Big changes in 2025 bring new opportunities and some risks for Washington families. If your estate is over $3 million, now’s the time to plan. This guide breaks down what’s new, what it means for you, and how to protect your wealth and your loved ones.
Quick Tax Snapshot
| Features | Federal | Washington |
| Exemption Amount | $13.99 million (2025), $15 million* (2026) per person | $3.0 million* (for deaths on or after July 1, 2025) |
| Top Tax Rate | 40% | 35% |
| Gift Tax | Yes – $19,000 annual exclusion (2025); lifetime gifts above annual exclusion counts against estate exemption | No gift tax. Lifetime gifts do not count against estate exemption. |
| Portability | Yes – Unused estate exemption can be inherited by surviving spouse by filing the Federal return | No |
| Taxable Assets | Worldwide assets of U.S. citizens/residents | WA-based or WA-sourced assets |
*Exemptions adjust for inflation starting in 2026.
Real-Life Examples
(Estimates only – actual tax depends on deductions, liabilities, and asset types.)
- Single Individual – $10M Estate
- Federal Tax: None
- WA Tax: approximately $1.5M on $7M taxable estate
Planning Tip: Use lifetime and charitable gifts to reduce future growth. Review out-of-state property for potential tax advantages.
2. Married Couple – $25M Estate
- Federal Tax: None
- WA Tax: approximately $5.5M on $22M taxable estate
Planning Tip: Use credit shelter trusts to preserve both spouses’ $3M WA exemptions.
3. Business Owner – $40M Estate
- Federal Tax: approximately $10.4M on $26.01M taxable estate
- WA Tax: approximately $10M on $37M taxable estate
Planning Tip: Consider Family Limited Partnerships, Grantor Retained Annuity Trusts, and charitable trusts to reduce estate value and tax exposure.
Smart Planning Moves
- Gift Early & Often: WA doesn’t tax gifts, use the federal annual exclusion to transfer wealth tax-free.
- Use Trusts Strategically: Credit shelter, irrevocable, and charitable trusts help reduce estate size while keeping control.
- Plan for Portability Gaps: WA doesn’t allow spousal exemption transfer, plan ahead to avoid losing it.
- Leverage Family Limited Partnerships: Transfer business or real estate interests at discounted values.
- Review Regularly: Update your plan every 1–2 years or after major life or law changes.
FAQ: Estate Planning in Washington
A few smart steps to take while things are up in the air:
- What is community property?
In Washington, most assets acquired during marriage are jointly owned. Smart planning can help couples maximize the step-up in basis, reducing taxes for heirs.
- Which assets don’t get a step-up in basis?
Retirement accounts (IRAs, 401(k)s) and lifetime gifts keep their original cost basis. Under SECURE Act 2.0, most inherited retirement accounts must be distributed within 10 years, potentially triggering higher taxes. Planning ahead helps your heirs manage this.
Bottom Line
Estate planning isn’t just for ultra-wealthy. It’s for anyone who wants to protect what they’ve built, care for their loved ones, and keep more of it in the family. With smart coordination between federal and Washington rules, you can reduce taxes, safeguard assets, and build a legacy.
Our estate and trust team are here to help. Reach out today to schedule a personalized consultation and take the next step in securing your family’s future.
Disclaimer
This content is for informational purposes only and does not constitute legal or tax advice. Please consult your advisor before implementing any strategy.
Diem Bui – CPA, EA, MBA, Tax Manager
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