Washington State Estate Tax Planning 2026

2026 Washington Estate Tax Planning: Why Advanced Tax Knowledge Matters 

Estate planning is about much more than deciding who receives your assets. In Washington State, thoughtful planning will minimize estate taxes, preserve family wealth, and ensure your wishes are carried out efficiently. Because Washington State has its own estate tax system, separate from the federal estate tax, understanding the tax rules is an essential part of a comprehensive estate plan in addition to simple wills or trusts.

Beginning in 2026, Washington's estate tax exemption has increased from approximately $2.2M up to $3M per person, allowing more estates to pass free of Washington estate tax before tax is imposed. Estates exceeding the exemption may face significant state estate taxes. The applicable exemption amount, tax rates, and planning opportunities should all be considered when preparing or updating an estate plan. Additionally, if a decedent resides outside of Washington but owns property located in Washington, or has a Washington State estate of under $3M, but owns additional property outside of Washington, a more complicated formula applies to their estate in order to calculate whether taxes are owed and how much of an exemption applies to their estate.

Although the Washington State estate tax exemption in 2026 is $3M per person, a spouse cannot transfer unused exemption credit to their surviving spouse. One of the most effective planning strategies for married couples may be the use of a Credit Shelter Trust (also known as a bypass trust). Properly drafted and funded, these trusts can preserve each spouse's Washington estate tax exemption, potentially reducing or eliminating estate tax at the surviving spouse's death while also providing asset protection and flexibility for beneficiaries. Utilizing this technique, a couple may collectively be able to transfer up to $6M free of Washington state estate assets.

Another important concept is the step-up in basis. In general, appreciated assets included in a person's taxable estate receive a new income tax basis equal to their fair market value at death. This adjustment can significantly reduce or eliminate capital gains taxes if heirs later sell those assets. Balancing estate tax planning with income tax planning is often critical, as strategies that reduce estate taxes may affect whether assets receive a full step-up in basis. An attorney with advanced tax training, like Megan M. Lewis with Megan Lewis Law, PLLC, can help evaluate these competing considerations.

A complete estate plan also includes documents beyond a will or trust. Depending on your circumstances, these may include:

• Durable Powers of Attorney for financial decisions
• Health Care Directives (Living Wills)
• Health Care Powers of Attorney
• Community Property Agreements
• Revocable Living Trusts
• Last Wills and Testaments
• Beneficiary designation reviews for retirement accounts and life insurance

Each document serves a different purpose, and together they help ensure your financial, legal, and health care decisions can be carried out if you become incapacitated or after your death.

Estate planning has become increasingly sophisticated as tax laws continue to evolve. Working with an estate planning attorney licensed in Washington State who holds an LL.M. in Taxation provides the added benefit of advanced graduate-level education focused specifically on federal and state tax law. This specialized knowledge can be especially valuable when developing strategies that coordinate estate, gift, income, and capital gains tax considerations to achieve your family's goals.

Every family and estate is unique. While general information can help you understand the planning process, the appropriate strategies depend on your assets, family circumstances, and long-term objectives. If you would like personalized guidance from Megan Lewis Law, PLLC on Washington estate tax planning or updating your estate plan for 2026, contact our office to schedule a consultation or call (509) 242-3432.
​