Estate Tax Planning

Oregon is one of the few states that has a state-level estate tax. Currently, estates valued over $1 million will be subject to estate tax upon an individual’s death. All assets of the individual are included in determining the estate value, including accounts with beneficiaries and even life insurance proceeds. Each year, more and more Oregonians have estates exceeding $1 million that will be subject to the Oregon estate tax; however, with proper planning the Oregon estate tax can be limited.

Credit Shelter Trust

In Oregon, married couples with total estates over $1 million should strongly consider an estate plan that includes a credit shelter trust, also sometimes called a disclaimer trust or bypass trust. A credit shelter trust is typically created upon the passing of the first spouse to ensure the deceased spouse’s estate tax credit is utilized. To benefit from a credit shelter trust, the credit shelter trust must be drafted into the estate plan before a spouse dies. When utilized as intended, estates can save tens of thousands of dollars in estate taxes resulting in more funds going to the beneficiaries.

Federal Estate Tax

In 2017, the Tax Cuts and Jobs Act increased the federal estate tax exemption to $11.4 million, which is adjusted each year for inflation. Federal estate tax planning rules such as portability do not apply to Oregon-level estate tax. Therefore, planning for both levels of estate tax is essential to maximizing the amount an individual’s beneficiaries inherit. Couples and individuals with estates that would be subject to federal and Oregon estate taxes should regularly review their estate plans with an attorney as the applicable laws and estate tax credits are subject to change.

Gifting

Each year, an individual is permitted to give $16,000 (as of 2022) to as many individuals as they would like without the requirement of filing a gift tax return. These gifts can be made outright or in trust and can include cash, real estate, business interests, or other assets. Regular and planned gifting can be an important tool for limiting the estate tax burden upon an individual’s death. There are many options when considering gifting depending on the individual’s objectives and the nature of the asset to be gifted. We help our clients evaluate whether gifting is an option that should be considered as part of an overall estate plan.

Planning for estate taxes can save tens of thousands of dollars for your beneficiaries.

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