When you spend your life working hard to earn your assets, you may do everything possible to protect them upon your death. However, you may be shocked to learn that your estate incurs the federal estate tax. As such, you may wonder what you can do to reduce the estate taxes you owe to help ensure your Beneficiaries receive the funds they deserve. The following blog explores what you must know about estate taxes and how a Medina, Ohio estate planning lawyer can help you explore your options to make the most confident decision to achieve peace of mind for the future.
What Are Estate Taxes, and Does Ohio Implement Them?
Estate taxes are paid to the federal and, in some instances, state governments after you pass. Essentially, the government will take a portion of your estate if you have over a particular value in assets. As of 2023, only estates valued at $12.92 million are subject to estate taxes. These taxes are paid before the rest of your assets are distributed by your Executor to your beneficiaries.
While some states also take a portion of the estate through taxes on top of what is paid to the federal government, Ohio is not one of them. As such, the only estate tax placed on Ohio estates comes from the federal government.
What Can I Do When Planning to Reduce Estate Taxes?
If you wish to decrease the value of your estate to reduce or eliminate the taxes you must pay, there are several options you can explore. One of the most common options is a marital transfer, which transfers the entirety of your estate to your spouse upon your death. However, it’s important to note that this will not eliminate the tax burden but puts it off until your spouse passes.
Another option is to look into charitable gifts or transfers. This can help reduce the value of your estate, subsequently lowering how much you owe in taxes. Not only does this benefit you, but giving back to charities you hold close to your heart is a great way to help your community. You can do this by establishing a Charitable Lead or Charitable Remainder Trust.
Finally, you may want to consider establishing an Irrevocable Life Insurance Trust. This can help transfer your life insurance policy to a Beneficiary, thus reducing your estate value while ensuring your loved ones receive the support they need. However, it’s necessary to do this soon, as it may be considered part of your estate if you pass within three years of creating an Irrevocable Life Insurance Trust.
As you can see, there are many options you can choose from if you’re looking to reduce the value of your estate. However, it can also be incredibly overwhelming to determine what the best option for your circumstances is. The team at Krause Law understands that this can be a confusing process. As such, we are dedicated to explaining all of your options so you can make the most informed decision based on your needs. Contact us today to learn how we can guide you through this process to help you make the best choice.
