Houck Menninger Law

Tax Planning in Ohio

An important part of a solid estate plan includes implementing strategies that minimize the effects of taxes on our client’s assets. While usually Ohio residents do not have to worry about estate or inheritance taxes, there are certain circumstances in which Ohio residents may be required to pay either estate or inheritance tax.  Our team can help you put a plan in place today that helps you understand and navigate the complexities of tax provisions.

Estate Tax

Estate taxes are paid by a decedent’s estate before the assets are distributed to their heirs. Meaning, the tax is imposed on the overall value of the estate.

In 2023, the federal exemption increased to $12.92 million, meaning that all estates with a value less than $12.92 million are exempt from the federal estate tax. For married couples, the threshold is higher at $25.84 million. Despite Ohio’s exemption, any estate in excess of the threshold will be required to pay, but taxes will only be assessed on the value of the estate that exceeds the threshold amount. Our team of experienced attorneys can help you determine your specific estate tax obligations.

Inheritance Tax

While Ohio does not have an inheritance tax, if an Ohio resident inherits money or a retirement account from a resident of a state that levies inheritance tax, the Ohio resident will have to pay the inheritance tax of that state. In the event you plan to receive money from someone in another state, our team can help you determine your tax obligations on that transfer and navigate this complex process with ease.

Generation Skipping Transfer Tax

The Generation-Skipping Transfer Tax (GSTT) is a federal tax, separate from your estate tax, that applies to the transfer of assets between people who are at least one generation apart. For example, if you would like to transfer assets to your grandchildren while their parents are still alive, you will incur this tax because the transfer “skips” over their parents.

The GSTT will be applied to transfers you make above the exempt amount in addition to the estate tax. Unlike passing assets from one generation to the next, where the IRS can collect estate taxes from each generation, by skipping a generation the IRS misses a link in the chain. So, the GSTT is implemented to complete the chain from a tax perspective. The generation-skipping transfer tax is complex and can make a big impact on the assets you are able to leave your grandchildren, but our team can help you navigate the process and plan your transfers in a way that is most advantageous to you.

With proper planning, Houck Menninger Law, LLC can help you plan ahead and protect your assets. Our team can help create a comprehensive estate plan to give you and your loved ones peace of mind today.

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