Wealth Advisor recently published an article—“Tune-Up Your Estate Plan in Light of Changing Conditions”—that discusses the status of the Illinois and federal estate taxes and exemption levels.
The federal estate tax gift and estate tax exemption amount is now $11.4 million, indexed for inflation, which is an all-time high. A married couple can transfer twice that amount to children or others, or $22.8 million, without any federal gift and estate tax. The federal exemption amount is also now “portable” between spouses. It means that the first spouse to die, can transfer any unused exemption to the surviving spouse, without the need of a “credit shelter trust.”
Note that the enhanced federal exemption amount is scheduled to “sunset” in 2026, returning back down to $5.6 million (indexed for inflation).
However, in the state of Illinois, the estate tax exemption amount is only $4 million and isn’t portable. This makes flexibility in your estate plan very desirable. For residents in the Land of Lincoln (that’s Illinois), the estate tax savings are less dramatic, since the exemption is smaller than in places like New York, but the potential savings through proper planning are still major.
Another consideration to note includes the fact that surrogate’s courts and probate courts—which have always moved at a snail’s pace—have become even slower.
Some of these changes may impact your current estate plan. You may want to take advantage of the enhanced federal exemption amount, before it goes away.
Talk to an experienced estate planning attorney to see how you can shelter your savings from a state estate tax, if you are married and live in Illinois, or any state with an estate tax. This could save you a lot of money that you can then pass on to your heirs.
Reference: The Wealth Advisor (June 17, 2019) “Tune-Up Your Estate Plan in Light of Changing Conditions”