How Can You Reduce Estate Taxes?
The most important thing to know about estate tax is that you probably won’t need to worry about it. There is a federal estate tax exclusion that is a prescribed amount that can be transferred tax-free, and it is $13.99 million per person in 2025.
State-Level Taxes
Here in Oklahoma, we do not have a state-level estate tax, but 12 states do impose estate taxes. If you own property in one of these states, the tax in that state would be applicable if its value exceeds that state’s exclusion.
Exclusions in the individual states are lower than the federal estate tax exclusion in most instances. The lowest state-level exclusion in the country is $1 million in Oregon.
Inheritance Tax
An inheritance tax is a different type of tax. It is not levied before the estate is distributed to the heirs. There is no inheritance tax in our state. Once again, there is no inheritance tax in our state.
For your information, the states with inheritance taxes are New Jersey, Maryland, Nebraska, Kentucky, and Pennsylvania.
Estate Tax Efficiency Strategies
If your estate is going to be exposed to the estate tax, steps can be taken to mitigate the damage. First, there’s an unlimited marital tax deduction. If your spouse is a citizen of the United States, you can transfer any amount to your spouse without paying tax. The exclusion is portable so a surviving partner can use the exclusion available to their deceased spouse. The estate tax and gift tax are both unified in the tax code. In addition to the unified estate and gift tax exemption, there is also a separate annual exclusion. You can gift more than that amount to cover education and medical costs. You and your spouse can give $19,000 each to an unlimited number recipients every year if you are married. You can also use it to fund certain types trusts. The assets will no longer be included in your estate for taxation purposes. Your grandchildren would be beneficiaries, as the name implies. You could skip your children in the final distribution, but that would not mean they were disinherited. During the child’s life, they can be lifetime beneficiaries of the trust and receive distributions. The estate tax would not apply while the child is alive.
It will be a factor when they die, but it would only be one taxation. Take action today!
If you don’t have an estate plan, now is the time to get started. You can schedule a consultation at our Oklahoma City estate planning office if you call us at 405-843-6100.
The number for our Tulsa location is 918-615-2700, and there is a contact form on this site you can fill out if you would rather send us a message.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors Read More! Larry Parman, Attorney At Law’s latest posts
