- Associated Press - Thursday, October 2, 2014

OLYMPIA, Wash. (AP) - The state Supreme Court on Thursday unanimously upheld legislative changes to the state’s estate tax law that saved the state millions of dollars in refunds.

The court ruled that the move taken by lawmakers last year to allow retroactive taxes on some estates was constitutional, did not intrude upon judicial power, and that the retroactivity of the changes were not a violation of the estates’ due process rights.

The Legislature’s action was in response to a 2012 ruling by the high court, which determined the estate tax did not apply to married couples who had used a certain type of trust in their estate planning before the 2005 estate law was passed. Thursday’s ruling by that same court was in response to challenges brought by two estates: one that already paid the tax and was seeking a refund, and another that was fighting a tax bill from the state.

The amendment to the estate tax law became a key part of a budget agreement during an overtime legislative session in 2013. At the time, officials said that without a change, the state would have been on the hook for $160 million. That number included more than $92 million in refunds, nearly $5 million in cancellation of assessments that haven’t yet been paid, and $63 million less in future collections through the middle of 2015.

“The decision to retroactively amend the statute was a policy decision, properly in the sphere of the legislature,” the court wrote in a footnote.

In the case of Thomas Macbride, who died in 1999, followed by his wife, Jesse, in 2007, his estate was seeking a refund from the state of more than $643,000 it paid in taxes. A superior court found in favor of the state, and the state Supreme Court upheld that ruling.

Floyd Hableton died in 2005, and his wife Helen, died the following year. The state is seeking nearly $1.2 million in taxes from that estate. A trial court found in favor of the estate, but the state Supreme Court overturned that ruling.

Messages left with the estates’ attorneys were not returned Thursday.

Carol Nelson, director of the state’s Department of Revenue, said that with its ruling, “the Supreme Court assures the estate tax is applied fairly and equally in our state.”

“Had the Court ruled otherwise, married couples would have been able to shield their assets from the estate tax using a type of trust that is not available to single individuals,” she said in a written statement.

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