The past year ushered in many changes to the Illinois estate planning landscape. There’s a lot to cover, so I’m breaking it into three posts. First up is the Illinois estate tax.
The Illinois estate tax rules have caught many people by surprise. So much attention has been paid to the federal estate tax (which currently has a $5 million exemption) that many have forgotten that Illinois has an estate tax too.
Under the 2009 and 2011 Illinois estate tax rules (there was no Illinois estate tax in 2010), a person dying with an estate of $2.5 million would owe no federal taxes. But their estate would have to write a $128,518 check to the Illinois Department of Revenue. That big number often shocks people who think of their estates as “just a little bit over the $2.0 million limit.”
Good news arrived last week, though, for Illinois families. On December 20, Governor Quinn signed a law raising the estate tax exclusion (the minimum estate size before Illinois estate taxes are due) from $2.0 million (currently) to $3.5 million for 2012 and $4.0 million for 2013 and beyond.
Too many times this year I’ve had clients ask whether they should consider moving to another state to avoid Illinois estate taxes. By narrowing the gap between the Illinois and federal estate tax rules, fewer families will need to consider advanced planning techniques.
But…the good news from Illinois is tempered by the uncertainty behind the federal estate tax rules that is still hanging over everyone’s heads. The federal estate tax exemption for 2012 is currently $5.0 million, but it drops back down to $1.0 million for 2013 and beyond. Several proposals have been made in Congress for a permanent solution. So stay tuned!
In Part 2, we’ll fill you in on the changes to powers of attorney.
Comments are closed.