At Caress Law, one of the most important jobs we have is to keep you educated about legislation updates or policy changes that could impact your estate plan. That being said, we want to fill you in on the details of a recent Oregon legislation change.

In 2021, the Oregon legislature changed the due date for filing Form OR-706, the Oregon Estate Tax Return. Estates of decedents dying on or after January 1, 2022 are now required to file Form OR-706—and pay any taxes due—within 12 months of the date of the decedent’s death. If the decedent died prior to January 1, 2022, the previous deadline of nine months is still applicable. If more time is needed to file Form OR-706, a six-month extension can be granted; however, this does not extend the date that taxes are due—it only extends the deadline for filing Form OR-706. Extensions for payment are granted only under special circumstances.

If you are unsure what an “estate transfer tax” is, it is a tax that is imposed when assets are transferred from an estate to the decedent’s heirs and beneficiaries. A return must be filed if the value of the gross estate at the date of death is $1,000,000 or more. This applies only if the estate contains property taxable by the state of Oregon, and the responsibility to file Form OR-706 falls on the fiduciary (i.e. the executor, personal representative, trustee, or estate administrator) of the decedent’s estate.

While many may view this change as favorable, our experience leads us to believe that it could result in some negative consequences. When it comes to estate transfer tax, only the State of Oregon extended the time required to file. The Federal Government timeline still requires the estate to file within nine months of the date of death. As a result, this could lead to missed filing deadlines, due to the inconsistent requirements. Extending the deadline to 12 months could also potentially cause delays, and unnecessary costs to the estate as the estate is required to remain open until the estate tax return is filed and paid. The longer the estate is open, the greater likelihood that multiple income tax returns are required to be filed for the estate, and distribution of assets to loved ones may be delayed until the estate tax is filed and paid.

Navigating changes to state law can be a challenge, especially when they pertain to estate administration. Caress Law can help you ensure that deadlines are met and taxes are minimized as much as possible in alignment with Oregon state law. Reach out today to learn how we can help with your estate planning and estate administration needs.

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