Jensen Estate Law

April 2025 Newsletter

Hi clients and friends,

April got away from us, but we’re back with timely updates and helpful insights. We’re sending this newsletter a bit later than usual—hello, May—but it’s packed with important information we didn’t want you to miss.

This month, Derek W. Jensen, JD, LLM breaks down a significant tax proposal currently awaiting the Governor’s signature. If passed, the changes would increase Washington’s estate tax exemption, restore inflation adjustments, and raise the top estate tax rate for larger estates. It also introduces a new capital gains surtax for high earners. While the increased exemption may come as a relief to many Washingtonians, others will need to consider how these higher rates could affect their long-term planning. Derek’s summary offers a clear overview of what’s included and what to expect.

We’re also sharing three articles that explain how core estate planning tools—pour-over wills and revocable living trusts—work together to keep your wishes on track. If you’ve ever wondered why both are often used or what role they play in avoiding probate, these quick reads can help bring clarity.

Whether you’re thinking about how policy changes might affect your plan or just want to better understand the structure you already have, we hope this month’s update is a helpful resource.

Engrossed Substitute Senate Bill 5813 (ESSB 5813), now awaiting Governor Bob Ferguson’s decision by May 17, 2025, introduces significant tax reforms aimed at raising $321.6 million for education funding. The key provisions include:

• Estate Tax (Effective July 1, 2025): Increases the estate tax exclusion to $3,000,000 (up from $2,193,000) and restores inflation indexing, benefiting many Washingtonians. However, it also significantly raises the top estate tax rate from 20% to 35% for estates exceeding $9,000,000. A $3,000,000 deduction for family-owned businesses will offer additional relief.
• Capital Gains Tax (Effective 2025): Adds an additional 2.9% tax on capital gains over $1,000,000, bringing the total tax to 9.9%. The existing 7% rate continues for gains above $270,000.

Although many will appreciate the higher estate tax exemption and restoration of inflation adjustments, we understand concerned raised by the top estate tax rate. Stay tuned, as our firm will soon announce creative planning strategies to assist those affected by these higher rates.