OREGON ESTATE TAX PLANNING WITH GIFTS – BE CAREFUL

Oregon’s estate tax only applies to the decedent’s wealth on the date of death. ORS 118.010. And Oregon has no gift tax. Thus, if assets are given away before death, by even one day, the tax is zero. But gifts can backfire. Here’s why. Continue reading

SLATs (Spousal Lifetime Access Trusts)

In general, “SLAT” refers to a trust created during a spouse’s lifetime for the benefit of the other spouse. (For simplicity, I will assume the husband is the party creating the SLAT, and the wife is the beneficiary.) The SLAT usually continues for the rest of the wife’s life. Only the husband’s assets are used to fund the trust, and the wife is given no powers (such as a general power of appointment) that would cause the SLAT assets to be included in her estate at her death. No marital deduction is claimed.

Advantages of a SLAT:
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DISCLAIMER WILLS FOR MARRIED COUPLES — ESTATE TAX PLANNING IF YOU NEED IT

If you are a married and need a simple will that minimizes or eliminates estate taxes, consider using a “disclaimer will.” It provides “wait and see” flexibility on whether to use tax planning trusts when the first spouse dies. Continue reading

$5M GIFT TAX EXEMPTION (AND “CLAWBACK”) – URGENT OPPORTUNITY?

I continually hear of the urgency in utilizing the $5M gift tax exemption, based on the paranoia that Congress will reduce it (or worse yet, let it return to $1M). For a couple of reasons, I think the benefit of making large gifts (to protect against a rollback) is speculative at best. First, the “no tax increase” climate in Congress suggests a rollback is unlikely. Second, even if there is a rollback, it is necessary to make huge gifts of high-basis assets to realize a tax savings. Finally, the potential estate tax savings is often recaptured by the carryover basis attaching to lifetime gifts.
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LIVING TRUSTS VS. WILLS

Everyone should have a living trust. Avoid probate at all costs. Avoid horrible death tax bills. Avoid exorbitant executor fees and legal fees. The list goes on and on. While there is a grain of truth in these arguments, you should take a closer look before expending resources on a living trust. Here’s why.
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