On Behalf of Evergreen Law Group, LLC
In 2025, Oregon Estate Tax applies to Estates valued at over $1 Million, which is an Exemption Threshold that is much lower than the Federal Limit. Unlike the Federal system, Oregon also does not allow for “Portability” between Spouses. Portability allows a Surviving Spouse to use the Deceased Spouse’s unused Exemption Amount to whittle down any Estate Taxes due.
Due to these constraints, using Trusts can be a Key Strategy for Oregon Married Couples to maximize both Spouses’ allowable Exemptions and enable them to potentially save Hundreds of Thousands of Dollars in Oregon State Estate Taxes.
Since Oregon has no “Portability,” Assets passed directly to a Surviving Spouse via the Marital Deduction will use only one of the $1 Million Exemptions when the Surviving Spouse dies. A Married Couple with $2 Million or more in Assets could face high Oregon Estate Taxes that could have been avoided with Proper Estate Planning Guidance and the Use of Trust(s).
Example: Consider an Oregon Married Couple with a $2 Million Estate in 2025, who intend to leave everything to their Children:
1. Without a Trust: All Assets pass tax-free to the Surviving Spouse when the First Spouse dies. When the Second Spouse dies, their Estate is worth $2 Million. After the $1 Million Oregon Exemption is applied, $1 Million is left that is Taxable. The Tax Rate on this amount would be between 10% and 10.3% (using 2025 values), resulting in a Tax Bill of over $100,000, that would come off the top of their Estate, leaving their Children with less to inherit.
2. With a Trust: When the First Spouse dies, a “Bypass Trust” (or “B Trust”) is funded with their Assets up to the $1 Million Exemption. These Assets grow outside the Second Spouse’s Taxable Estate. When the Second Spouse dies, the Estate’s Value will be lower, and their own $1 Million Exemption can then be applied. With this Strategy, the Entire $2 Million Estate could potentially pass to their Children free from any Oregon Estate Tax.
Types of trusts for Estate Tax Savings
• Bypass Trust (or AB Trust): This Strategy is Essential for Married Couples in Oregon who want to preserve each Spouse’s $1 million Exemption and save on Estate Tax.
• Irrevocable Life Insurance Trust (ILIT): An ILIT is an Irrevocable Trust that holds your Life Insurance Policy, removing the Death Benefit from your Taxable Estate.
• Charitable Trust: For those with Philanthropic Goals, a Charitable Trust can reduce the size of a Taxable Estate.
Additional Strategies to Complement Trusts in Oregon
• Lifetime Gifting: Since Oregon does not have a Gift Tax, Lifetime Gifting can be an effective way to Reduce your Taxable Estate.
• Family Limited Partnership (FLP): Allows you to transfer a portion of a Family Business or other Assets to Heirs, reducing your Taxable Estate while you maintain control while alive.
• Qualified Personal Residence Trust (QPRT): This allows you to Transfer your Home to Beneficiaries while continuing to live in it for a set term. This removes the Value of the Residence from your Taxable Estate.
CALL OUR OFFICE TODAY AT 541-471-2222 TO SCHEDULE YOUR FREE CONSULTATION WITH NATALIE WETENHALL, OUR ESTATE PLANNING EXPERT
