SimplyTrust Knowledge Base

A: At its core, community property means earnings during marriage—and items bought with those earnings—are jointly owned. By contrast, assets owned before marriage, plus gifts and inheritances to one spouse, usually remain separate. Debts work similarly: many obligations taken on during marriage are shared. Rules vary by state, but that’s the broad frame.Nine states use community property as the default marital property system (as opposed to equitable property). They are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Several states also offer opt-in community property—typically by creating a special trust or agreement. These include Alaska, Florida, Kentucky, South Dakota, and Tennessee. Opt-in frameworks can give couples certain community property benefits even in otherwise non-community jurisdictions.

A: Overall, both states deliver probate avoidance and privacy. Nevada stands out for having no state estate or inheritance tax, while Hawaii has no inheritance tax but overlays a separate estate tax that can matter for larger estates. Hawaii’s trust rules track the Uniform Trust Code (UTC). You’ll find a dedicated “Revocable Trusts” part and clear rules on creating, revoking, and administering trusts. Nevada’s framework lives in NRS Chapters 163 and 164, which add features like modern decanting and flexible administrative rules. The biggest difference comes in taxes. Nevada has no state estate or inheritance tax, and there hasn’t been a filing requirement since 2005. Hawaii, by contrast, imposes a stand-alone estate tax. That tax can apply to larger estates, with an exclusion fixed to the old federal 2017 level. Meaning some estates that owe nothing federally can still trigger Hawaii estate tax.

A: For years, many states relied on a federal “pick-up” system that shared federal estate tax revenue with the states. When Congress phased out that credit in the early 2000s, some states let their taxes lapse, while others rebuilt independent systems. Hawaii chose the estate-tax route. It enacted Chapter 236E to apply to residents’ estates and to nonresidents with Hawaii-situs property for transfers after January 25, 2012. The state did not add an inheritance tax. Today, six states impose inheritance taxes, and Hawaii isn’t one of them. Why that choice? Estate taxes are assessed on the estate before beneficiaries receive property, which aligns cleanly with federal concepts and simplifies administration. Hawaii’s law expressly coordinates with federal rules while remaining a state-level system. That structure let lawmakers restore revenue after the federal credit disappeared—without creating a separate levy on heirs. Bottom line: inheritance tax in Hawaii doesn’t exist, and it hasn’t been part of the state’s modern framework. Hawaii opted for an estate tax that works alongside federal law, keeping beneficiaries free from a separate, state-level inheritance levy.

A: For decades, most states didn’t run standalone estate taxes. Instead, they used a “pick-up” tax that matched a federal credit; the state simply “picked up” part of the federal tax bill. When Congress began phasing out that credit in 2001, pick-up taxes faded.Hawaii responded by enacting the Estate and Generation-Skipping Transfer Tax Reform Act (HRS Chapter 236E). The act applies to estates of residents and to nonresidents with Hawaii property for transfers after January 25, 2012. The policy tracks federal rules in many places but sets its own exclusion amount and rate table. Hawaii estate tax isn’t about penalizing success. Rather, it’s a targeted system, built after the old pick-up era, that funds state priorities while aiming squarely at the largest estates. The basics: Hawaii’s progressive estate tax applies above a $5.49 million exclusion, with rates from 10% to 20%. (Note: The state has no inheritance tax.)

A: An inheritance tax is paid by the beneficiary and depends on the recipient’s relationship to the person who passed. Only a handful of states still use it—currently Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania (Iowa ended its tax January 1, 2025). Nevada is not on that list.Nevada historically relied on a pick-up estate tax tied to a federal credit—not a separate inheritance tax. When Congress eliminated that credit for passings after December 31, 2004, Nevada’s pick-up system went dormant. While some states “decoupled” and enacted their own estate or inheritance taxes to preserve revenue, Nevada chose not to. The state did not then create a new estate or inheritance tax to replace it. So, there was no inheritance tax in Nevada before that and none since.

A: Nevada once had an estate tax. But it wasn’t a standalone tax. It was a “pick-up” tax that simply claimed a portion of the federal estate tax already owed. When Congress phased out the federal credit that funded pick-up taxes (effective for passings after December 31, 2004), Nevada’s tax effectively disappeared. The Nevada Department of Taxation confirms that only estates for passings on or before December 31, 2004 might still file. Later passings owe nothing to the state. After the federal credit vanished, some states created their own estate taxes to replace the lost revenue. The federal credit repeal in 2005 pushed states to decide whether to keep, repeal, or redesign their taxes. Nevada landed on repeal-by-inaction and chose not to decouple. Therefore, there has been no estate tax in Nevada since 2005.

A: No, there is no requirement for grantors or trustees of a Nevada trust to be residents of Nevada.

A: Nevada is a favorite for its lack of state taxes, strong privacy protections, and robust asset protection laws. Therefore, it's an ideal jurisdiction for trust formations.

A: Yes, Nevada allows the use of spendthrift clauses. They offer significant protection from creditors, making it difficult for creditors to access trust assets.

A: The day-to-day benefits are similar—control now, smoother administration later. In either state, a revocable trust lets you keep control while you’re living and designate who steps in later. Properly funded trusts can keep most assets out of probate, which can save time and reduce paperwork for loved ones. The standout differences between revocable trusts in Washington versus Nevada come from Washington’s estate tax and Nevada’s specific community-property title tools. In short, Washington has an estate tax (although no inheritance tax) while Nevada doesn’t. And while both states are community property states, Nevada goes one better by adding a statutory form for right of survivorship in a deed.

A: For decades, Washington State imposed an inheritance tax (a tax on what heirs receive). In November 1981, voters approved Initiative 402, repealing the inheritance and gift taxes effective January 1, 1982. In their place, the state kept a “pick-up” estate tax equal to the federal state death-tax credit—essentially piggybacking on federal law. So, no. Washington does not impose an inheritance tax anymore. It levies an estate tax instead (a tax on the estate itself before assets are distributed). The switch away from an inheritance tax dates to that 1981 vote and took effect in 1982. Then, in the early 2000s, Congress began phasing out the federal credit that Washington’s pick-up system relied on. In Estate of Hemphill (Feb. 3, 2005), the Washington Supreme Court confirmed that, under existing statutes, the state tax was tied to current federal law—so as the federal credit faded, Washington’s linked tax did, too.

A: For passings on or after July 1, 2025, Washington’s exclusion amount is $3,000,000. Therefore, only amounts above that figure are subject to state estate tax (but no inheritance tax). Also, the rate schedule is graduated. It starts at 10% and rises in steps to 35% for Washington taxable estates over $9 million. Earlier dates of passing use prior brackets and a $2,193,000 exclusion. Washington also adjusts key amounts annually beginning in 2026, based on a CPI calculation the Department of Revenue updates each year. Check the state’s estate-tax table for the latest thresholds and rates.

A: Used thoughtfully, the right of survivorship is a practical tool that streamlines transfers, reduces court involvement, and keeps loved ones focused on what matters—not paperwork. It’s a powerful way to avoid probate. With joint tenancy (often called JTWROS), a decedent’s share transfers instantly to the survivor and skips probate—even if a will says otherwise. Bank and brokerage accounts titled JTWROS work the same way. Real estate can be titled to include survivorship. Through joint tenancy, tenancy by the entirety, or (in certain states) community property with right of survivorship. So the deed flows directly to the survivor at passing.

A: Revocable trusts in Vermont versus Nevada turns on tax context and drafting habits, not on whether trusts “work.” Both states let you keep control while living, avoid most probate, and maintain privacy. Vermont’s UTC-based framework and estate tax create one planning backdrop. Nevada’s NRS system and no state-level transfer taxes create another.Revocability mechanics: Vermont presumes revocable unless the document says otherwise. Meanwhile, Nevada presumes the opposite unless revocation rights are reserved. Both approaches work the same in practice if you include clear revocation language in the trust.Probate avoidance and privacy: in both states, properly funded revocable trusts can keep most assets out of probate and out of the public record. Funding requires retitling accounts and deeds. Taxes during life: revocable trusts are “see-through” for income taxes; the creator reports income on a personal return. There’s no built-in income-tax break. State tax landscape at passing: Vermont has no estate tax or inheritance tax, while Nevada has neither an estate nor inheritance tax. That difference doesn’t turn a revocable trust into a tax shelter. However, it shapes how families model future costs.

A: Vermont has long favored an estate tax structure rather than a separate inheritance tax. Before the early 2000s, Vermont tied its system to the federal one as many states did. When that federal credit phased out, Vermont maintained its own stand-alone estate tax. (Something that only a few states have done.)A 2016 law simplified the structure by applying a flat 16% rate above the exclusion, replacing prior brackets. Then, in 2019 (H.541), lawmakers phased in a higher exclusion—$4.25 million in 2020 and $5 million starting in 2021—where it stands today. So, the state has never been big on inheritance tax.

A: Vermont levies an estate tax only when an estate exceeds $5 million. Anything above that threshold is taxed at a flat 16%. Amounts under $5 million aren’t taxed at the state level. When a Vermont estate meets the filing threshold, the return is generally due nine months after the person’s passing. The state follows the common approach of allowing an extension to file (typically up to six months). However, an extension doesn’t extend the time to pay. These timelines track the federal estate tax calendar.While Vermont is one of a handful of places with a state-level estate tax, it does not impose an inheritance tax. That means beneficiaries don’t pay a separate tax on what they receive.

A: One big difference is that Rhode Island has a state income tax. Trusts with Rhode Island income or resident status may need to file RI-1041 and pay tax on Rhode Island–source income. Nonresident trusts file if they have Rhode Island–source income. Nevada does not impose a state income tax. Nevada-situs trusts therefore avoid a state-level income tax, though other states can still tax based on connections to them. Another contrast between the two states is how they handle duration. Rhode Island abolished the common-law rule against perpetuities. This allows very long-term or even perpetual trusts—but only for trusts drafted specifically that way. Nevada adopted a statutory approach. All future interests can remain unvested for up to 365 years under NRS 111.1031. That long window supports “dynasty” planning across many generations.

A: Rhode Island once used a patchwork of “estate and transfer” levies. Over time, lawmakers repealed many transfer-style provisions and modernized the code under Chapter 44-22. Which left a stand-alone estate tax framework in place. You can see this evolution in the statute index, where multiple former sections are marked “repealed.” A big shove came from federal changes. In 2001, Congress phased out the federal credit for state “pick-up” taxes. Many states, including Rhode Island, “decoupled” by adopting their own estate tax tied to the federal rules as they existed on January 1, 2001. Rhode Island’s law at §44-22-1.1 reflects that linkage and defines how the state estate tax works today. In short: the state chose an estate tax, not an inheritance tax.

A: Before the early 2000s, most states used a “pick-up” system. States took a share of the federal estate tax via a credit, so paying state tax didn’t increase the overall bill. Congress phased out that federal credit in the 2001 EGTRRA law, which pushed states to create stand-alone systems. Rhode Island is one of the states that did so, and today it imposes its own separate Rhode Island estate tax with its own threshold and rules (although no inheritance tax). For decedents who pass in 2025, the Division of Taxation set the credit at $85,375, which exempts the first $1,802,431 of value. That’s up from $1,774,583 for 2024. In plain terms: if an estate’s net taxable amount is at or below $1,802,431, the Rhode Island estate tax doesn’t apply. Over the threshold, Rhode Island uses a bracketed schedule with rates that top out at 16%.