed document signed and witnessed in a formal setting. But what about a simple, handwritten note? This is where many states diverge. Montana, as well as some other states, legally recognizes holographic wills (and no, this does not mean that Tony Stark is drafting your will on a futuristic holographic display). The holographic will is entirely handwritten and does not require witnesses to be valid. Washington does not accept holographic wills as under Washington law (RCW 11.12.160), a will must both be in writing and signed by at least two competent witnesses (or one notary). Both states have specific rules for witnesses as well. Washington's law has an interesting nuance which specifies a beneficiary can not be a witness if there are two additional witnesses who are not also beneficiaries. Montana, on the other hand, allows a beneficiary to serve as a witness regardless of additional, interested witnesses. If there are any questions as to whether or not your will, or a will you need to uphold, has a beneficiary witness included, reach out to a qualified probate attorney.

Estate and Inheritance Taxes

No one wants to see their hard-earned assets go to the tax man. When it comes to estate taxes, the difference between Washington and Montana is significant. Montana does not have a state-level estate or inheritance tax, so beneficiaries are only subject to federal estate tax laws. Additionally, Washington has its own estate tax, which is levied on the total value of the estate before it is distributed. The tax rate is progressive and can be substantial for large estates, starting at 10% and going up to 35% on assets above the Washington state tax exemption threshold. This is a critical consideration for residents of the Evergreen State, as it can significantly reduce the value of an inheritance for future generations. Our firm will work in coordination with your accountant to ensure the best financial outcome for your estate plan.

Probate Differences

While the purpose of probate—to validate a will, pay off debts, and distribute assets—is the same everywhere, the process can differ greatly. One key example is the Small Estate Affidavit. Both states have a streamlined process for smaller estates to avoid a lengthy and costly formal probate. However, the financial thresholds are different: Montana's limit is $50,000, while Washington's is $100,000. This is a simple but powerful way to avoid a key pain point for many families. Should the value of the estate from the deceased be less that the relevant state limit, the single document can be submitted to complete the entire probate process at no fuss (assuming no real property like a house, car, etc - remains in the name of the estate).

A Note on Validity of Out of State Estate Plans

It is a common misconception that a will created in one state is null and void if you move. The truth is, a will that was established legally under the laws of its original state is generally considered valid in your new state of residence. However, this is no excuse to postpone updating your estate plan. New state laws, especially regarding topics like community property and estate taxes, can change the impact of your will and potentially create legal hurdles for your loved ones. To ensure your wishes are carried out exactly as you intend, it is always a good idea to review your documents with a qualified attorney in your current state.