How to Minimize Oregon Estate Taxes

Currently the federal estate tax exemption is nearly $13.6 Million dollars, or $27.2 Million for a married couple.  So, unless you have assets exceeding these amounts, your estate won’t pay any federal estate taxes (also known as “death taxes”), when you pass.  This means there will be more of your assets left to your heirs.

Oregon, however, does not have nearly as generous of estate tax exemption.  In Oregon, if you pass and have assets valued at over $1 million, then your estate will be paying some taxes to Oregon, which means less assets being passed on to your heirs.    So, a dentist with a house worth $1 million, will already be hitting the threshold where their estate will owe Oregon taxes.  Oregon’s estate tax rate ranges from 10% -16%, which is higher than Oregon’s top income tax rate of 9.9%.  So, the taxes owed to Oregon for larger estates can add up quickly.

What can be done to minimize the estate taxes paid to Oregon and leave more assets for your heirs?  Gifts can be made to your heirs annually, or in large chunks.  For example, if your estate had assets of $2.0 Million, you could gift $500k of cash, stock, or property to your heirs.  That gift will require a federal gift tax return to be filed, but no actual federal “gift taxes” will be owed.  By making this gift before you pass, it would lower the value of our estate to $1.5M reducing the Oregon estate taxes owed by over $50,000.  So, gifting your assets to your heirs before you pass can be helpful.  Any gift of property that has appreciated significantly over time should be reviewed beforehand to ensure the stepped-up basis that property would get if your heirs inherited it after your passing, wouldn’t be more beneficial.  In short, please reach out to Fluence before any large donations to get clarity on what the tax consequences would be like.

Unfortunately, the low $1Million Oregon gift tax exemption is not set to adjust with inflation.  So, unless there are changes in Oregon tax law, more and more people (and certainly many dentists), will be subject to this tax.

Leave a Comment

Your email address will not be published. Required fields are marked *

Notify me of followup comments via e-mail.