20111114-NEWS--24-NAT-CCI-CL_--
11/9/2011
1:09 PM
Page 1
ESTATE PLANNING
S-8 NOVEMBER 14 - 20, 2011
Advertisement
TRENDS
Ohio estate tax repeal effect yet to be seen
Best time for gifts? There’s no time like the present sunset at the end of 2012, and again we are faced with the possibility of or individuals who reverting to the lower are inclined to exemption and higher include a lifetime rates that were in place in gifting program to 2001. Many consider now children and grandchilthrough the end of 2012 dren as part of their estate as a window of opportuplanning strategy, quesJOSEPH nity to make significant tions abound. What to MENTREK gifts in case lawmakers give? How to give? How scale back the exemption. much to give? Who should beneAnd while I would like to credit fit? With the continuing uncerour legislators for creating this tainty in federal estate, gift and window of opportunity, in reality generation skipping tax laws, the the fundamental core of any question of when to give poses an gifting strategy is designed to additional challenge. remove value and future appreciaChanges in federal tax laws that tion from the taxable estate of the occurred near the end of 2010 donor. increased and unified the lifetime So the sooner one is able to estate, gift and generation skipmake a gift, the better, because the ping tax exemption at $5 million, mere passage of time and the decreased the maximum tax rate power of compounding value are to 35% and added the ability of a the factors most likely to make married couple to effectively share any gifting strategy effective. The their combined estate tax exempfact that we are in a low point in tion amount through a concept the valuation cycles of closely known as portability. held business, real estate and These changes are scheduled to
By JOSEPH M. MENTREK
following Ohio’s lead. Vermont increased its exemption from $2 n June 30, Gov. John million to $2.75 million, and Kasich signed the law North Carolina and Delaware that repealed the Ohio increased their exemptions to estate tax for those who $5 million to match the federal die on or after Jan. 1, 2013. The estate tax exemption. legislation was included as part of However, other states are the Ohio budget bill. taking the opposite approach. The Ohio estate tax has been Looking to increase revenues around since 1968, generating during these challenging economic $333.8 million in fiscal year times, they are imposing new and 2009. Twenty percent of higher estate taxes. Illithe estate tax was distribnois revised its estate tax, uted to the state general effective Jan. 1, 2011, revenue fund, and 80% taxing estates exceeding was distributed to the $2 million and with a top local government where rate of 16%. Connecticut the decedent resided. lowered its exemption However, the tax profrom $3.5 million to $2 duces less than 1% of million per estate. total annual revenues for JOSEPH Gov. Kasich believes KOVALCHECK JR. excess state taxes are a Ohio cities, villages and townships. Additionally, major reason that capital, because proceeds go to the locality businesses and jobs have fled where the decedent resided, it was Ohio in recent years. Many felt that wealthy jurisdictions believe the elimination of the received a disproportionate share estate tax will help stop the exodus of estate tax revenues. No estate of Ohio residents who have fled tax revenues go to Ohio’s schools. to Florida or one of the other 27 Before the repeal, Ohio was states without an estate tax, and one of 22 states that had estate with luck, will attract new resiand/or inheritance taxes. Among dents and their businesses. ■estate tax states, Ohio had the lowest exemption amount, just Joseph P. Kovalcheck Jr., CPA, is prin$338,333, but also had the lowest cipal with M+N Advisory Services LLC. top rate at 7%. Some states are Contact him at (216) 363-0100. By JOSEPH P. KOVALCHECK JR.
F
O other investment assets makes potential results more attractive. Add to that the leverage that can be achieved from more sophisticated techniques and historically low interest rates, and the opportunity increases exponentially. So whether your motivation is high exemption amounts, low asset values or low interest rates, whatever gifting strategy you choose to pursue, the sooner you act, the greater the potential benefits to you and your family. â–
Joseph M. Mentrek, J.D., is vice president, Meaden & Moore, Ltd. Contact him at (216) 928-5343.
Dad’s my hero. He can fix everything from hot water tanks to BB guns. My son has the only two-story tree fort in the neighborhood thanks to him. He’s my go-to guy. Ask him about the big Cleveland game in ` 64, stocks, deep frying turkeys-he knows it all. But he doesn’t get around like he used to. He’s getting older and he can’t fix that. Wonder what he wants for the future? How do I bring it up?
What should our game plan be?
9*'0 9#5 ;174 .#56 (+0#0%+#. 2*;5+%#.! %1..')' r /#44+#)' r $+46* r 4'6+4'/'06 .+('o5 '8'065 %#0 *#8' # /#,14 +/2#%6 10 ;174 (+0#0%+#. (7674' 0QY KU VJG VKOG VQ JCXG C UQNKF RNCP KP RNCEG VQ JGNR RTGUGTXG YJCV [QW JCXG YQTMGF UQ JCTF HQT CPF OCMG UWTG [QW CTG TGCF[ HQT YJCVGXGT NKHG JCU KP UVQTG HQT [QW HQT DQVJ VJG GZRGEVGF CPF WPGZRGEVGF
Have you ever thought about what your loved ones want in their ďŹ nal years of life? Thinking about it is the ďŹ rst step to talking about it. At Hospice of the Western Reserve, we believe discussing it early will help you and your family make the right decisions when the time comes. That’s why we encourage you to talk about it now. Contact us for a booklet that explains our services and helps you start the conversation.
YYY JYEQ EQO
YYY JYHC EQO
%JCITKP $NXF 5WKVG ^ %NGXGNCPF 1JKQ
hospicewr.org /plan | 855.852.5050
5GEWTKVKGU CPF #FXKUQT[ 5GTXKEGU QHHGTGF VJTQWIJ QWT $TQMGT &GCNGT %QOOQPYGCNVJ (KPCPEKCN 0GVYQTM /GODGT (+04# 5+2%
Crain’s Cleveland Business Custom Publishing