IL Estate Planning Blog

Wednesday, January 19, 2011

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "Act")

On December 17, 2010 President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the "Act"). The Act significantly changes the federal estate tax, which impacts estate planning for many of our clients, and presents significant estate planning opportunities.

To summarize, the Act makes significant estate and gift tax changes.  The key points discussed above include the following:

·      The estate tax exclusion amount increases to $5 million per person for 2010 through 2012.

·      The maximum estate and gift tax rate is reduced from the 55 percent maximum rate under prior law to a maximum estate and gift tax rate of 35 percent for 2011 and 2012.

·      A "portability" provision is included, which allows surviving spouses to use any applicable exclusion amount that is not used by the first spouse to pass away. 

·      The GST exemption amount is increased to $5 million for 2010 through 2012.

·      The Act sunsets at the end of 2012, thus making the foregoing changes temporary in nature.

As always, we recommend that clients review their estate plans periodically and/or whenever a significant life event occurs (e.g., birth of a child, death of a spouse, purchase of new home, etc.).

For clients with substantial amounts of wealth and with closely held businesses, we highly recommend that such clients consider using lifetime gifts to take advantage of the current $5 million lifetime gift tax applicable exclusion amount, which will expire, absent further Congressional action, at the end of 2012.

Illinois (Illinois Taxpayer Accountability and Budget Stabilization Act) has provided the following:

(b) For persons dying after December 31, 2005 and on or before December 31, 2009, and for persons dying after December 31, 2010, an amount equal to the full credit calculable under  Section 2011 or 2604 of the Internal Revenue Code as the credit  would have been computed and allowed under the Internal Revenue Code as in effect on December 31, 2001, without the reduction in the State Death Tax Credit as provided in Section 2011(b)(2) or the termination of the State Death Tax Credit as provided in  Section 2011(f) as enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001, but recognizing the exclusion amount of only $2,000,000, and with reduction to the  adjusted taxable estate for any qualified terminable interest property election as defined in subsection (b-1) of this Section. 

Please do not hesitate to contact us with any questions that you might have or if you would like to discuss your estate plan in light of the Act.

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With two offices in Oak Lawn and Oak Brook, Stephen M. Sutera assists clients throughout Cook County, DuPage County and Will County IL including Chicago, Hometown, Barrington, Burbank, Burr Ridge, Chicago Ridge, Darien, Downers Grove, Evergreen Park, Geneva, Worth, Bridgeview, Palos Park, Palos Hills, Palos Heights, Hickory Hills, Midlothian, Willow Springs, Oak Forest, Orland Park, La Grange, Brookfield, Berwyn, Tinley Park, Hinsdale, Villa Park, Clarendon Hills, Westchester, Westmont, Lombard, Elmhurst, Western Springs, Berkeley, Downers Grove, Fox Valley, Glen Ellyn, Willowbrook, Aurora, Addison, Lisle, Forest Park, Bensenville, Wheaton, River Forest, Itasca, Shorewood, Frankfort, Mokena, Naperville, Crest Hill, Homer Glen, New Lenox, Bollingbrook, Schaumburg, Channahon and Woodridge.

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