An estate tax is a tax imposed on an individual’s assets at the time of their death. The amount is determined by what’s in the deceased person’s estate.
A person’s estate is made up of all of the assets owned by that individual. These often include a home or other property, life insurance, retirement accounts, stocks, bank accounts, personal belongings, etc.
A number of specific laws govern estate tax situations, such as the passing of assets to a surviving spouse, a qualified tax savings trust, or to a charity.
The IRS defines a gift as the transfer of any value from a donor to another individual during the donor’s lifetime. According to federal law, individuals can gift up to $15,000 per year to an individual without having to report the gift or pay gift tax. There are several other reporting and tax exceptions as well.
Neither Oregon nor Washington have a state-level gift tax.
Deciding when and how to pay gift taxes is part art, part science. Depending on the variables at play, it may make more sense to pay gift taxes with the donor’s next tax return or defer payment until death.
Generation-skipping refers to the transfer of funds to a person at least 37.5 years younger than the decedent. The recipient of such assets is usually a grandchild of the person transferring the assets, but that isn’t always the case.
There can be tax advantages to generation-skipping. It’s historically been used as a wealth-preserving strategy.
Stefan Wolf
Shareholder
Sara Winter
Shareholder
Steven Zipper
Shareholder
