Oregon Estate Tax: An Overview
As we settle into the new year trying to keep our resolutions can become difficult. Here at Barbur Law, however, we are sticking with it. Our resolution: more blogs written by our attorneys! Why is this our resolution? As a firm specializing in estate planning, we think it is important for our professionals to share our knowledge to help pass the basics on to you. We will start this year with several blogs on the Oregon estate tax and the best ways to manage this tax. As you can see in the overview below, estate tax affects Oregonians to a higher extent than most.
The State of Oregon has never met a tax it did not like, and estate tax is no exception. While the vast majority of states follow the federal estate tax exemption level ($12.92 million per individual in 2023), Oregon sets its exemption at the exceptionally low value of $1,000,000 — one million! — per individual. After the exemption on the first $1,000,000, the remaining estate is taxed from 10% to 16% based on the value. This requires many Oregon residents, and non-residents who own property in Oregon, to partake in more advanced estate planning techniques than are necessary in other states.
The purpose of estate tax is to set guardrails on the conglomeration of multi-generational family wealth by putting provisions in place to break up wealth as it transfers down family lines – think Rockefellers, Kennedys and Clintons. While this is an acceptable and appropriate goal at the values set by the federal government – and most states – this gets a bit excessive in Oregon. Having a one-million-dollar estate in Oregon is not unusual as a house, car and retirement account can get a lot of people over the threshold. In most cases this is hardly “multi-generational wealth” in need of “trust-busting” but simply middle class living in the modern age. Despite this, the limits do not appear to be going anywhere soon and are something that we continue to need manage as best as we can.
Over the next few months, our attorneys will be writing blogs on several ways to deal with Oregon estate tax, including utilizing the natural resources credit when applicable, preparing revocable living trusts and lifetime gifting. Hopefully, these will be a helpful guide to our readers. Please do note that these blogs are for informational purposes only and not intended as legal advice. We are not tax preparers ourselves so it is very important for any persons with estate tax issues to, in addition to seeking legal advice, to seek the advice of their own tax professional.
Lastly, a couple things of note to keep in mind:
First, if you fall into the estate tax realm it is often not realistic or practical to avoid all potential tax. As such, when we work with people, we are generally taking steps to mitigate tax exposure and lessen the overall amount of tax due rather than coming up with a magical solution to make it all disappear.
Second, I often tell clients that “having an estate tax problem is a good problem to have.” At the end of the day, you have accumulated wealth that you are transferring to your family. The State of Oregon may get its hands on up to 16% of this wealth but your family is going to walk away with the remaining 84%! Once they write the check, they will be enriched just as you had intended.