Bellevue is home to tens of thousands of tech employees at Microsoft, Amazon, Meta, and dozens of startups. This article explains what Bellevue tech professionals need to know about estate planning with equity compensation.
Why Tech Compensation Is Different
Most estate planning is built around bank accounts, a home, and retirement savings. Tech professionals in Bellevue and the Seattle area have a much more complex picture. A senior Microsoft engineer might have $400,000 in MSFT stock, $200,000 in unvested RSUs, an ESPP account, a 401(k), and a $1.2 million home in Kirkland. Each of these assets has different rules for transfer at death, different tax treatment, and different beneficiary options. A Bellevue estate planning attorney who understands tech compensation can help you coordinate all of these pieces into one plan.
How Stock Options Are Handled in an Estate Plan
There are two main types of stock options: non-qualified stock options (NSOs) and incentive stock options (ISOs). Each is treated differently for estate planning purposes:
- Unvested options: These cannot be transferred to a trust or to another person while unvested. If you die with unvested options, they may vest according to your employer's post-death vesting schedule. Check your stock plan document — some companies allow continued vesting after death, others do not.
- Vested but unexercised options: These are an asset of your estate. Your executor or trustee may have a limited window (often 6 to 12 months after death) to exercise them. If the window closes, the options are lost.
- Exercised shares: Once you exercise options and hold the shares, those shares can be transferred to a revocable living trust or passed through your will.
This is why your estate plan should include specific instructions for your executor or trustee about how to handle stock options — not just a generic "distribute my assets to my children" clause.
RSUs, ESPP, and Restricted Stock
RSUs are simpler than options but still have quirks. When RSUs vest, they become ordinary income, and the shares are deposited in your brokerage account. Once vested and deposited, RSU shares can be titled in a living trust like any other stock. The key issue is timing — if you die before vesting, unvested RSUs may or may not continue to vest after death depending on your employer's plan. Some Bellevue tech companies allow post-death RSU vesting, others pay out a pro-rated amount, and some forfeit everything.
ESPP shares have their own holding period rules. If you sell ESPP shares too soon, you may face a disqualifying disposition with less favorable tax treatment. Your estate plan should account for these timing rules. A Bellevue wills lawyer who works with tech professionals can coordinate with your financial advisor or CPA.
Washington Estate Tax and Concentrated Stock
Washington State has its own estate tax, separate from the federal estate tax. The Washington estate tax exemption is $2.193 million (as of 2024) — much lower than the federal exemption of $13.61 million. If you work at a major Bellevue tech company and have been there for 10+ years, there is a real chance your estate exceeds the Washington exemption. A Microsoft employee with 15 years of stock grants and home equity in Kirkland or Redmond can easily be worth $3-5 million. Without planning, your estate could owe Washington estate tax of $100,000 to $400,000 or more.
Strategies to reduce Washington estate tax include gifting during life, setting up an irrevocable trust, or using a credit shelter trust (also called a bypass trust) within your revocable trust. These are complex tools and should be set up with a qualified Washington estate planning attorney. See our estate planning cost guide for Washington to understand the investment.
Beneficiary Designations on Tech Accounts
Your 401(k), ESPP brokerage account, and any stock plan account all have beneficiary designations. These designations override your will. A common mistake is to set up a living trust, fund it, and then forget that the 401(k) still names an ex-spouse or a sibling from 10 years ago. Review your beneficiary designations at least every two years. Your estate planning attorney should review these with you as part of the planning process.
International Estate Planning for Tech Families
Bellevue has a large population of tech professionals who are not US citizens or who have family members living overseas. If you are a green card holder or on an H-1B visa working at a Bellevue tech company, your estate planning needs are different. Non-citizens do not get the unlimited marital deduction for federal estate tax, which means leaving assets to a non-citizen spouse can trigger estate tax. A Qualified Domestic Trust (QDOT) can solve this. Many Bellevue families also have assets or family in China, India, or Europe, which raises cross-border estate tax and inheritance issues. See our Chinese estate planning page if this applies to your family.
Frequently Asked Questions
01Can I put my unvested stock options into a living trust?
No. Unvested options cannot be transferred while unvested under most stock plans. Once they vest, you can exercise and transfer the resulting shares. Your trust document should include instructions for how your trustee should handle options at your death.
02Do RSUs count toward my estate for Washington estate tax?
Yes. Vested RSU shares and the cash value of any RSUs that vest after death are part of your estate. If your total estate exceeds the Washington exemption of $2.193 million, estate tax may apply.
03What happens to my 401(k) when I die?
Your 401(k) passes to whoever you named as beneficiary on the plan. This designation overrides your will. Most married Bellevue tech workers name their spouse, but you can also name a trust — though that has tax consequences that should be discussed with an attorney.
04I have stock at a private Bellevue startup. How do I plan for that?
Private company stock is harder to value and may be illiquid. If your startup goes public or is acquired, the value can spike suddenly. Talk to an estate planning attorney before a liquidity event — gifting or trust planning done before an IPO is much more tax-efficient than after.
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