Lisa, a 68-year-old widow living in Oregon, had built a comfortable life alongside her late husband. Over the years, they accumulated a $5 million net worth through real estate investments, retirement savings, and a well-structured stock portfolio. Lisa’s biggest concern? She wanted to leave as much as possible to her two children while minimizing the tax bite that could significantly reduce their inheritance.
Like many Oregon residents, Lisa wasn’t aware that her estate was subject to the state estate tax. Unlike the federal estate tax, which only applies to estates over $13.99 million (in 2025), Oregon’s estate tax kicks in at just $1 million, with rates ranging from 10% to 16%. That meant Lisa’s estate could face over $500,000 in state estate taxes alone—a number that left her uneasy.
After consulting with her estate planning attorney and tax advisor, Lisa implemented a strategy that not only protected her wealth but also maximized the legacy she could leave to her children. Here’s how she did it.
Step 1: Setting Up a Charitable Remainder Trust (CRT)
Lisa had a highly appreciated stock portfolio worth $2 million, and she wanted to sell some of it to create retirement cashflow. The problem? Selling would trigger a large capital gains tax bill.
To solve this, she established a Charitable Remainder Trust (CRT) and transferred the appreciated stocks into the trust. Here’s what happened next:
The CRT sold the stocks tax-free, avoiding immediate capital gains tax.
Lisa began receiving annual income from the trust, structured at 6% per year, generating $120,000 annually.
Because the CRT is considered a charitable entity, she received an immediate charitable deduction of around $700,000, reducing her taxable estate size.
Upon her passing, the remaining CRT assets will go to her favorite charity.
This strategy allowed Lisa to secure a reliable income stream for the rest of her life while also reducing the size of her taxable estate.
Step 2: Protecting Her Kids with an Irrevocable Life Insurance Trust (ILIT)
Lisa wanted to ensure that her two children, Emma and James, would receive a significant inheritance without getting hit with estate taxes. With that in mind, she used part of her CRT-generated income to fund a $2 million life insurance policy inside an Irrevocable Life Insurance Trust (ILIT).
Here’s why this was a smart move:
The life insurance payout is estate-tax-free, meaning her kids would receive the full $2 million with no deductions.
The ILIT ensured that the proceeds would not be counted as part of her taxable estate, further reducing the Oregon estate tax burden.
The trust gave her control over how the funds would be distributed—ensuring her children received the money responsibly.
The Final Outcome: A Legacy Preserved
By using these two strategies, Lisa successfully reduced her estate tax liability while securing her family’s financial future. Here’s the breakdown of how things played out:
✅ Before Planning:
Estate Value: $5M
Estimated Oregon Estate Tax: $500,000+
Heirs’ Net Inheritance: ~$4.5M
✅ After Planning:
Estate Value Reduced (due to CRT and ILIT): $2.5M
Estimated Oregon Estate Tax: ~$150,000
Life Insurance Proceeds to Heirs (Tax-Free): $2M
Heirs’ Net Inheritance: $4.35M + Charitable Legacy
Lisa not only preserved her wealth but also left a charitable legacy while ensuring her children received nearly the same inheritance—with far less tax exposure.
Take Control of Your Estate Planning
Lisa’s story is a powerful reminder that proactive estate planning can make a significant difference in how much of your wealth is passed down to your heirs versus how much goes to the government in taxes. If you’re an Oregon resident with a net worth over $10 million (or even over $5 million, like Lisa), the right strategies can help you:
✅ Reduce estate tax exposure
✅ Maximize your heirs’ inheritance
✅ Create tax-efficient charitable giving
✅ Secure income for retirement
Schedule a consultation with our tax advisor team today if you’d like to explore how these strategies could work for your unique situation.
Let’s ensure your legacy is preserved the way you envision it.
