Federal Estate Tax and Ohio Estate Tax Law

Ohio Estate Tax

Governor John Kasich signed in to law, on July 2, 2011, a full repeal of the Ohio Estate Tax. This repeal took place and is effective after January 1, 2013. For those who died in 2011 and 2012, there will still be an Ohio Estate Tax.

For those individuals who died prior to January 2013, the Estate Tax rate in Ohio is 6% on assets above the $338,333.33 exemption, up to $500,000, and a 7% tax on assets above $500,000.00.

Federal Estate Tax

For 2013, each individual has an effective credit of approximately $5 million. The new Federal Estate Tax rate for 2013 will be 40% for assets above the credit.

There is also a concept known as Portability. This allows a spouse to transfer all assets to the surviving spouse, pay no tax at the first spouse’s death (there is an unlimited marital deduction which results in no Federal Estate Tax for assets given to a surviving spouse), and transfer the $5 million dollar credit to the surviving spouse.

One requirement for transferring the credit to a surviving spouse is that a Federal Estate Tax Return must be filed after the first spouse’s death. Further, there are restrictions on the transfer of this credit in subsequent marriages.