Estate tax is assessed upon the death of an individual when the value of the assets owned or controlled by that individual (the “taxable estate”) exceed a specific threshold set by statute. Any assets included in a person’s taxable estate receive a step-up in basis to date-of-death value, thus eliminating any built-in capital gain that existed prior to death.
There are potentially two levels of estate tax that may apply to Oregon residents at death:
- The Oregon Estate Tax: Every individual residing in Oregon at the time of his/her death has a $1,000,000 exemption from Oregon estate tax. If an individual dies owning assets in excess of $1,000,000, an Oregon estate tax return must be filed. The tax rates for the Oregon estate tax start at 10% and gradually increase to 16%. There is a 100% deduction for any assets that are left to: (1) a tax-exempt organization; or (2) a surviving spouse outright (or in a qualifying trust).
- The Federal Estate Tax: Every U.S. individual has a combined $5,450,000 (2016) (this amount will be adjusted each year for a cost of living increase) exemption from federal estate and gift tax. If an individual dies with a taxable estate in excess of $5,450,000, a Federal estate tax return (“Form 706”) must be filed. The taxable estate for federal purposes includes the cumulative value of taxable gifts made by the individual during his/her lifetime (see Gift Tax discussion below). The federal estate tax is a flat rate of 40%. Again, there is a 100% deduction for any assets that are left to: (1) a tax-exempt organization; or (2) a surviving spouse outright (or in a qualifying trust). Additionally, under the new “portability” rules, the estate of a surviving spouse may use the unused portion of a predeceased spouse´s federal exemption if a proper election is made.
DISCLAIMER:The information contained in this website is based on Oregon law and is subject to change. It
should be used for general purposes only and should not be construed as specific legal advice by Fitzwater Meyer Hollis & Marmion, LLP or
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legal questions, consult with your own attorney or call us for an appointment.