When most people think about estate planning, they picture wills, powers of attorney, and maybe some life insurance. But one of the most overlooked—yet incredibly powerful—tools in an estate plan is the trust.
Even though Ohio has no state-level estate or inheritance tax, that doesn’t mean you’re off the hook when it comes to preserving wealth. In fact, setting up a trust in Ohio can unlock a range of federal tax advantages, reduce long-term financial risk, and give you greater control over what happens to your assets when you're gone.
Whether your priorities are tax efficiency, asset protection, probate avoidance, or leaving a lasting legacy, a trust could be a smart move. Below, we outline six major tax and financial benefits of establishing a trust in Ohio—plus a few strategic insights you’ll want to consider as part of your long-term planning.
1. Minimizing Federal Estate Taxes
While Ohio doesn’t impose its own estate tax, the federal government does. For individuals or married couples with significant wealth, this can become a serious concern.
As of 2024, the federal estate tax exemption sits at $13.99 million per individual. For married couples, this doubles to nearly $28 million. But if your estate is close to or over that threshold, estate taxes can erode your legacy quickly.
That’s where advanced trust planning comes in. Trust structures like A-B trusts (also known as bypass trusts) are designed to help couples fully utilize both spouses’ federal estate tax exemptions. This strategy can reduce or completely eliminate federal estate taxes upon the death of the second spouse.
By keeping certain assets out of the surviving spouse’s estate, these trusts help shield wealth and ensure that more of it is passed on to the next generation—not lost to the IRS.
2. Preserving the “Step-Up in Basis”
One of the most valuable tax breaks in estate planning is the step-up in basis. When someone passes away, the assets they own receive a new cost basis equal to their fair market value at the time of death.
This means that appreciated assets—like real estate, stocks, or business interests—can be sold by heirs with little to no capital gains tax.
When assets are held in a revocable living trust, they still qualify for this step-up in basis. So, not only does the trust avoid probate, it preserves this critical tax benefit. For heirs who may want or need to liquidate certain assets quickly, this can make a significant financial difference.
3. Strategic Income Tax Planning
Income taxes are another area where thoughtful trust design can yield powerful results. In some cases, an irrevocable trust can be set up to distribute income to beneficiaries who are in lower income tax brackets, minimizing the overall tax burden for the family.
By shifting income in a controlled and lawful way, families may be able to reduce their effective tax rate across the board. Of course, this strategy requires careful coordination and should always be implemented under the guidance of a qualified attorney and CPA—but the savings over time can be substantial.
4. Avoiding Probate and the Costs That Come With It
One of the most common reasons people use trusts is to avoid probate—and for good reason.
Probate is the legal process of validating a will, settling debts, and distributing assets after someone passes away. In Ohio, the probate process can be time-consuming, costly, and public.
When assets are placed into a trust, they bypass probate entirely. This can save your heirs from:
- Paying court fees and legal costs
- Dealing with delays that last months—or even years
- Having your financial affairs become part of the public record
For families that value privacy and efficiency, this benefit alone often justifies the decision to set up a trust in Ohio.
5. Protecting Assets from Creditors and Lawsuits
Asset protection isn’t just for billionaires or celebrities. Everyday families can benefit from using trusts to shield wealth from unexpected threats, including:
- Creditors
- Divorce claims
- Lawsuits
- Financial mismanagement by beneficiaries
An irrevocable trust—when structured correctly—can make it very difficult for outside parties to access or claim the assets inside. This gives you peace of mind that what you’ve worked hard to build will remain secure and intact for your loved ones.
Some parents also use spendthrift provisions to ensure that beneficiaries who may be financially irresponsible don’t waste their inheritance or become targets of legal claims.
6. Medicaid and Long-Term Care Planning
Long-term care costs are one of the biggest threats to family wealth, especially in retirement.
Nursing home care in Ohio can cost upwards of $90,000 a year, and Medicare doesn’t cover it. To qualify for Medicaid assistance, you must meet strict income and asset limits. This forces many people to “spend down” their savings just to receive care.
However, there’s a way to protect your assets and still qualify for Medicaid: a Medicaid-compliant trust. When established at least five years before applying for benefits, this type of trust can help preserve wealth while still allowing eligibility for long-term care coverage.
That said, Medicaid planning is extremely technical. If you’re considering this option, timing and legal compliance are critical—and so is working with an attorney who understands Ohio’s Medicaid rules.
Trusts Are More Than Just Tax Tools
While tax savings are a huge plus, trusts do more than just minimize taxes. They offer:
- Control over how and when your assets are distributed
- Privacy and protection from the court system
- Flexibility to meet your family’s unique needs
- Peace of mind that your wishes will be honored
Trusts can also be tailored to meet very specific goals—like caring for a child with special needs, supporting a charitable cause, or protecting a family business for future generations.
Final Thoughts (and Your Next Step)
Just because Ohio doesn’t have an estate tax doesn’t mean estate planning should be simple or ignored. A trust can be one of the most strategic and protective moves you make for your financial future and your family’s stability.
Whether you're concerned about preserving your legacy, minimizing federal estate taxes, avoiding probate, or planning for long-term care, a trust offers flexibility, control, and protection that other tools can’t match.
If you're wondering whether a trust belongs in your estate plan—or if you're ready to take that next step—contact ALH Law Group today. Our experienced Ohio estate planning attorneys can help you build a personalized trust strategy that protects your assets, honors your wishes, and sets your family up for long-term success. Schedule your consultation now and get started on securing your legacy—with confidence.
