Estate Tax Law Update for 2013

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.

Naming an Executor

If you are married, the surviving spouse is typically appointed as the Executor. Similarly, if there is only one beneficiary he or she should also be appointed as the Executor.

An Executor must be at least 18 years old to be appointed by the county Probate court. When creating your Ohio Will, this consideration must be taken into account.

Beneficiary Designation

There is a common misconception regarding beneficiary designations. The person you list on your beneficiary designation for a life insurance policy, retirement account, or bank account will receive that asset regardless of what you have in your Will.

In fact, your beneficiary designations avoid Probate. By avoiding Probate these assets go directly to the beneficiary listed. It is possible for this asset to pass through Probate.

If you list your Estate as beneficiary or if the person listed (and contingent beneficiaries) are deceased the asset will not avoid Probate. This substantially increases the costs of administration and makes the asset subject to creditor claims.

Updating  Beneficiaries

The most common estate planning mistake is to have an out-of-date beneficiary designation. For example, if you are recently married (or divorced) you may not have updated your beneficiary designations. Even if you updated your Will to add (or remove) a spouse the beneficiary designation controls who receives the asset.

Review your beneficiary designations regularly to ensure the provider has the correct person listed. You can consult with your human resources department or financial advisor to verify your designations are up-to-date.

Executor of an Ohio Will

An Executor is appointed by the local county Probate Court to manage the distribution of assets consistent with the instructions in your Will. Executrix is the female version of an Executor.

This process of administration includes:

–      Collecting all Probate Assets;

–      Creating an Inventory;

–      Paying all expenses (including the funeral bill, court costs, attorney’s fees, estate taxes, and creditor claims) of the Estate;

An Executor is typically compensated for his or her services. Here is a link to calculate the potential executor fee.


A Will allows you to: Name a Guardian to care for your minor children, Appoint an Executor, and Control the division and final distribution of assets titled in your name.

Naming a Guardian

Appointing a Guardian for your children if you are gone can be a difficult, but very important decision. This individual takes parental control of minor children if both parents are deceased; unless a judge decides the Guardian unfit.

Naming an Executor

Your Will appoints an Executor to oversee the distribution of assets after your life. This individual, along with your Probate Attorney, manages the distribution process.