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A bill introduced in the Ohio House of Representatives proposes a complete repeal of the Ohio estate tax.  Representatives Grossman and Hottinger introduced H.B. 3 on January 11, 2011. The bill is simple:  it amends the estate tax provisions currently in Ohio law to state that the tax provisions apply only to estates of persons who died before January 1, 2011. Regardless of when the bill would become effective, persons dying after January 1, 2011 would not be subject to the estate tax. The bill also removes the estate tax return filing requirement for estates of persons dying after the January 1, 2011 date. 

The Ohio estate tax is a graduated tax on a person's gross taxable estate, less deductions and exemptions.  An estate valued at less than $338,333 pays no tax due to credits and exemptions included in the law.  Estates between the value of $338,334 and $500,000 pay a 6% estate tax while estates over $500,000 in value owe a 7% estate tax.  The state receives 20% of the estate tax revenue and the local government of the decedent's residence receives the remaining 80% of the tax.  Ohio is one of 17 states that have an estate tax.

How is agriculture affected by the Ohio estate tax?  It's not uncommon for a farm estate to be valued at the taxable threshold of $338,334.  However, qualifying farm properties that elect the special use valuation option in the estate tax law can further reduce the taxable amount of the estate up to an additional $500,000.  The special use valuation election provides that qualifying farmland will be valued at the lesser Current Agricultural Use Valuation amount; qualifications for the election relate to keeping the farm in the family.  Sound planning and proper use of special use valuation thus can reduce the Ohio estate tax burden for farms that intend to continue the farm business after the loss of an active farm family member.

The idea to repeal the estate tax is not a new one; several prior attempts have not met with success.  A bill identical to current H.B. 3 was proposed last year, but the bill never made it out of the House Ways and Means committee.   Will the change in Ohio's elected officials yield different results?  The current House Ways and Means committee will hear sponsor testimony on the H.B. 3 at its hearing on January 26, 2011.View H.B. 3 here.

Posted In: Estate Planning
Tags: Estate Planning, Ohio estate tax
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In an attempt to satisfy the animal welfare agreement negotiated last year with the Humane Society of the United States and various agricultural interests, Governor Strickland yesterday authorized an emergency rule that restricts the possession, sale and transfer of certain wild animals in Ohio.  The controversial animal welfare agreement, designed to prevent another Ohio ballot initiative on farm animal welfare,  provided that "[t]he Ohio Department of Agriculture and the Ohio Department of Natural Resources will coordinate and take action on wild and dangerous animals including the prohibition of the sale and/or possession of big cates, bears, primates, large constricting and venomous snakes and alligators and crocodiles.  Existing owners will be grandfathered in, but they could not breed or obtain new animals."  The Governor's action, however, is a week shy of the December 31, 2010 deadline included in the agreement, which stated that failure to implement the wild and dangerous animals provision by such date could void  the agreement. 

 "This action fulfills my responsibilities within the agreement that will keep Ohio's vital agriculture industry profitable while appropriately updating animal care standards," said Governor Strickland.  The Governor also cited public safety reasons for the new regulation, stating that "[t]his rule will help protect Ohioans from deaths and serious injuries caused by attacks from dangerous wild animals held in private ownership."

The Governor's Executive Order suspended the regular rulemaking process and allowed the immediate adoption of Rule 1501:31-19-05 by the Department of Natural Resources Divison of Wildlife.  The new rule, which became effective January 6, 2011, does the following:

  • Prohibits the possession, sale and transport of "restricted species,"  which includes coyotes, timber and gray wolves, lions, tigers, jaguars, panthers, leopards, cheetahs, bobcats, lunx, cougars, pumas, mountain lions, bears, all primates except humans, alligators, crocodiles, caimans, gharials and numerous snake species, including pythons, cobras and rattlesnakes.
  • Creates an exception from the regulation for persons who possessed a restricted species prior to January 6, 2011, if the person meets all of the following criteria:
    • Does not acquire any new restricted species through purchase, gift, trade, barter, donation or breeding;
    • Has not been convicted of animal abuse or neglect;
    • Has not had any type of animal license or permit revoked or suspended;
    • Registers the animal by May 1, 2011 with the Ohio Department of Natural Resources and maintains the registration annually;
    • Does not allow the public to come into physical contact with the animal;
    • Does not sell or transfer the animal to anyone other than an accredited zoo or institution, a wildlife sanctuary, a family member approved by the division chief, or an out-of-state facility (until January 1, 2016) and notifies the division chief of the new recipient of the animal at least 72 hours prior to transfer.
    • Maintains a permanent transponder implant on the animal.
  • Creates an exception from the rule for certain facilities and organizations:
    • Institutions accredited by the association of zoos and aquariums and facilities under active contract for a species survival plan under the Endangered Species Act;
    • Circuses licensed by the U.S. Department of Agriculture that are in the state less than 45 days per year and do not allow the public to come into physical contact with the restricted species;
    • Institutions operating a mascot program licensed by the U.S. Department of Agriculture;
    • Non-profit wildlife sanctuaries that do not use restricted species for commercial or entertainment purposes, do not allow the public to come into contacted with the species, and do not breed the species.
    • Wildlife rehabilitation facilities engaged in the rehabilitation and reintroduction of native species and permitted by the division chief;
    • Education, research and scientific institutions or projects permitted by the division chief;
    • A person transporting a legally owned restricted animal through the state for less than 48 hours who does not exhibit the animal, keeps the animal enclosed and does not allow public contact with the animal.
  • Requires a person who possesses a restricted species to notify the division of wildlife if the animal escapes, in addition to complying with other reporting requirements in ORC 2927.21.

Emergency rules remain in effect in Ohio for 90 days, which should provide the agency sufficient time to extend the life of the rule through the regular rulemaking process.  Given the upcoming change of leadership in Ohio,  it will be interesting to see if the new administration follows Governor Strickland's lead and makes the new regulation permanent.

View the Governor's Executive Order and the new rule.