Ohio residents urged to act on estate planning before tax changes

In 2026, federal estate tax exemptions are set to revert to lower thresholds as provisions in the Tax Cuts and Jobs Act expire, potentially impacting estate plans across the U.S., including Ohio.

Currently, Ohio does not impose its own estate or inheritance tax, but federal rules apply to larger estates, leading many Ohioans to explore strategies to minimize potential tax burdens. Key strategies include trusts, estate freeze techniques, and non-probate transfer options, all aimed at optimizing asset transfers and protecting wealth for future generations.

As Ohio residents prepare for tax planning in the coming months, an important deadline approaches. With the expiration of the Jobs Act (TCJA) and the Tax Cuts in 2025, estate tax exemption limits may significantly decrease, which has triggered a sense of urgency for Ohio residents aiming to protect their assets and wealth.

The current federal estate tax exemption threshold, substantially increased under the TCJA, is slated to revert to pre-2017 levels, meaning estates valued over approximately $7 million per individual may face increased tax obligations. This looming deadline calls for proactive measures to optimize estate management and minimize tax exposure.

Changes in estate tax exemptions

In 2026, the estate tax exemption threshold is expected to drop to $5 million per person, adjusted for inflation, marking a notable decrease from the current $12.92 million per individual or $27.2 million for married couples. This potential drop has significant implications for Ohioans, who may face substantial estate tax burdens if their estates exceed the reduced limit. Without strategic planning, residents risk larger portions of their wealth being subject to federal estate tax, also referred to as the death tax.

To manage this uncertainty, Ohio residents are encouraged to explore various estate planning tools such as trusts and asset transfer options. Grantor-retained annuity trusts (GRATs) and spousal lifetime access trusts (SLATs), for instance, allow individuals to retain partial control of assets while strategically moving them out of their taxable estates. Utilizing these trusts can reduce tax liabilities on appreciating assets, safeguarding the inheritance for future generations.

In addition, Ohioans should stay informed on Ohio-specific probate processes and exemptions. Non-probate transfer mechanisms, such as joint ownership and designated beneficiaries, can bypass probate, simplifying asset transfers while minimizing associated costs. Considering these approaches can help Ohio residents streamline estate distribution, reduce expenses, and protect their wealth from elevated tax obligations.

Effective estate planning for taxes

Estate planning in Ohio demands a nuanced understanding of both federal and state regulations. While doesn’t impose its estate taxes, federal estate taxes remain applicable to larger estates. This federal tax rate currently stands at 40% for qualifying estates, emphasizing the need for proactive planning.

For Ohio residents, techniques like family limited partnerships (FLPs) can reduce the market value of assets for tax purposes, decreasing the estate’s taxable footprint and potentially resulting in significant tax savings.

Another option gaining traction is the estate freeze strategy, which locks in the value of appreciating assets, allowing beneficiaries to inherit them at a lower value, effectively reducing future estate taxes. This technique requires careful planning to identify which assets will appreciate and which heirs to transfer ownership to over time.

Estate freezes are particularly valuable for property owners looking to shield their estates from escalating tax costs. However, each decision in the freezing process, including ownership transfer timelines, should align with Ohio’s estate laws and an individual’s long-term objectives.

These techniques underscore the importance of seeking expert guidance when navigating estate planning strategies. Financial advisors and estate planners can offer tailored solutions, ensuring that each plan reflects the individual’s financial goals, family dynamics, and Ohio’s specific probate and transfer laws. This expert advice not only ensures legal compliance but also optimizes estate preservation for future generations.

Ohio’s probate process and non-probate options

Ohio’s probate process can be a time-intensive and costly procedure, making it advantageous for residents to consider non-probate asset transfer options. Assets held in joint ownership or with designated beneficiaries pass directly to heirs, circumventing the probate process entirely.

This direct transfer avoids probate fees and delays, which can be especially beneficial in complex estates. Non-probate transfers are a practical way to expedite the distribution of wealth while reducing costs, enabling heirs to access assets with minimal administrative interference.

Additionally, Ohio residents should prioritize creating a legally valid will, an essential document to prevent disputes and facilitate smooth estate transitions. A valid Ohio will must be properly witnessed by at least two individuals, emphasizing the need for accuracy in the drafting and execution process.

Complementing a will with a durable power of attorney and health care directives can further streamline estate management, ensuring that all aspects of an individual’s financial and medical needs are adequately addressed if they become incapacitated.

Ohio’s elective share rights, which allow surviving spouses to claim a portion of the estate, should also be considered in estate planning. Regularly reviewing and updating estate plans is essential, particularly as Ohio estate laws and federal tax codes evolve.

Ohio residents should also remain vigilant regarding potential legislative changes at the state level, ensuring that their estate plans remain compliant and optimized.

Adapting for long-term estate planning success

As the 2025 sunset of the current estate tax exemption approaches, Ohio residents must adopt a proactive approach to estate planning. With shifting tax policies and potential federal revisions, it is essential to regularly review estate plans to align with current laws and personal financial goals.

To keep plans effective, Ohioans should consider ongoing consultations with estate planners and tax professionals who are up-to-date on regulatory developments. Adjusting estate plans as necessary ensures that each component, from trusts to non-probate transfers, aligns with both current laws and the estate owner’s intentions.

Among other strategies, family limited partnerships (FLPs) and other estate freezing techniques provide options to reduce tax burdens while securing assets for future generations. FLPs, for example, offer Ohioans a way to minimize estate value for tax purposes by transferring portions of property ownership to family members, thereby lowering the estate’s taxable worth.

Also, transferring appreciating assets early, particularly those expected to increase significantly in value, can further reduce future tax liabilities while preserving wealth within the family.

In light of potential changes to estate tax policies, making informed decisions based on professional advice is critical. Estate planning is not static; Ohio residents are advised to regularly revisit their plans to accommodate changes in tax legislation, personal financial situations, and family structures. The strategic use of estate planning tools allows individuals to achieve tax efficiency, ensuring a more secure financial future for their beneficiaries.

The prospect of lowered estate tax exemptions and evolving probate regulations presents a challenge for Ohio residents but also an opportunity to secure their wealth through thoughtful estate planning. By understanding estate freeze techniques, leveraging non-probate transfer options, and consulting qualified professionals, Ohioans can proactively prepare for tax changes, achieving a stable financial legacy for their heirs.

Estate planning is an ongoing process, and periodic review is essential to stay compliant and optimize outcomes. By staying informed and adaptable, Ohio residents can navigate the changing tax landscape, ensuring that their wealth is preserved and transferred according to their wishes.