Oregon Estate Tax Exemption Is Only $1M?! My Parents' House Alone Exceeds That

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Illustrative scenario prepared by my practice.
For informational purposes only. This is not legal advice.
Hypothetical question

Just learned that Oregon's estate tax exemption is only $1 million. ONE MILLION. My parents' house in Lake Oswego alone is worth $1.3M, and they have maybe $800K in retirement accounts plus a $500K life insurance policy. Total estate about $2.6M.

They're not "rich" by any stretch — they're retired teachers who bought the house 30 years ago. But apparently they'd owe Oregon estate tax on $1.6M of their estate? The tax rates start at 10% and go up to 16%. This could be $150K+?

Is this really how it works? And what can they do about it? They're 71 and 68.

Illustrative response

Exactly. The credit shelter trust is the single best bang-for-buck move in Oregon estate planning. For your numbers, it would shelter $1M in the bypass trust when the first spouse passes, leaving only ~$480K exposed. Tax drops from ~$48K to roughly $14K. The trust setup is typically $3-5K.

Also consider that Oregon has no gift tax and no clawback on lifetime gifts. So even modest annual gifting ($19K/year to each kid) can bring you below the exemption entirely within a few years.

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