Overview of Oregon Estate Tax Laws

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Understanding How Oregon Estate Taxes Affect an Estate
By Julie Garber, About.com Guide

If you live in Oregon, then you live in one of a handful of states that collects a state death tax. The estates of Oregon residents, as well as the estates of nonresidents who own real estate and/or tangible personal property located in Oregon, are subject to a state death tax under the following guidelines.

NOTE: State laws change frequently and the following information may not reflect recent changes. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.

Does Oregon collect an estate tax or an inheritance tax?

Prior to 2012, the Oregon death tax was referred to as an "inheritance tax" in the Oregon code, but effective January 1, 2012, the Oregon death tax became known as an "estate tax." This makes sense since Oregon's death tax is collected based on the value of the estate (hence, an "estate tax"), as opposed to being based on who inherits the estate (hence, an "inheritance tax").

In this article, the Oregon death tax collected on or before December 31, 2011 is referred to as an inheritance tax, the Oregon death tax collected on or after January 1, 2012 is referred to as an estate tax, and both taxes are referred to in general as the death tax.

When is an estate subject to the Oregon inheritance tax or estate tax?

For Oregon residents, an estate may be subject to the Oregon inheritance tax or estate tax if the total gross estate exceeds $1,000,000.

For nonresidents of Oregon, an estate may be subject to the Oregon inheritance tax or estate tax if it includes real estate and/or tangible personal property having a situs within the state of Oregon and the gross estate exceeds $1,000,000.

What Oregon inheritance tax or estate tax forms must be filed?

For deaths that occurred on or before December 31, 2011, estates with a gross value that exceeds $1,000,000 must file an Oregon inheritance tax return, Form IT-1, even if no Oregon inheritance tax will be due as a result of applicable deductions and exemptions.

For deaths that occurred on or after January 1, 2012, estates with a gross value that exceeds $1,000,000 must file an Oregon estate tax return, Form OR706, even if no Oregon estate tax will be due as a result of applicable deductions and exemptions.

Are Oregon Registered Domestic Partners treated the same as married couples?

In 2007 the Oregon legislature passed HB 2007. Under the provisions of this law, the instructions for the Form IT-1 were amended to provide that the term “surviving spouse” may be replaced with "surviving Oregon Registered Domestic Partner."

Are transfers to a surviving spouse taxable?

Outright transfers to a surviving spouse or registered domestic partner are not taxable.

For married couples who have used AB Trust planning to reduce their federal estate tax bill, an Oregon death tax may be due on the B Trust after the first spouse's death due to the gap of $4,120,000 between the Oregon exemption of $1,000,000 and the federal exemption of $5,120,000. Nonetheless, a married decedent's estate can make an election to treat a trust of which the surviving spouse is the sole beneficiary as "special marital property" for purposes of calculating the Oregon death tax. Thus, married Oregon residents can defer payment of both Oregon and federal death taxes until after the death of the surviving spouse using ABC Trust planning.

When are the Oregon death tax return and tax payment due?

The Oregon death tax return must be filed and any death tax due must be paid within nine months after the decedent's date of death.

An extension of time to file the Oregon death tax return and pay any tax due will be accepted for Oregon if granted by the Internal Revenue Service. If the estate does not have to file a federal estate tax return, then mark "For Oregon Only" at the top of IRS Form 4768 and federal guidelines will be used to consider the request. If an extension of time to pay is granted, the tax must be secured by collateral acceptable to the Oregon Department of Revenue. In addition, an extension of time to file the return does not extend the time to pay the tax, and interest will accrue during the extension period.

Where is the Oregon death tax return filed?

Mail the Oregon inheritance tax return, Form IT-1, or the Oregon estate tax return, Form OR706, and all other required forms and documentation to:

Oregon Department of Revenue
P.O. Box 14110
Salem, OR 97309-0910

If you are using a private delivery service such as FedEx or UPS, then use the following address:

Oregon Department of Revenue
955 Center Street
NE Salem, OR 97301-2555

What are the Oregon inheritance tax or estate tax rates?

For deaths that occurred on or before December 31, 2011, once the value of the net estate exceeded $1,000,000, the entire value of the estate was taxed. Inheritance tax rates ranged from 0.8% to 16% of the adjusted taxable estate.

For deaths that occurred on or after January 1, 2012, the first $1,000,000 of an estate is exempt from the estate tax calculation. For a table showing the estate tax rates that went into effect on January 1, 2012, refer to Lawmakers Tweak Oregon Estate Tax.

Overview of New Jersey Estate Tax Laws

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Understanding How New Jersey Estate Taxes Affect an Estate
By Julie Garber, About.com Guide

NOTE: State laws change frequently and the following information may not reflect recent changes in the laws. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.

In addition to a state inheritance tax, New Jersey also imposes a separate state estate tax which has been decoupled from the federal estate tax laws. Here is a summary of the current New Jersey estate tax laws.

When is a New Jersey Estate Tax Return Required to be Filed?

A New Jersey estate tax return, Form IT-Estate, must be filed if the decedent's gross estate plus adjusted taxable gifts exceeds $675,000. How is the New Jersey Estate Tax Calculated?

The New Jersey estate tax is either the maximum credit for state inheritance, estate, succession or legacy taxes allowable under the provisions of the Internal Revenue Code in effect on December 31, 2001 (this is called the "Form 706 Method"), or an amount determined pursuant to the Simplified Tax System prescribed by the Director, Division of Taxation (this is called the "Simplified Form Method").

The Form 706 Method must be used if the taxpayer is required to file a federal estate tax return, IRS Form 706.

If the taxpayer isn't required to file IRS Form 706, then, in addition to the Form 706 Method, the Simplified Form Method may be used provided that it produces a tax liability similar to the Form 706 Method.

When is the New Jersey Estate Tax Return and Any Payment Required Due?

Form IT-Estate must be filed and any tax due must be paid within nine months of the decedent's death, or nine months plus 30 days if the Form 706 Method is used.

An extension of time to file Form IT-Estate may be requested, however, even if an extension is granted it won't delay the time for payment of any tax due.

The Form 706 Method requires that Form IT-Estate be prepared and filed along with a 2001 IRS Form 706. This is in addition to IRS Form 706 for the year of the decedent's death if one is required to be filed. Where is the New Jersey Estate Tax Return Filed?

Mail the New Jersey estate tax return, Form IT-Estate, and all other required forms to:

NJ Inheritance Tax and Estate Tax
P.O. Box 249
Trenton, New Jersey 08695-0249

What is the New Jersey Estate Tax Rate?

The tax rate is a progressive rate that maxes out at 16% for the amount above $10,040,000.

Are Transfers to a Surviving Spouse Taxable?

Outright transfers to a surviving spouse are not taxable.

For married couples who have used AB Trust planning to reduce their federal estate tax bill, a New Jersey estate tax may be due on the B Trust after the first spouse's death if there is a gap between the New Jersey estate tax exemption and the federal estate tax exemption at the time the federal estate tax comes back into effect. A married decedent's estate is authorized to make an election on Form IT-Estate to treat property as marital deduction qualified terminable interest property ("QTIP") for New Jersey purposes, but married New Jersey couples cannot defer payment of both New Jersey estate taxes and federal estate taxes until after the death of the surviving spouse using an ABC Trust scheme.

Are Transfers to a Surviving Domestic Partner Taxable?

Federal estate tax laws do not have a provision providing a deduction for property passing to a domestic partner. However, if a New Jersey decedent was a partner in a civil union and died on or after February 19, 2007, and was survived by his or her partner, then a marital deduction equal to that permitted to a surviving spouse under the provisions of the Internal Revenue Code in effect on December 31, 2001, is permitted for New Jersey estate tax purposes.

Does New Jersey Impose a Lien on the Deceased Person's Property?

For New Jersey decedents dying after December 31, 2001, the New Jersey estate tax remains a lien on all property of the decedent as of the date of death until paid. No property may be transferred without the written consent of the Director of the Division of Taxation.

Where Can I Find Additional Information About New Jersey Estate Taxes?

For more information about New Jersey estate taxes, refer to New Jersey Inheritance and Estate Tax General Information on the New Jersey Division of Taxation website.

Estate Tax Tables 1997-2013

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Historical Federal Estate Tax Exemptions and Rates: 1916 - 1997

Year

Estate   Tax Exemption

Top   Estate Tax Rate

1916

$50,000

10%

1917   - 1923

$50,000

25%

1924   - 1925

$50,000

40%

1926   - 1931

$100,000

20%

1932   - 1933

$50,000

45%

1934

$50,000

60%

1935   - 1940

$40,000

70%

1941

$40,000

77%

1942   - 1976

$60,000

77%

1977

$120,000

70%

1978

$134,000

70%

1979

$147,000

70%

1980

$161,000

70%

1981

$175,000

70%

1982

$225,000

65%

1983

$275,000

60%

1984

$325,000

55%

1985

$400,000

55%

1986

$500,000

55%

1987   - 1997

$600,000

55%

 


Historical and Future Federal Estate Tax Exemptions and Rates: 1997-2013

Year

Estate   Tax Exemption

Top   Estate Tax Rate

1997

$600,000

55%

1998

$625,000

55%

1999

$650,000

55%

2000

$675,000

55%

2001

$675,000

55%

2002

$1,000,000

50%

2003

$1,000,000

49%

2004

$1,500,000

48%

2005

$1,500,000

47%

2006

$2,000,000

46%

2007

$2,000,000

45%

2008

$2,000,000

45%

2009

$3,500,000

45%

*2010

$5,000,000   or $0

35%   or 0%

2011

$5,000,000

35%

**2012

$5,120,000

35%

**2013

$5,250,000

40%


State Estate Tax and Exemption Chart

State

2009   Exemption

2010   Exemption

2011   Exemption

2012   Exemption

2013   Exemption

Connecticut

$2,000,000

$3,500,000

$2,000,000

$2,000,000

$2,000,000

Delaware

$3,500,000   effective 07/01/2009

$3,500,000

$5,000,000

$5,120,000

$5,250,000

District   of Columbia

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

*Hawaii

No   state estate tax

$3,600,000   effective 05/01/2010

$3,600,000

$3,600,000   or $5,120,000

$5,250,000

Illinois

$2,000,000

No   state estate tax

$2,000,000

$3,500,000

$4,000,000

Kansas

$1,000,000

No   state estate tax

No   state estate tax

No   state estate tax

No   state estate tax

Maine

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$2,000,000

Maryland

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

Massachusetts

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

Minnesota

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

New   Jersey

$675,000

$675,000

$675,000

$675,000

$675,000

New York

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

North   Carolina

$3,500,000

No   state estate tax

$5,000,000

$5,120,000

No   state estate tax

Ohio

$338,333

$338,333

$338,333

$338,333

No   state estate tax

Oklahoma

$3,000,000

No   state estate tax

No   state estate tax

No   state estate tax

No   state estate tax

Oregon

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,000,000

Rhode   Island

$675,000

$850,000

$859,350

$892,865

$910,725

Tennessee

$1,000,000

$1,000,000

$1,000,000

$1,000,000

$1,250,000

Vermont

$2,000,000

$2,000,000

$2,750,000

$2,750,000

$2,750,000

Washington

$2,000,000

$2,000,000

$2,000,000

$2,000,000

$2,000,000

Inheritance Tax Chart

State

Are   Spouses Exempt?

Are   Descendants Exempt?

Are   Domestic Partners Exempt?

*Is   Life Insurance Included?

Tax   Rate

Tax   Form

Due   Date

**Indiana

Yes

No

No

No

1%   to 20%

Form
IH-6

9   months after death

Iowa

Yes

Yes

No

No

5%   to 15%

Form
IA 706

Last   day of ninth month after death

Kentucky

Yes

Yes

No

No

4%   to 16%

Form   92A200, 92A202, or 92A205

18   months after death

Maryland

Yes

Yes

Certain   transfers

No

10%

Varies

Varies

Nebraska

Yes

No

No

No

1%   to 18%

Form   500

12   months after death

New   Jersey

Yes

Yes

Yes

No

11%   to 16%

Form
IT-R or IT-NR

8   months after death

Pennsylvania

Yes

No

No

No

4.5%   to 15%

Form
REV-1500 or
REV-1737A

9   months after death

**Indiana's inheritance tax has been repealed effective January 1, 2013. Thus, the information in the chart above refers to deaths that occurred in 2012 and prior years.

Document Solutions

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I Would Like an Advisor to Contact Me to Discuss My Estate Planning Needs

Here is a list of what our package includes:

  • 1 set of Ancillary Documents per person (DPOA for assets, DPOA for healthcare or Advanced Directive, Living Will, Nomination of Conservator, Appointment of Guardian, and Anatomical Gift)
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There are a number of other legal documents that are not legally required parts of the Living Trust but which should be included in or with the Trust to provide for future contingencies. Our ancillary documents offer you additional control over your person or assets. These documents are so vital; they are included, at no additional charge as part of your comprehensive document package.

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Because many individuals have needs that go beyond basic estate planning, we offer numerous Advanced Estate Planning Solutions that can be incorporated into your overall estate plan. These documents should be considered as a supplement to your Living Trust to shelter your hard-earned estate from unnecessary estate taxes.

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“A POORLY WRITTEN TRUST IS WORSE THAN NO TRUST AT ALL.” Henry Abts, III

A poorly drawn trust can become a restrictive nightmare for the surviving spouse or successor trustee and beneficiaries. As long as the clients are living, it does not matter what a Living Trust says, because it can always be revoked. However, upon the death of the client, these poorly written Trusts are going to end up in probate court, with petitions being presented to revise or clarify the Trust wording. (Even though the main advantage of a Living Trust is to avoid probate, a Trust falls under the legal jurisdiction of the probate code; any need for clarification of a Trust therefore must be handled in the probate courts.)

One size does not fit all – no two people or families are alike! Your family’s needs, dynamics, personalities, and values are unique. If you use a form kit, you are asking for problems. Even LegalZoom.com reveals that 80% of people who fill in blank forms to create legal documents do so incorrectly. Plus, if your Will or Living Trust is not executed properly, it becomes invalid. If you overlook the opportunity to write specific instructions about how you want to provide for your spouse and children, your family will receive whatever the “cookie cutter” document provides, and you may not know of other options. The only estate plan you rely on is the one that is custom prepared by a qualified estate planning professional attorney.

A well-written comprehensive trust document comes about only through extensive experience. The Estate Planning Source’s trust documents are the result of more than 28 years of working together with legal counsel to cover every imaginable contingency.

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