By Jason Gray
PINNACLE LAW PLLC
Washington State is dramatically changing the rules around estate taxes. Last week, legislation was signed that raises the top estate tax rate from 20% to 35% for larger estates, effective July 1, 2025. At the same time, the exemption amount—the portion of an estate shielded from taxation—will increase to $3 million. These changes are part of a broader tax package aimed at addressing a projected multi-billion dollar state budget deficit.
For Washington residents with sizable estates, this tax hike should serve as a wake-up call. While the higher exemption may benefit some families, the increased top rate means that many estates will face a much steeper tax burden. In response, now is the time for proactive estate planning—and setting up a trust may be one of the most effective tools available.
A trust, particularly an irrevocable trust, can remove assets from your taxable estate. When properly structured, this means that the value of those assets won’t be counted toward the total estate subject to Washington’s estate tax. This can result in significant tax savings, especially as the top rate climbs to 35% for larger estates. Without planning, your heirs could lose millions in unnecessary taxes—money that could have remained in the family.
Beyond tax reduction, trusts provide other powerful advantages. They allow you to control how and when your assets are distributed after your death, rather than leaving those decisions to the courts. You can protect assets for minor children, ensure responsible use by adult heirs, and even include conditions for distributions. Trusts can also help avoid the often lengthy and expensive probate process, which can delay access to your assets and drain estate funds.
Another major benefit of using a trust is asset protection. In many cases, assets held in trust are shielded from the reach of creditors and lawsuits. This can be especially valuable for families with business interests, high-value properties, or concerns about beneficiary liability. Trusts can even be used to provide for charitable giving, supporting causes you care about while reducing your taxable estate.
The sooner you act, the more options you’ll have. Setting up a trust before the new tax rates take effect can help you lock in protection for your estate under current law and avoid last-minute planning.
With estate taxes poised to become more burdensome, especially for high-net-worth families, a trust is no longer a luxury—it’s a necessity. Now is the time to sit down with an estate planning attorney and explore how a trust can help preserve your legacy and protect the people you love most.
Jason Gray is the owner of Pinnacle Estate Planning. To schedule a free consultation in Spokane, Coeur d’Alene, or Sandpoint, please call (509) 505-0665 or (208) 449-1213 or visit www.LawPinnacle.com
*This article is for informational purposes only and should not be construed as legal or financial advice.
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