_ Small Business Owners should be aware of the current Estate Tax Credits for 2012 and changes that take effect in 2013. These will have a drastic impact on succession planning for Ohio small businesses.
Federal Estate Tax
Currently, the Federal Estate Tax credit is equivalent to $5,120,000.00 per person (any dollar under $5,120,000.00 passes free of Federal Estate Tax. Married couples are able to transfer their unused Federal Estate Tax credit to the surviving spouse that provides the equivalent of a $10,240,000.00 per couple credit (also known as “Portability”).
Unless the President and Congress can agree on an extension of the current law, the Federal Estate Tax credit will be reduced, beginning in 2013, to $1,000,000.00 per person, without Portability, at a rate of 55%.
Ohio Estate Tax
In 2012, the Ohio Estate tax rate is 6% of every dollar between $338,333.33 and $500,000.00. For every dollar above $500,000.00, the tax rate is 7%. This calculation does not include life insurance proceeds.
Effective in 2013, the Ohio Estate tax has been repealed. This will be a substantial savings for residents of Ohio. Before transferring your residence to another state, it is important to check that state’s law regarding Estate Taxes.
Elliott Stapleton Attorney with CMRS Law