The Federal Estate Tax Exemption has increased, but Oregon Estate Tax Rate Remains Unchanged
The Tax Cuts and Jobs Act (TJCA) increased the the federal estate tax exemption to $11 million for an individual, and $22 million for a married couple that elects portability. This is up from $5.49 million and $10.98 million respectively. For the vast majority of people, the federal estate tax will not come into play. However, the exemption in Oregon currently stands at $1 million with rates ranging from 10% to 16%. The estate tax exemption and the gift tax work together in a sense that you have a unified lifetime credit for gifts, which match the estate tax exemption. The credit increases each year, along with the estate tax exemption. In 2018, the amount that an individual can gift tax-free is $15,000. If you are married and elect to split your gifts, you can give someone $30,000. These amounts can be given without having to file a gift tax return. If you give a person an amount over the exemption, then you must file a gift tax return, and the amount over what you could give is deducted from your unified lifetime credit. If you go over this lifetime credit then you have to pay a gift tax of 40%.
Comprehensive estate planning can help individuals avoid additional taxing headaches for their heirs. When an individual dies without an estate plan, that person’s estate will be distributed by the state in accordance with its laws which could potentially be contrary to what the individual’s true wishes were. Be sure to distribute your property in accordance with your wishes and create an estate plan today.