Ohio Estate Tax

If you have heard recent news stories about proposed legislation to end the Ohio estate tax and wondered what all that means, you are not alone. Many people probably do not really know about Ohio estate tax. I will give a basic (and NOT comprehensive) description here. Ohio estate tax is basically a transfer tax. It is a tax imposed on the transfer of wealth that occurs due to a person’s death. If we take all the property we own (and in some situations control) that will pass to others by our death, we have our Gross Taxable Estate. We can often reduce the Gross Taxable Estate by taking deductions such as the costs of funeral and burial, the cost of administration of the estate, any outstanding debts, gifts to charity, etc. One important thing to note is all property that is passing to a surviving spouse is 100% deductable. After deductions are applied, the remainder is known as our Net Taxable Estate. The Net Taxable Estate determines if we pay estate taxes and how much. http://www.cusacklawoffice.com

Our Ohio estate tax system allows a credit to every estate against estate tax. For any date of death from 2002 through the present, that credit is $13,900.00. By virtue of that credit, there is no Ohio estate tax obligation for estates that do not exceed $338,333.00. Estates greater than that face a 6% tax on the value of the estate from $338,333.00 to $500,000.00. The value of the estate over $500,000.00 is taxed at 7%.

Do I need to update my estate plan?

The short answer to this question is almost always “not necessarily.”
I have reviewed Wills, Trusts and other estate planning documents that required no changes despite the fact that they are “old” by most definitions of the word. It is smart to review your estate planning documents on occasion to make sure they still represent your wishes. They should also be checked to make sure they account for any changes you may have in your life since the time when the documents were executed. An estate planning “checkup” with the attorney of your choice is not a bad idea when it has been a while since you executed your documents. While you know the changes that have taken place in your life, the estate planning attorney may alert you to changes in the law that can impact your estate planning choices as well. When you do have estate planning documents executed for the first time or when you make changes, you should receive some type of letter from your estate planning attorney that reviews the things you discussed and the decisions you made. The letter should describe the thought process behind the decisions you made. If your attorney does not provide that type of service automatically, you should request such a letter. The letter may be kept with your documents so it can serve as a guide when you review the documents.
So, do you need to update your estate plan? Not necessarily. However, it doesn’t hurt to review it.