The more financially successful an individual is throughout their life, the more likely they are to leave a sizable estate when they die. Their financial resources, real property, business holdings and other assets become their estate.
The probate courts help ensure that creditors and other interested parties have an opportunity to make claims for repayment. The personal representative of the estate could theoretically have personal liability if they fail to follow the right procedures. Fulfilling all tax obligations is one of the most important aspects of successful estate administration.
Personal representatives typically cannot avoid or minimize estate taxes. Testators who have achieved success during their lives need to plan in advance to minimize estate taxes. How can Ohio residents prevent estate taxes from diminishing what their chosen beneficiaries inherit?
By diminishing personal holdings
As a general rule, any assets held in the name of the decedent alone become the property of their estate when they pass. The more valuable property an individual owns, the greater the potential for estate taxes. In fact, the higher the value of the estate, the higher the potential estate tax rate that applies.
Ohio does not collect an estate tax, but residents of Ohio could be at risk of federal estate taxes. Every year, there is a different limit on how much property people can exempt from estate taxes. For those who die in 2025, it is possible to exempt up to $13.99 million in personal holdings. That should increase to $15 million in 2026.
Testators hoping to optimize their legacies may need to transfer certain assets to other owners while they are still alive. Some people make strategic gifts to friends and family members, but those gifts may count toward the overall value of their exempt estate after their passing.
Testators may also need to consider transferring assets to a trust. Taking steps to diminish what an individual holds in their own name before they die can help eliminate the risk of estate taxes. Even if estate taxes are still due, planning could help people avoid the highest tax rate of 40%. The right type of trust can manage valuable assets while an individual enjoys their golden years and can control the descent of property after the trustor dies.
Reviewing current assets and any existing estate planning documents with a skilled legal team can help people explore different options for limiting estate tax liability. A thorough estate plan can help ensure that intended beneficiaries, rather than the federal government, ultimately benefit from an individual’s financial success.