The Ohio budget bill signed into law June 30, 2011, contains a provision that completely repeals the Ohio estate tax for the estates of persons who die on or after January 1, 2013. The Ohio estate tax is levied on the estates of Ohio residents (and some nonresidents) based on the value of the taxable estate. For Ohio residents, generally all property in which the decedent had an interest on the date of death, less certain deductions and a credit equivalent to $338,333, is subject to the Ohio estate tax. The tax is levied at graduated rates, topping out at 7 percent for estates that exceed $500,000.
This repeal is good news for many of our clients who would remain residents of Ohio if not for the Ohio estate tax. It also may present a planning opportunity for married clients who currently have traditional credit shelter type trusts, often referred to as A/B Trusts. Once the Ohio estate tax is repealed, the provisions of the B Trust may become more flexible and allow for beneficiaries other than the spouse. This is because the B Trust will no longer need to qualify for the Ohio marital deduction. If you have this type of plan, please contact your estate planning attorney to discuss adding this flexibility to your trust when the repeal takes effect.