In In re Estate of Hambleton, No. 89419-1 (consolidated with In re Estate of MacBride No. 89500-7), the Washington State Supreme Court upheld the “Bracken fix,” a retroactive amendment of the 2005 Estate and Transfer Tax Act, Chapter 83.100 RCW. (Prior to 2005, Washington did not have an independent estate tax and instead participated in a federal tax sharing system). The 2013 Amendment was passed just before the Department of Revenue (DOR) began refunding millions of dollars of estate taxes pursuant to In re Estate of Bracken, 175 Wn.2d 549 (2012), in which the Washington Supreme Court invalidated the 2005 Act to the extent it allowed taxing “transfers” of QTIP assets when the deceased spouse died before the effective date of the 2005 Act. In Bracken, the Supreme Court rejected DOR’s argument that a taxable “transfer” occurred after the 2005 Act came into effect, when the second spouse died.
The 2013 Amendments corrected the problems struck down in the Bracken decision, retroactively. It broadened the definition of the term “transfer,” which applies both prospectively and retroactively, except for any final non-appealable judgments. In Hambleton, the plaintiff argued that the retroactive amendments violated the separation of powers, due process and the impairment of contracts clause, as well as the Washington Constitution. The Supreme Court disagreed, holding that the legislature is not prohibited from passing amendments that directly impact pending cases.