Insights

When many professionals think about financial planning, estate planning rarely tops the list. Yet in our experience, a well-crafted estate plan is one of the most powerful ways to support your wealth, your loved ones, and your legacy.

It’s not just about “who gets what.” Estate planning also determines who can make financial and medical decisions if something happens to you, how to minimize taxes, and how to support loved ones in blended or unique family situations. Whether you are single, married, or have children from a prior marriage, a clear estate plan ensures your wishes are carried out and your family is cared for.

What Is an Estate Plan?

At its core, your estate plan outlines your wishes for what happens if you are unable to make decisions or after you have passed away.

Key documents include:

• Durable Financial Power of Attorney – Appoints someone to manage your finances if you become incapacitated.
• Health Care Directive – Grants authority for medical decisions on your behalf.
• Will or Revocable Living Trust – Directs how your assets are distributed, names guardians for minor children, and can establish trusts for heirs.
• Beneficiary Designations – Often overlooked, these override what is in your will for accounts such as IRAs, 401(k)s, and life insurance.

Will vs. Trust: Which Is Right for You?

At a high level, a will takes effect only after you pass away and directs how your assets are distributed, while a revocable living trust can be set up immediately and allows for more privacy and management of assets both during your life and after death.

The right structure depends largely on your state of residence and family situation.

• Washington: Probate is relatively straightforward, so many choose a will-based plan.
• Still, a revocable living trust can be valuable for privacy, control, and ensuring an orderly transfer of assets, especially for those with real estate in multiple states or complex family situations.

Even if you use a trust, it’s critical to “fund” it by retitling assets in its name. Any assets left outside of it may still trigger probate.

The Role of Beneficiary Designations

Beneficiary designations override your will, which can lead to unintended results if they are not coordinated with your estate plan.

Many Boeing professionals hold a large portion of their wealth in tax-deferred retirement accounts such as 401(k)s, IRAs, and rollovers from the lump-sum pension. These accounts are commonly governed by beneficiary designations for tax efficiency, not your will or trust. That means the names you’ve listed on your retirement accounts override anything written in your estate documents.

Example: If your estate plan calls for a credit shelter trust for tax savings, but your IRA names individuals directly, those funds will side-step the trust entirely, defeating your planning intent.

General guidelines:

• IRA or 401(k): Naming individual beneficiaries often preserves tax advantages.
• Taxable or joint accounts: Be cautious when naming a direct beneficiary, as it can unintentionally override or disrupt provisions in your estate plan intended to take effect at death.

Planning for Blended Families

For those in second marriages or with children from prior relationships, trusts can balance support for a current spouse while ensuring assets ultimately go to your children.

Example: Your plan can create a trust that supports your spouse for life and then passes remaining assets to your children. Without this structure, children could be unintentionally left out of the inheritance.

Estate Taxes and Gifting Strategies

While federal estate taxes generally affect only the ultra-wealthy, given the current exemption of nearly $15 million per person ($30 million per couple), many Washington residents should still pay attention to state estate taxes.

Washington Estate Tax

Washington’s estate tax exemption is $3 million per person, recently increased from $2.193 million, with a starting rate of 10% that climbs up to 35% for larger estates. This means that families with significant home equity, retirement accounts, or Boeing lump-sum pensions can quickly approach or exceed the state threshold.

Gifting Strategies

• Annual gifts: You can give up to $19,000 per person in 2025 ($38,000 per couple) without using your lifetime exemption or filing a gift tax return.
• Lifetime gifts: Larger gifts require filing a gift tax return, but generally no tax is due unless your total estate exceeds the lifetime exemption amount.

Example: A couple gifting $100,000 to help a child buy a home only uses $62,000 of their lifetime exemption after accounting for the annual exclusions, leaving over $29 million of federal exemption.

Charitable Giving as a Tax-Smart Estate Tool

Charitable giving can be both meaningful and strategic. Naming a Donor-Advised Fund or charity as a partial IRA beneficiary can help eliminate income and estate taxes on those funds. This approach is particularly effective for highly taxable assets such as IRAs.

For example, we recently worked with a family whose inherited IRA would have been reduced to roughly 25% of its value after taxes by the time their son accessed it. By naming a Donor-Advised Fund as the beneficiary, they were able to give 100% of that amount to charity while retaining control over future distributions.

Special Consideration: Your Boeing Pension

Your Boeing pension presents unique estate planning implications depending on whether you choose the annuity or lump-sum option.

• Pension Annuity:
  The annuity will continue to your spouse based on the survivorship option you select at retirement (commonly 50%, 75%, or 100%). Unless you elect a 10-year certain option, the pension stops after both you and your spouse pass away and does not continue to your children. Importantly, pension income is not considered part of your taxable estate.
• Lump Sum Option:
  If you choose the lump sum and roll it into an IRA, those funds become part of your estate and will pass to your beneficiaries according to your IRA beneficiary designations. This structure can provide greater flexibility and potential legacy benefits for heirs but also shifts investment and longevity risk to you.

Washington State–Specific Opportunities

1. Full Step-Up in Basis on Community Property
   Washington is a community property state, meaning both halves of community property receive a step-up in cost basis when one spouse passes away. This can substantially reduce capital gains taxes when assets are later sold.
2. Credit Shelter (Bypass) Trusts
   Washington’s $3 million exemption is not portable between spouses. To preserve both exemptions ($6 million total), your estate documents should include credit shelter trust provisions. This ensures the first spouse’s exemption is not wasted and that future growth is protected from taxation.

Pro Tip: Consider including flexible trust language that allows for a federal QTIP election, which may provide an additional step-up in basis at the second spouse’s death.

Final Thoughts

Estate planning is not a one-time task. Laws change, your life changes, and your wealth evolves. Whether your goal is to minimize taxes, protect loved ones, or simply stay organized, a thoughtful estate plan provides clarity and confidence for you and your family.

If it has been more than five years since you reviewed your estate plan, now is the time. Our team of Certified Financial Planners works closely with Boeing professionals and estate attorneys to ensure your plan reflects your goals and the latest laws. Schedule a complimentary review with our team to discuss your estate plan.

Additional Resources

You may also want to watch our recent video, 2025 Tax Law Changes and Year-End Tax Planning

team@stablerwm.com | (425) 646-6327

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No strategy assures success or protects against loss. Stabler Wealth Management and LPL Financial are not affiliated or endorsed by Microsoft.

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