You may have heard about the existence of an Ohio estate tax at some point in time. If you are under the impression that this is a tax that you should be concerned about, we have some good news to pass along.
There was a state level estate tax in our state, but it was repealed in 2013. We are all in the clear for the most part, but there is another consideration. If you own property that is located in a state that has an estate tax, it would apply to your estate if the value of the property exceeds the exclusion in that state.
The exclusion is the amount that can be transferred before the remainder would be subject to the tax. Exclusion amounts vary depending on the state, but the lowest state-level exclusions in the country are in Massachusetts and Oregon. These states have one million-dollar exclusions.
A small handful states have inheritance taxes, and Maryland has an inheritance tax and an estate tax. We do not have one of these taxes in Ohio, but once again, a transfer of property that is located in one of the states could be subject to taxation.
Federal Estate Tax
Though we do not have to worry about an Ohio estate tax, there is a federal estate tax that can potentially impact any American. That’s the bad news, but the good news is that there is a very high exclusion, so a tiny percentage of people are exposed to this tax.
At the present time, the exclusion stands at $11.58 million. It could be changed via legislative mandate, and it was $5 million adjusted for inflation prior to 2018. We have an election looming over the horizon, and a change in legislative priorities could trigger an exclusion reduction.
If you are going to be exposed to the federal estate tax, you would logically consider lifetime gift giving as a way to get around it. Unfortunately, there is a gift tax that is unified with the estate tax, so the exclusion applies to large lifetime gifts as well.
It should be noted that there is an additional gift and estate tax exclusion. You can give as much is $15,000 to any number of people within a calendar year free of this tax without using any of your $11.58 million unified gift and estate tax exclusion.
There are no federal gift or estate taxes on transfers between spouses, and a surviving spouse would be able to use the exclusion that was available to their deceased spouse.
Download Our Free Worksheet
There are multiple posts on this blog that you can explore to learn more about the estate planning process, and we have additional resources on this site. One of them is our worksheet, and we get a lot of positive feedback from people that have gone through it.
There is no charge for this valuable tool, so you should really take advantage of this opportunity. To get access to your copy, visit our worksheet page and follow the simple instructions.
We Are Here to Help!
Written information is great, you should absorb as much of it as you can if you are still trying to get a feel for the estate planning process. This being stated, at some point in time, it is time to take action to put a plan in place for the benefit of your loved ones.
In addition to the events that will take place after your passing, a comprehensive plan will also address the eventualities of aging. Most elders will need some type of living assistance, and over one third of senior citizens will eventually reside in costly nursing homes.
Medicare does not pay for long-term care, but Medicaid will cover these costs. If you take the right steps in advance, you can live comfortably as you aim toward Medicaid eligibility.
You can schedule a consultation appointment right now if you give us a call at 531-721-1513. There is also a contact form on this site you can use to send us a message.