What are the biggest differences between inheritance tax and estate tax in Ohio?
Taxon estates and property is levied when the owner dies in a country that has one. When a person inherits property that was given to them by a resident of a state with an inheritance tax, an inheritance tax is imposed. If an Ohio resident inherits property that was owned by a resident of one of the six states with an inheritance tax, the state will impose an Ohio inheritance tax. A tax on estates would not be imposed.
Although the Ohio estate tax is not an issue, there may be other taxes that are levied upon the death of an Ohio resident. Ohio residents can have retirement accounts that are subject to income taxes. On any money that is withdrawn from an IRA, 401(K), or a beneficiary account, the beneficiary will be subject to income tax. These plans may also have after-tax contributions that are not subject to tax upon withdrawal. The withdrawal rules can be complicated and may differ for spouses surviving than for beneficiaries. It is wise to consult a Columbus Ohio estate lawyer in this area.
If an Ohio resident inherits a retirement fund from a resident of an inheritance tax-paying state, the Ohio resident will be responsible for this tax. An Ohio estate tax would not apply. Roth plans differ from 401(K), IRA plans because these funds are already taxed. In certain cases, however, income taxes may be incurred by the beneficiary. This should be discussed with an estate lawyer.
An estate worth less than $11.18 million is exempt from federal estate taxes
Columbus Ohio residents do not have an inheritance or estate tax. However, Ohio residents might have relatives in other states that levy inheritance and estate tax. An Ohio resident might inherit a retirement account that may be subject to an inheritance tax, state and federal income taxes, or both. Talking to an estate attorney about the types of assets that are inherited can help you avoid unnecessary worry and expense.
Working with an attorney to save time and money
It is smart to have a legal team that understands all aspects of estate planning. It is recommended to consult an attorney, in Columbus regardless of whether you have concerns about taxation, trust establishment, Will writing, and any other aspect of your estate. It is possible to draft all your estate documents at once, which can help you save considerable time and money.
These legal documents can be prepared at once to allow you to create your estate so that each element works in conjunction. For example, your Will and durable power of attorney may have some overlap. The forms that establish your trust(s), for example, have a lot of legal language in common. Contact our law firm office in Columbus if you are interested in these topics. We would be pleased to discuss your estate plans with you and the legal protections that you have for your loved ones.
Ohio Residents in Columbus Don’t Have to Pay Estate Taxes
People who want to leave assets to their loved ones or to others should be concerned about inheritance taxes and estate taxes. Beneficiaries of estates should also be concerned about these taxes. In 2013, Ohio’s inheritance and estate taxes were abolished. These taxes were eliminated in 2013 when the state passed legislation. An Ohio resident could be subject to an inheritance tax if they inherit money from someone who is a resident of any of the six states that levy inheritance taxes: Iowa, Kentucky Maryland, Nebraska, and New Jersey.