Thoughtful financial planning goes well beyond investment management. Aspects like risk management, wealth preservation, and estate planning each influence our bigger financial picture. With laws continually changing, there is always something new afoot that can impact a person’s best laid plans. That happened this week in Washington State. 

Major updates to Washington’s estate tax laws were recently enacted, affecting a wide swath of Washington residents. The laws will be most impactful on people whose estates are valued at $2 million or more. An estate includes retirement and investment accounts, real estate, or anything of significant value. For that matter, Washington homeowners would be wise to take action to protect assets. 

What can you do?

• First, learn about the changes which are outlined below.
• Second, talk with your team at MarsJewett.

Consider working with an estate planning attorney. Estate planning may cost several thousand dollars, but it is well worth it. Neglecting this important piece can cost your estate tens of thousands of dollars, or much more, and prevent your heirs from receiving all that you intended. 

Changes to Washington State’s Estate Tax 

Increased Exclusion Amount

Previously, estates valued below $2.193 million were exempted from Washington’s estate tax. In one good move, that exclusion was increased to $3 million. Previously, estates valued above $2.193 million were subject to Washington estate tax. Under the new law, estates under $3 million will avoid the tax entirely. 

Return of Annual Inflation Adjustment to the $3m WA Estate Tax Exclusion 

The amount of Washington’s estate tax exemption has not been adjusted for inflation since 2018. The new exemption renews the adjustment annually based on inflation rates measured in the Greater Seattle area. 

Adjusted Tax Rates 

For estates over the WA exclusion amount, Washington estate tax will be assessed according to the new rates below. You’ll notice significant increases as estate sizes grow 

Estates over $3m will have the amount over $3m taxed according to the following marginal rates: 

Over $9 million: 35% (20% previous) 

$0 to $1 million: 10% (same as previous) 

$1,000,001 to $2 million: 15% (14% previous) 

$2,000,001 to $3 million: 17% (15% previous) 

$3,000,001 to $4 million: 19% (16% previous) 

$4,000,001 to $6 million: 23% (18% previous) 

$6,000,001 to $7 million: 26% (19% previous) 

$7,000,001 to $9 million: 30% (19.5% previous) 

Implications for Estate Planning

These changes to Washington’s estate tax laws mean it is crucially important for individuals to consult with estate planning professionals who can help tailor strategies that may reduce their WA estate tax. A widowed spouse is not obligated to pay the Washington estate tax in their lifetime. Rather, the Washington estate tax is charged to the children after the last parent passes. Since the Washington $3 million estate tax exclusion is not portable, if legal steps are not taken prior to the first partner passing, a couple may qualify for only $3 million of exclusion rather than $6 million. 

We construct graphic flowcharts to assist clients in conceptualizing estate plans and the impact of this potential tax on their families. Please reach out to us if you would like us to help construct that flowchart for your family estate and discuss this in more detail. We are happy to assist your extended family and friends on these topics, too, helping them conceptualize options related to estate planning.  

Any time new legislation reforms estate law, it necessitates review of existing estate plans. As part of the comprehensive financial planning you receive at MarsJewett, we can help model potential strategies to illustrate how they might affect your goals and plans. Specifically, we can help you determine if a trust or gifting strategy is favorable in your situation. Moreover, we regularly review your beneficiary designations to ensure they are aligned with your intended plans. Your team at MarsJewett is here to support your plans and stands ready to help. 

Source: Washington State Legislature https://app.leg.wa.gov/BillSummary/?BillNumber=5813&Year=2025&Initiative=false 

Disclosures: MarsJewett Financial Group is an SEC-registered investment adviser. This communication is provided for informational purposes only and does not constitute legal, tax, or investment advice. Before implementing any estate planning or tax-reduction strategies, we strongly recommend consulting with a qualified estate planning attorney or tax advisor regarding your specific situation. Past performance is not indicative of future results. For more information about our firm, including our Form ADV, please visit www.marsjewett.com or https://adviserinfo.sec.gov/