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 is 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:

Beneficiary Designations – Often overlooked, these override what is in your will for accounts such as IRAs, 401(k)s, and life insurance.

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.

Will vs. Trust: Which Is Right for you?

The right structure depends largely on your state of residence.

• Washington: Probate is relatively straightforward, so many choose a will-based plan.
• California: Probate is more complex and expensive, so a trust-based plan is typically a must.

Even if you live in a state where a will is sufficient, you may still prefer the privacy and control of a trust. Just make sure to fund your trust! Assets not retitled into it may trigger a 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.

Example: If your estate plan calls for a credit shelter trust for tax savings, but your IRA names individuals directly, those funds will bypass the trust and defeat 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 income tax planning is a primary focus during life, estate taxes become crucial after death. The stakes can be high, particularly for those living in states with their own estate taxes.

Federal Estate Tax

• The federal estate tax exemption is scheduled to increase to $15 million per individual, or $30 million per couple, in 2026.
• The top federal estate tax rate is 40 percent.

Few families will have to face the lofty federal estate tax, but if you’re in that range, long-term planning is essential.

State Estate Taxes

A number of states also have their own estate or inheritance tax.

• Washington: $3 million exemption (recently increased from $2.193 million)
• Oregon: $1 million exemption
• Both have escalating rates beyond these thresholds. In Washington, the top state estate tax rate has increased from 20 percent to 35 percent. This is in addition to federal estate taxes where applicable.

Gifting Strategies

• Annual gifts: You can give up to $19,000 per person in 2025 without using your lifetime exemption or filing a gift tax return. Married couples can each give this amount, doubling their gifting power.
• Lifetime gifts: Larger gifts require filing a gift tax return but generally no tax is due unless you exceed your lifetime exemption.

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. This means they would still have approximately $29.94 million of exemption remaining.

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 when IRAs would otherwise be heavily taxed for heirs.

For example, we recently worked with a family whose inherited IRA would have been reduced to roughly 25 percent 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 percent of that amount to charity while retaining control over future distributions.

Washington State Specific Opportunities

For Microsoft professionals living in Washington, there are two important opportunities to reduce estate taxes and improve outcomes.

1. Full Step-Up in Basis on Community Property
Washington is a community property state, meaning both spouses’ halves of community property receive a step-up in cost basis when one spouse passes away. This can significantly 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 shelters future growth from taxation.

Pro Tip: Consider including language in your trust that allows for a federal QTIP election. This may offer a second step-up in basis at the surviving spouse’s death without increasing federal estate tax exposure.

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 Microsoft 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 current estate plan, identify potential gaps, and strive to ensure your wealth is structured to support your family and future intentions.

Additional Resources

You may also want to watch our recent video, Estate Planning in 2025: Navigating Washington State’s New Tax Landscape:

Join our next Webinar!

November 19th, 2025 — 5 Key Year-End Tax Savings Strategies for Microsoft Professionals

This webinar is designed specifically for Microsoft professionals looking to maximize their tax savings before December 31. Our experienced presenter, Dave Mantell, CFA, CFP®, will guide you through the most impactful year-end moves, new planning opportunities, and ways to avoid costly surprises.

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⭐ Who should attend ⭐ Microsoft employees, managers, and anyone interested in optimizing their year-end tax strategy.

We hope to see you there!

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.

Securities and Advisory services are offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Stabler Wealth Management is not registered as a broker-dealer or investment advisor.