Less Taxes And Less Probate Administration Ahead, Major Changes In Ohio!

Article

Font:

Decrease

Increase

JANUARY 10, 2001

Less Taxes And Less Probate Administration Ahead, Major Changes In Ohio!

By Joseph E. Balmer III, Attorney at Law

Two bills enacted in the year 2000 provide significant and important changes to Ohio estate tax and estate planning law. The first of these addresses the Ohio estate tax credit allowable against the estate tax levied by the state. The second provides six estate planning improvements, the most meaningful of which is probably the creation of a transfer-on-death beneficiary designation for real estate. Both new laws are discussed below.

Sub. S.B. 108, signed into law on June 29, 2000, brings about long overdue relief from Ohio estate taxes. Prior to this new law, all assets owned to any extent by a decedent, other than those passing to a surviving spouse, over and above $25,000.00, were subject to Ohio estate taxes. This $25,000.00 exemption provided a tax credit of $500.00. For a number of years a push has been made to enact a 'sponge' tax in Ohio, whereby the state estate tax exactly equals the federal estate tax (thus, for estates where no federal estate taxes are due, no state estate taxes would be due). The current federal estate tax exemption amount is $675,000.00. At least 35 states currently have adopted a sponge tax. It has been argued that any loss in estate tax revenue would be offset by an increase in income and sales tax due to increased migration by residents into the state and less migration out of the estate. The response to this push is S.B. 108. S.B. 108 provides, in part, as follows:

For estates of decedents dying in the year 2001, the Ohio estate tax exemption amount is $200,000.00, providing a tax credit allowable of $6,600.00 against any Ohio estate taxes levied.
For estates of decedents dying in the year 2002 and thereafter, the dollar amount for exempt assets is $338,333.00, providing a tax credit of $13,900.00.
In addition, a committee was created to provide a proposal to the Ohio House and Senate to eliminate or phase out all remaining Ohio estate taxes by the year 2006.

Thus, for 2001, those estates of $200,000.00 and less will be exempt from Ohio estate taxes, and for 2002 and beyond, the first $338,333.00 will be exempt from estate taxes.

In addition to Sub. S.B. 108, H.B. 313 was passed and became effective in August of 2000. The following six changes to estate planning went into effect: Transfer on death real estate titles authorized; ademption on sale by agent avoided; summary release from administration authorized; trucks granted to spouses in lieu of cars; payable on death accounts clarified; and generation-skipping transfer tax annual exclusion saved for spendthrift trusts.

The most valuable and useful change for most individuals is probably the creation of a transfer-on-death deed for real estate. With the increasing trend in estate planning towards attempting to transfer assets upon death outside of the probate process, the TOD deed will provide an important tool in accomplishing this. In the past, real estate could only be transferred outside of the probate process through the use of a trust or a 'survivorship deed' (providing for joint ownership with rights of survivorship among the joint owners). However, a trust can involve a substantial expense, and joint ownership may not be desirable, particularly when the owner's intended beneficiary or beneficiaries are those other than one's spouse. A transfer on death (or 'TOD') deed provides on the deed itself that the ownership remains solely in the name of the owner yet immediately vests at the time of death to the named beneficiary or beneficiaries. It is similar to a beneficiary being named on a life insurance policy, retirement account, etc. Upon the death of the owner, the property passes to the beneficiary outside of the probate process. However, the property is still subject to estate taxes, and an Affidavit of the beneficiary and certified copy of the owner's death certificate will need to be recorded at the time of death.

Combined with using 'payable on death' beneficiary designations and 'joint and survivorship' designations on other assets, a TOD deed will allow many individuals, who may otherwise have been unable to do so, to avoid the probate process altogether.

These changes in the law should provide significant relief to many, both in terms of estate taxes payable to the state and also in terms of estate planning and providing ease in administration of one's estate.

Back to Joseph E. Balmer bio

Also see:

Blog Article: "Antenuptial Agreements - An Effective Estate Planning Tool"
News Release: "Local Dayton Attorney Achieves "Specialist" Certification"
Article: The Four Basics Of Estate Planning
Article: Is A Revocable Living Trust Appropriate For Your Client?
Article: Less Taxes And Less Probate Administration Ahead



	Article	Font: Decrease Increase
	JANUARY 10, 2001 Less Taxes And Less Probate Administration Ahead, Major Changes In Ohio! By Joseph E. Balmer III, Attorney at Law Two bills enacted in the year 2000 provide significant and important changes to Ohio estate tax and estate planning law. The first of these addresses the Ohio estate tax credit allowable against the estate tax levied by the state. The second provides six estate planning improvements, the most meaningful of which is probably the creation of a transfer-on-death beneficiary designation for real estate. Both new laws are discussed below. Sub. S.B. 108, signed into law on June 29, 2000, brings about long overdue relief from Ohio estate taxes. Prior to this new law, all assets owned to any extent by a decedent, other than those passing to a surviving spouse, over and above $25,000.00, were subject to Ohio estate taxes. This $25,000.00 exemption provided a tax credit of $500.00. For a number of years a push has been made to enact a 'sponge' tax in Ohio, whereby the state estate tax exactly equals the federal estate tax (thus, for estates where no federal estate taxes are due, no state estate taxes would be due). The current federal estate tax exemption amount is $675,000.00. At least 35 states currently have adopted a sponge tax. It has been argued that any loss in estate tax revenue would be offset by an increase in income and sales tax due to increased migration by residents into the state and less migration out of the estate. The response to this push is S.B. 108. S.B. 108 provides, in part, as follows: For estates of decedents dying in the year 2001, the Ohio estate tax exemption amount is $200,000.00, providing a tax credit allowable of $6,600.00 against any Ohio estate taxes levied. For estates of decedents dying in the year 2002 and thereafter, the dollar amount for exempt assets is $338,333.00, providing a tax credit of $13,900.00. In addition, a committee was created to provide a proposal to the Ohio House and Senate to eliminate or phase out all remaining Ohio estate taxes by the year 2006. Thus, for 2001, those estates of $200,000.00 and less will be exempt from Ohio estate taxes, and for 2002 and beyond, the first $338,333.00 will be exempt from estate taxes. In addition to Sub. S.B. 108, H.B. 313 was passed and became effective in August of 2000. The following six changes to estate planning went into effect: Transfer on death real estate titles authorized; ademption on sale by agent avoided; summary release from administration authorized; trucks granted to spouses in lieu of cars; payable on death accounts clarified; and generation-skipping transfer tax annual exclusion saved for spendthrift trusts. The most valuable and useful change for most individuals is probably the creation of a transfer-on-death deed for real estate. With the increasing trend in estate planning towards attempting to transfer assets upon death outside of the probate process, the TOD deed will provide an important tool in accomplishing this. In the past, real estate could only be transferred outside of the probate process through the use of a trust or a 'survivorship deed' (providing for joint ownership with rights of survivorship among the joint owners). However, a trust can involve a substantial expense, and joint ownership may not be desirable, particularly when the owner's intended beneficiary or beneficiaries are those other than one's spouse. A transfer on death (or 'TOD') deed provides on the deed itself that the ownership remains solely in the name of the owner yet immediately vests at the time of death to the named beneficiary or beneficiaries. It is similar to a beneficiary being named on a life insurance policy, retirement account, etc. Upon the death of the owner, the property passes to the beneficiary outside of the probate process. However, the property is still subject to estate taxes, and an Affidavit of the beneficiary and certified copy of the owner's death certificate will need to be recorded at the time of death. Combined with using 'payable on death' beneficiary designations and 'joint and survivorship' designations on other assets, a TOD deed will allow many individuals, who may otherwise have been unable to do so, to avoid the probate process altogether. These changes in the law should provide significant relief to many, both in terms of estate taxes payable to the state and also in terms of estate planning and providing ease in administration of one's estate. Back to Joseph E. Balmer bio Also see: Blog Article: "Antenuptial Agreements - An Effective Estate Planning Tool" News Release: "Local Dayton Attorney Achieves "Specialist" Certification" Article: The Four Basics Of Estate Planning Article: Is A Revocable Living Trust Appropriate For Your Client? Article: Less Taxes And Less Probate Administration Ahead Home \| About Us \| Areas Of Practice \| Attorneys \| Professional Affiliates \| Blog \| Contact Us \| Client Feedback \| Resources
	© 2001-2008 Holzfaster, Cecil, McKnight & Mues LPA. All rights reserved. Disclaimer \| E-Mail Us \| Contact Form \| Search \| What's New \| Site Map