The estate planning process is one that requires a great deal of time and effort. The thought that after all that exertion a portion of your assets will still be eaten up by taxes can be discouraging. Like most, however, you have likely accepted having to pay estate taxes as an inevitability. Yet is it really? After all, Ohio does not impose a state estate tax on its residents. That means that you only need to worry about your estate potentially being taxed by the federal government.
In many cases, even federal estate taxes may be avoided. This is due to the fact that you are allowed to exempt a certain portion of your estate assets from being taxed. According to information shared by the Internal Revenue Service, that amount is the first $11.58 million of your estate. This means that as long as the total taxable value of your estate is under that amount, it will not be subject to federal tax.
Through careful planning between you and your spouse, you may even be able to protect more than that from taxes. You are allowed to gift an unlimited amount to your spouse thanks to the unlimited marital deduction. This allows you to pass your entire estate on to them without it being taxed (and without it counting against your estate tax exemption). Your spouse is then able to claim the unused portion of your exemption through a process known as estate tax portability (they simply need to file an estate tax return claiming portability within nine months of your death). By combining your unused exemption with the amount due to them, they can protect as much as $23.16 million from taxes, instead preserving that entire amount to settle your estates and pass on to your beneficiaries.