When Does Inheritance Tax Planning Matter?
Tax planning is a necessary part of estate planning when there is either an inheritance tax or when there is an estate tax. In Ohio, inheritance tax planning is not a big concern for most people. This is because there actually is no inheritance tax in Ohio. Inheritance taxes are assessed in a minority of states, and are paid by people who inherit money. Estate taxes are different from inheritance taxes. Estate taxes are far more common, but still not charged in every state. They are assessed based on the value of the estate, and they are paid by the estate.
The good news for Ohio residents is that there is no estate tax within the state of Ohio any more. In the 2012 to 2013 budget bill, the Ohio estate tax was repealed. The repeal went into effect in 2013. This means that for deaths after January 1, 2013, there is no more estate tax in Ohio, according to the Ohio Department of Taxation.
This does not, however, mean that there is no scenario in which inheritance tax planning matters. If you are planning on leaving money to someone, or if you are going to be inheriting wealth, you may need to think about tax planning if your estate is potentially large enough to be subject to federal estate taxes.
Zimmer Law Firm can provide you with help determining if inheritance tax planning is something that you need to consider. If there are concerns about estate tax, your attorney can also provide you with guidance on estate planning that can help you to reduce or eliminate the taxes that could be assessed after a death. Give us a call at 513.721.1513 to find out more about the ways in which an experienced Ohio inheritance tax planning lawyer can help you.
Inheritance Tax Planning to Reduce Tax Liability
If you do not want your heirs to lose out on a substantial portion of their inheritance, you need to know what inheritance tax planning should involve.
First and foremost, it is important to consider whether you own any property in any of the states where inheritance taxes apply. If you have heirs and property in different jurisdictions where there are inheritance taxes, the laws of those jurisdictions could result in taxes being assessed.
Estate tax planning also matters a lot if you are concerned about the impact of federal estate taxes. Federal estate taxes are assessed once an estate exceeds a certain value. As of 2016, that value is $5.45 million. If your estate is larger than this exempt or excludable amount, then federal estate taxes are going to have to be paid.
These federal taxes will be paid out of estate assets and are required, even through Ohio has repealed its own statewide local estate tax. The federal government still gets to set the rules for assessing federal taxes after a death, and there has even been talk during the 2016 election year of substantially raising estate taxes.
Why is Inheritance Tax Planning Important?
If your estate is going to be subject to the federal estate tax, you need to be aware of the damage that a large tax bill could do to an inheritance. Protecting an inheritance from substantial loss is one of the main reasons for inheritance tax planning aimed at avoiding estate taxes.
The big problem with both federal and state estate taxes is they could end up hurting businesses and family farms. There are a lot of people with the bulk of their money and property coming from the value of land that may have been in their family for generations or from the value of a family business. There may not actually be liquid money or assets available to pay the big bill which is assessed based on the value of the land or business.
This could lead to heirs being forced to sell land, forced to sell a company, or forced to take out substantial loans. You don’t want to put your heirs into this type of difficult position and should talk with an experienced attorney about estate planning to reduce or avoid inheritance taxes.
Getting Help from a Cincinnati Inheritance Tax Planning Lawyer
To find out more about inheritance taxes and about estate planning steps you can take to try to protect your assets, download our estate planning checklist. You can also give us a call at 513.721.1513 to speak with a member of our legal team and to find out the ways in which a Cincinnati inheritance tax planning lawyer can assist you with protecting your heirs from a big tax bill.