What Really Happens If You Die Without a Will in Ohio?
Many people assume that if they pass away without a will, everything will just “work itself out.” Unfortunately, that’s not how Ohio law works. Dying without a will—also known as…
Many hardworking parents want to leave their property to their children, hoping to give them a financial head start. Some, in an effort to avoid legal costs or probate, take matters into their own hands—transferring real estate to their kids while they’re still alive.
On the surface, this seems like a smart move. No lawyers, no court involvement, and they can rest easy knowing their property is in their children’s names. But what they don’t realize is that this well-intended gift can create a massive tax burden for their children.
Let’s take a real-world example of how DIY estate planning can backfire and cost a family far more in taxes than the cost of setting up an estate plan.
Bob and Linda bought their first home in 1992 for $60,000. Over the years, they worked hard, saved, and invested in a few additional properties in their neighborhood as rentals. Now, in their late 70s, they want to make sure their children inherit these properties without the hassle of probate or legal fees.
To avoid hiring an attorney, they decide to quitclaim their properties to their children. Last month, they transferred ownership of their rental home at 123 Main Street to their son, Mike.
At first, this seems like a win:
✅ No attorney fees
✅ No probate
✅ Mike owns the property immediately
But what Bob and Linda don’t realize is that this “quick fix” has just created a major capital gains tax problem for Mike.
When you gift property during your lifetime, the recipient (in this case, Mike) receives your original purchase price as their cost basis.
🔹 Bob and Linda bought 123 Main Street in 1992 for $60,000.
🔹 Today, the property is worth $154,000.
🔹 Because this was a lifetime gift, Mike’s cost basis is still $60,000 (the original purchase price).
Now, let’s say Mike decides to sell the house after inheriting it from his parents.
$154,000 (sale price) – $60,000 (cost basis) = $94,000 in taxable gain
Since capital gains taxes can be as high as 15-20% federally (plus state taxes), Mike could owe $14,000-$18,800 in taxes—just because of the way the transfer was done.
Had Bob and Linda waited and allowed Mike to inherit the house through their estate, he would have received a stepped-up basis—meaning his cost basis would be the property’s value on the date of their death ($154,000) instead of the original purchase price.
If Mike sold the home immediately after inheriting it, there would be zero capital gains taxes owed.
By trying to avoid legal fees, Bob and Linda unintentionally cost their son nearly $20,000 in taxes.
Bob and Linda aren’t alone—many families try to take shortcuts with estate planning because they’re worried about costs or don’t understand how taxes work. But these shortcuts often create big financial consequences for their heirs.
Here’s why gifting property during your lifetime is a mistake:
❌ No Step-Up in Basis – The recipient inherits your original purchase price, meaning they may owe huge capital gains taxes if they sell.
❌ Loss of Control – Once you gift property, you no longer own it. If your child faces financial troubles, lawsuits, or divorce, your property could be at risk.
❌ Medicaid Penalties – If you need nursing home care within five years of the gift, you could face Medicaid penalties and be ineligible for assistance.
❌ Unintended Tax Liabilities – Depending on the value of the gift, gift taxes may also apply.
Instead of rushing to transfer property, Bob and Linda could have set up a simple estate plan that:
✅ Ensures their children inherit real estate without probate
✅ Provides a step-up in basis to eliminate capital gains tax
✅ Keeps full control over their property during their lifetime
✅ Protects assets from creditors, lawsuits, and Medicaid issues
A properly structured revocable living trust or Transfer on Death (TOD) Deed would have allowed Bob and Linda to pass their properties to Mike without probate AND without tax burdens.
Bob and Linda wanted to avoid attorney fees, but they didn’t realize that a basic estate plan costs far less than the taxes and financial headaches their shortcut created.
Cost of a Trust-Based Estate Plan: $2,500-$5,000
Cost of a Will-Based Plan with TOD Deeds: $1,000 – $3,000
Cost of DIY Gifting Mistakes: $14,000 – $18,800+ in capital gains taxes
The harsh truth: Avoiding planning doesn’t save money—it just shifts the financial burden to your children.
Estate planning isn’t about avoiding costs—it’s about protecting your legacy and your loved ones from financial pitfalls.
If you want to ensure your children receive their inheritance without unnecessary taxes, probate, or legal trouble, the best thing you can do is plan now.
At Ohio Heritage Law LLC, we help families create customized estate plans that keep property out of probate, minimize taxes, and make sure your assets go exactly where you want them to go.
Call us at (330) 5714151 or click here to schedule a free consultation. Let’s create a plan that truly protects your family’s future.
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