When planning your estate, you may want to do everything possible to care for your descendants, including ensuring they receive the maximum amount of funds and assets to help support them. However, estate taxes may make this challenging. Luckily, there are steps you can take to avoid these taxes to provide maximum support for your loved ones. Keep reading to discover how to minimize these fees and why you need a Medina, Ohio estate planning lawyer to assist you through this process.

What Are Estate Taxes, and Does Ohio Impose Any?

Estate taxes are essentially your right to transfer assets to an inheritor. This can also be referred to as the death tax, as your assets will be taxed upon your passing. Some confuse this with an inheritance tax, which occurs when an inheritor has obtained the assets or funds from the estate.

Ohio is one of many states that does not impose any estate or inheritance taxes. However, you may still be subjected to the federal estate tax if your estate is worth a certain amount. As of 2023, this threshold is $12.92 million.

Is It Possible to Reduce or Avoid These Taxes?

There are some methods you can use to reduce the estate tax your assets will encounter upon your death if your estate is above the federal threshold.

One thing many choose to do is create an Irrevocable Life Insurance Trust. This is a form of Trust that holds your policy as the asset to ensure the inheritors of the Trust receive the full benefits. Because this is an Irrevocable Trust, it is technically not owned by you. As such, it will not be subjected to any federal estate taxes. Similarly, creating this Trust is ideal for those close to the threshold but whose insurance policy places them over the limit.

If you do not want to create an Irrevocable Trust, you may choose a martial transfer instead. Generally, gifting your estate to a surviving spouse means you will not incur estate taxes. However, it must be noted that this will not erase estate taxes. When your spouse passes, their estate will be subjected to taxation. As such, a marital transfer merely delays the fees.

As you can see, there are many considerations you must make when planning your estate. Unfortunately, this can be a complicated process to navigate on your own, and trying to create a Will or Trust by yourself can leave your estate vulnerable if the document is deemed invalid. Luckily, the dedicated team at Krause Law is here to help when you’re ready to plan your estate. Contact us today to learn how our competent law firm can help you achieve peace of mind.