Does the Middle Class Need to Think About Estate Taxes in Ohio?

The estate tax in Ohio was repealed in 2013. However, its repeal does not necessarily mean the estate tax is something that can be ignored and forgotten by middle class families in Ohio. While the Ohio estate tax is no longer in existence, the Federal estate and gift taxes are still in effect. If your wealth has grown to a particular point, you may have no choice but to deal with the federal estate tax. While many may view this as a good problem to have, it is one that should still be addressed to maximize the potential for creating generational wealth.

 The federal estate tax has a current exemption amount of $5.45 million per person. This is almost a ten-fold increase from 2001. While the exemption is scheduled to increase next year, many predict that this growth may not go on forever. In fact, there may be a point where this exemption is lowered or the estate tax in Ohio is reintroduced. The current federal estate tax affects only .02% of the population and political pressures may desire an increase in applicability.

Couples should keep abreast of potential changes to the estate tax. This is because changes could affect how to make the most of your assets in your family wealth plan. This is particularly true if either of you elect to have a substantial life insurance policy. If life insurance ends up in your estate, it could quickly eat up the majority of your estate tax exclusion.

While we are looking a large sum of money for exemptions, this amount may not cover many individuals who own family farms. While there are several tax exclusions and exemptions that can be applied, it may not be enough to provide a comprehensive solution. Individuals facing these issues should have a specific plan that can address all the pitfalls of operating a farm when it comes to asset protection.         

As of 2017, the estate tax is not one that many Americans need to be concerned about. However, if couples are concerned about the day where it becomes a factor for them, several steps can be taken to reduce its applicability. Planning ahead of time can help you and your family take the steps needed to maximize generational wealth.