Washington DC Estate Tax Planning
Last updated: 7 Nov 2025 • Author: Alexander Foelsche CPA (US), WP (DE), RE (CH)
District of Columbia Estate Tax — Planning
A practitioner’s guide to D.C. estate tax planning: aligning federal techniques with the D.C. base, handling domicile/situs, choosing marital/QTIP paths (no DC portability), coordinating lifetime gifts, valuation strategy, and liquidity/execution.
Planning objectives
Core goals
- Minimize D.C. exposure via domicile integrity and situs control.
- Use marital/QTIP planning to defer or reduce state tax consistent with federal rules (no DC portability).
- Coordinate lifetime gifts with federal planning to shift appreciation and manage D.C. brackets.
- Secure liquidity and timing (payment due at 10 months; FR-77 extends filing only).
- Prepare valuation support aligned with federal schedules.
Who this page is for
- D.C. residents with estates approaching/exceeding the D.C. zero-bracket amount.
- Nonresidents owning D.C.-situs real/tangible property.
- Executors and advisors coordinating federal and D.C. filings.
Domicile & situs levers
Domicile (resident estates)
- D.C. taxes resident estates above the zero-bracket amount; determine domicile using intent plus objective ties (primary home, registrations, community ties).
- Maintain consistent evidence across years (returns, licenses, voter/vehicle, medical/professional relationships).
Situs (nonresident estates)
- Nonresidents are taxed only on D.C.-situs real property and tangible personal property; most intangibles follow domicile unless they acquire a D.C. business situs.
- Entity structures: consider substance and business purpose; avoid having pass-throughs used solely to hold D.C. real/tangible assets without planning for situs consequences.
Marital & QTIP strategy
Conformity highlights
- No portability: D.C. does not allow a state portability election of a deceased spouse’s unused D.C. amount.
- QTIP: D.C. does not recognize a separate state-only QTIP election; marital deduction generally tracks the federal QTIP election and attachments included with the D-76.
- Design choice: Where federal portability would otherwise be used, consider QTIP/credit-shelter combinations tailored to D.C. thresholds and nonresident situs exposure.
Design tips
- Draft QTIP terms to meet federal income/distribution rules; align trustee powers and accounting with expected D.C. treatment.
- Model survivor outcomes under varying asset mixes (D.C. real/tangible vs. intangibles elsewhere) to manage later D.C. inclusion.
Lifetime gifts & coordination
Planning with gifts
- D.C. has no separate gift tax; lifetime gifts can remove post-gift appreciation from both federal and D.C. estates.
- Gifts reduce federal exemption; align with expected D.C. exposure and marital structure (e.g., SLATs, GRATs, QSBS planning where relevant).
Practical implications
- Annual-exclusion gifts and direct payments for tuition/medical care remain effective without using exemption.
- Keep documentation (deeds, assignments, valuations) that establishes non-D.C. situs for gifted assets where appropriate.
Valuations, liquidity & timing
Valuation
- Use qualified appraisers for D.C. real property and high-value tangibles; reconcile to federal schedules (706/706-NA).
- Consider discounts where appropriate under federal principles; maintain robust workpapers for OTR review.
Liquidity & extensions
- Payment deadline: 10 months after death for taxable estates.
- Extension to file: request up to +6 months via FR-77 (does not automatically extend time to pay).
- Extension to pay: limited payment relief may be available for reasonable cause; coordinate with OTR and document cash-flow constraints.
- If a federal §6166 election is relevant (closely-held business), coordinate D.C. implications and attach federal election documentation.
Planning checklists
Design & documents
- Will/Revocable Trust with marital/QTIP options (consider Clayton/partial QTIP approaches).
- Nonresident owners: entity and titling review for D.C.-situs assets; evidence of location and business purpose.
- Funding memos; beneficiary designations; durable POA and health directives.
Execution & filings
- Assemble federal attachments (706/706-NA, Forms 712, appraisals) for D-76/D-76EZ.
- Calendar the 10-month D.C. due date and any requested FR-77 filing extensions.
- Track extension payments and MyTax.DC.gov confirmations for reconciliation on the final return.
FAQs
Does D.C. have portability between spouses?
No. D.C. does not offer state portability. Federal portability remains a federal election and does not create a D.C. portability benefit.
Can I make a state-only QTIP election in D.C.?
No. D.C. does not recognize a separate state-only QTIP election; the marital deduction generally follows the federal QTIP election and attachments.
Do lifetime gifts still help for D.C.?
Often, yes. While D.C. has no separate gift tax, gifts can shift future appreciation out of the estate. Coordinate with federal exemption usage and maintain clear situs documentation.
Can I defer payment if the estate is illiquid?
Possibly. File FR-77 to extend filing and request payment relief from OTR for reasonable cause. If federal §6166 is elected, coordinate with OTR and include federal election proof.
References
- District of Columbia Office of Tax and Revenue (OTR) — D-76/D-76EZ, FR-77, and estate tax guidance (MyTax.DC.gov).
- OTR publications on estate tax rates, due dates, and attachments; conformity to federal concepts for marital/QTIP.
- Internal planning practice — domicile evidence, situs determinations, and valuation/appraisal standards aligned with federal schedules.