The landscape of estate planning is shifting again, thanks to recent changes in federal estate tax law. A new tax bill, signed into law under President Trump’s administration, brings a significant increase in the federal estate tax exemption and offers welcomed predictability for high-net-worth families and their advisors.
What Is the Federal Estate Tax?
The federal estate tax is a tax on your right to transfer property at death. Your “gross estate” includes everything you own or have an interest in at the time of your passing, valued at fair market value (not necessarily what you originally paid). From this total, deductions such as mortgages, debts, estate administration expenses, and certain transfers to surviving spouses or qualified charities may be applied to arrive at your “taxable estate.”
The IRS then adds any taxable lifetime gifts (dating back to 1977) to this amount before calculating the total tax. Fortunately, most estates will not owe any federal estate tax due to the high exemption amount.
What’s Changing?
For 2025, a federal estate tax return is only required if the gross estate (plus adjusted taxable gifts and specific gift tax exemptions) exceeds $13.99 million. Starting in 2026, the exemption will increase to $15 million per person (or $30 million for a married couple with appropriate estate tax planning in place) with annual inflation adjustments going forward.
Making the higher exemption permanent allows individuals and families to plan with greater certainty, without worrying that the exemption may drop dramatically in future years.
What About State Taxes?
While the federal exemption is generous, many states – including Washington – have their own estate tax systems. Washington’s estate tax exemption is significantly lower: $3 million for deaths occurring on or after July 1, 2025 (or $6 million for a married couple with appropriate estate tax planning in place), with annual inflation adjustments expected thereafter.
This means that even if your estate won’t trigger a federal tax, it could still owe taxes at the state level. Washington residents with estates above the state threshold should consider proactive planning strategies to minimize the impact.
Bottom Line
The new federal law is good news for those looking to preserve generational wealth. But Washington families must still account for the state estate tax and work closely with an estate planning attorney to craft a strategy that addresses both state and federal rules.
If you have questions about how these changes might affect your estate plan, or if you want to explore planning strategies tailored to Washington law, our office is here to help.
Phone: (206) 784-5305
