At one time not too long ago, federal estate taxes (death taxes) started at $600,000.
Many people have or had the potential to have to pay estate taxes if they had savings, retirement accounts, and/or a house, when estate tax was due on amounts over $600,000.
Many estate plans were designed with this figure in mind.
In addition, unfortunately, quite a few estate plans that were put in place after this $600,000 threshold was raised to a million dollars or more still are written around this old threshold.
The threshold for federal estate taxes is now well over eleven million dollars ($11,200,000 to be precise).
Not too many people need to worry about federal estate taxes anymore, for this reason.
It is not uncommon for people (including people who do not think of themselves as rich) to have estates that total over a million dollars ($1,000,000). This is the level at which Oregon state estate taxes start to be a factor. Taxes should be kept in mind in situations like this, therefore. Sometimes it can be cheaper to pay estate taxes rather than paying other kinds of taxes such as capital gains taxes, so tax avoidance strategies should always be carefully evaluated.
Regardless whether it makes sense to incur the very real costs in loss of liquidity and the like that accompany most tax plans that are designed to avoid state estate or death taxes, which have a threshold of one million dollars ($1,000,000), if someone has an estate plan where the figure $600,000 appears, this plan should be carefully evaluated, and in most cases replaced.
The limitations on liquidity or freedom of the surviving spouse to do as they wish, and the very real problems that arise when estate plans that were designed around the estate or death tax that began at $600,000 can create particular problems now, when an ordinary middle class house may cost half that much, even before one starts considering the money needed for someone to live on if they retain ownership of the family house after their spouse dies.
Steven A. Heinrich
Divorce & Custody
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