Formulating your estate tax strategy

| Mar 18, 2021 | Firm News |

As you progress deeper and deeper into the estate planning process in Oregon, you quickly begin to realize that there are opportunities to limit the potential liabilities against your estate (such as avoiding probate or planning to settle your debts before your death). Yet you may assume that one expense that you cannot avoid is estate taxes.

Indeed, many clients come to us here at Schmidt & Yee, P.C. assuming the same thing. While it is true that your estate could potentially face taxes from both the state and federal levels, there are opportunities for you to limit (or in certain cases, even avoid) your tax liability.

Oregon estate taxes

As previously mentioned, Oregon is one of the handful of states that still assesses a local estate tax. The Oregon Department of Revenue shows that the state’s estate tax exemption is $1 million. That means that your estate will only be subject to taxes if its total taxable value exceeds that amount.

Federal estate taxes (and tax portability)

The federal government also sets an estate tax exemption threshold (and updates it annually). According to the Internal Revenue Service, the threshold amount for $11.7 million.

You may be able to take advantage of the benefit of estate tax portability to extend your exemption even further. Portability allows you to combine your exemption with your spouse’s. By leaving your entire estate to your spouse, those assets pass tax-free due to the unlimited marital deduction (thus preserving your entire exemption amount). Your spouse can then claim that amount by filing an estate tax return within nine months of your death (effectively doubling their exemption).

You can find more information on optimizing your estate planning by continuing to explore our site.