Why Washington Families Still Need an Estate Plan—Even With a $15 Million Federal Exemption
Headlines about the $15 million federal estate tax exemption may leave you wondering whether you still need an estate plan. For Washington families, the answer is yes.
Washington has its own estate tax rules. And even when no estate tax is due, a plan addresses important questions: Who can make decisions if you become incapacitated? Who will care for your children? How will your assets reach the people you want to receive them?
Federal and Washington Estate Taxes Follow Different Rules
For 2026, the federal estate tax exemption is $15 million per person, putting most families outside the reach of federal estate tax. IRS estate and gift tax updates
Washington’s rules are different. For deaths on or after July 1, 2026, the state estate tax exclusion is $3 million, with annual inflation adjustments resuming in 2027. An estate may therefore owe Washington estate tax even when no federal estate tax is due, depending on its assets and available deductions. RCW 83.100.020
Washington also does not allow “portability” of an unused state estate tax exclusion between spouses. In plain English, a surviving spouse cannot simply add the deceased spouse’s unused Washington exclusion to their own. Thoughtful planning, sometimes involving a credit shelter or bypass trust, can help married couples make use of both spouses’ exclusions. Washington Department of Revenue estate tax FAQ
Coordinate How Your Assets Will Pass
Probate is the court-supervised process for administering an estate after someone dies. It may involve admitting a will, appointing a personal representative, addressing debts, and distributing the remaining assets. Washington probate can be orderly and manageable, but it still involves time, paperwork, and expense.
Some assets can pass outside probate, including retirement accounts and life insurance with valid beneficiary designations, certain payable-on-death or transfer-on-death accounts, property held with rights of survivorship, and assets properly held in a trust.
The key is coordination. A will does not control every asset you own. Beneficiary designations generally determine who receives retirement accounts and life insurance, even when your will expresses different wishes.
Reviewing account ownership and beneficiary designations helps identify gaps before they create problems. A deceased beneficiary, an outdated designation, or an account without a suitable backup beneficiary can complicate an otherwise sound plan.
After divorce, do not assume that every beneficiary designation has—or has not—been revoked. Washington law may revoke certain designations, but exceptions and federal rules can affect the outcome. Review each account and policy directly. RCW 11.07.010
Account for Washington’s Community Property Rules
Washington is a community property state. Generally, property acquired during marriage is community property, while property owned before marriage or received individually through a gift or inheritance is separate property. Agreements and the way assets have been handled can affect that characterization.
Understanding ownership matters when deciding what each spouse can transfer at death and how the estate plan should work.
Some married couples use a Community Property Agreement to simplify transfers at the first spouse’s death. This can be useful, but it does not address every estate planning need. It does not provide authority to act during incapacity, and it may be unsuitable for blended families or certain tax planning goals. RCW 26.16.120
Plan for Incapacity, Too
An estate plan should address who can help while you are alive but unable to manage your affairs. Three documents deserve particular attention:
Durable financial power of attorney. Authorizes a person you choose to handle financial matters within the authority you grant. A properly prepared document can help reduce the need for a court-appointed conservator, although it cannot eliminate that possibility in every situation.
Health care power of attorney. Names someone to make health care decisions when you cannot, subject to the document’s terms and applicable law.
Health care directive, sometimes called a living will. Records your wishes about life-sustaining treatment in specified end-of-life circumstances.
These documents serve different purposes and should work together. They are valuable regardless of the size of your estate. Chapter 11.125 RCW, Chapter 70.122 RCW
Choose Tools That Fit Your Family
A revocable living trust can provide continuity in managing trust assets during incapacity and help those assets pass without probate. During your lifetime, you generally retain control and can amend the trust as your circumstances change.
The trust must be properly funded to accomplish those goals. Funding may involve transferring appropriate assets to the trust and coordinating beneficiary designations. Retirement accounts require separate consideration and generally should not be retitled into a living trust during your lifetime.
Other planning tools address particular family circumstances:
Blended families. A carefully designed trust can support a surviving spouse while directing remaining trust assets to children from a prior relationship. The amount ultimately available depends on the trust’s terms, distributions, and remaining assets.
Minor children. A will can nominate a guardian, subject to court approval. Trust provisions can establish who manages a child’s inheritance and when the child receives it.
Beneficiaries with disabilities. A properly structured and administered supplemental needs trust can provide support while helping preserve eligibility for means-tested benefits.
Business owners. Succession arrangements, buy-sell agreements, and planning for taxes and expenses can help a business navigate an owner’s incapacity or death.
The right approach depends on your family, assets, and priorities. A trust that serves one household well may be unnecessary or unsuitable for another.
Practical Steps to Take Now
List your assets, how each is owned, and any primary and contingent beneficiaries.
Review your potential Washington estate tax exposure, including available deductions and planning options.
Update beneficiary designations so they work with your current wishes and overall plan.
Put a will, durable financial power of attorney, health care power of attorney, and health care directive in place.
Evaluate whether a trust would help address probate, incapacity, tax, or family concerns.
Revisit your plan after major life events and periodically as laws and circumstances change.
A well-designed Washington estate plan gives your loved ones guidance when they need it most. Even if federal estate tax is unlikely to affect your family, planning can protect your wishes, support the people you care about, and make difficult transitions easier to manage.
If you have not created a plan—or have not reviewed yours recently—contact our office to discuss whether it reflects your family’s needs and Washington’s current rules.
Comments