In response to the Economic Growth and Tax Relief Reconciliation Act of 2001, which, among other things, increased the amount of an estate that will pass without federal estate tax upon one’s death from $1,000,000 to $3,500,000 in 2009 and eliminated the state death tax credit, Gov. Blagojevich, on June 20, 2003, signed a law imposing an estate tax in Illinois. Because the new law is complicated and not well-written, we have only recently begun to see articles by estate planning professionals that fully explain the new law’s implications.
The bottom is as follows: for married couples with all of their assets in Illinois and an estate plan that funds a family trust with the maximum amount that will result in no federal estate tax, no changes in estate plans are required until 2009 to avoid the Illinois tax. For unmarried persons, there will be an Illinois estate tax whenever there is a federal taxable estate, meaning whenever the taxable estate exceeds the applicable credit.
Change of domicile to a state without an estate tax, such as Florida, and lifetime gifts, such as, of limited partnership interests, will avoid, or at least minimize, the implications of the new Illinois estate tax law now and in the future. Unmarried persons should call us now to make an appointment to explore these alternatives.