Estate planning, in its broadest sense, is a way to turn your wishes into a plan and make them legally binding. It encompasses things such as giving money for grandchildren’s college funds, stating who you would like to raise your children if you could not and establishing a financial power of attorney.
One of Forbes’ first lists of the new year underscores another reason Oregonians need to prioritize their estate planning. Oregon is named by Forbes Magazine as one of the states on their “ in 2018” list. One of the reasons is because Oregon has a state estate tax, and another is because the tax exempts only one million dollars of assets. Here are some ways you and your heirs can benefit while reducing or eliminating your state estate tax responsibility.
Claim Community Property
If you’re a married couple that has moved to Oregon from a community property state such as California, Oregon law allows recognition of community property assets acquired while you were a resident of a community property state. A signed community property agreement will help reduce or erase any capital gains taxes.
Since Oregon doesn’t have a gift tax, an attractive alternative to willing assets to family and friends is to give them gifts before you die. Under federal law, you can give 13,000 dollars per year tax-free, with a lifetime limit of 5,000,000 dollars.
Form A Trust
With the many kinds of trusts available to Oregon residents, it is advantageous to work with an experienced estate planning professional that is familiar with all of your applicable options. You can probate process by placing ownership of your assets in a living trust. For married couples, a bypass trust is a way to shelter up to one million dollars when the first spouse dies. Several more trust types exist for different specialized situations.
When it comes to passing down assets from your estate to loved ones, you don’t have to resign yourself to a large tax responsibility. With proper planning, you can make the most of your estate for yourself and others.