You might have heard about the recent changes to federal estate tax laws. The amount that can pass free of federal estate taxes is over $11 million (until December 31, 2025). While the federal estate tax will affect fewer individuals, persons domiciled in Illinois should be aware of the significant Illinois estate tax: Illinois imposes tax on assets passing at death to a non-spouse in excess of $4 million. Married couples can pass
Taxes
Living Trusts
A declaration of trust (also known as a “living trust” or “revocable living trust”) is an agreement you make with yourself. You can amend or revoke your living trust any time while you are competent. It is a “see-though” document (an “ignored entity” and not considered as separate from you) for income tax purposes and does not require admin- istration by a professional trustee, a taxpayer identification number or other trust formalities during your lifetime.
Basically, you can
Tax reform may impact charitable giving
As the tax reform measures were unveiled, members of the charitable community expressed alarm that the new rules could create a disincentive to donate. With the larger standard income tax deduction ($12,000 for an individual filer and $24,000 for a married couple), fewer people will realize the benefits of itemizing. Some charities fear that, absent … Read more
Tax reform will have big impact on divorce
Tax reform eliminates the alimony deduction. Before the new tax law, spouses paying alimony to an ex could deduct these pay- ments from the amount of income they were taxed on. This would often be enough to move that spouse into a lower tax bracket, which would result in all of his or her taxable income getting taxed at a lower rate.
The spouse receiving alimony, however, would
Gifting strategies
As a rule, the IRS treats any transfer of money or property you make to another person (vs. to a charity or to a political organization) as a taxable gift – unless an exclusion applies. Three typical exclusions that may apply are: Gifts to a spouse, which are subject to an unlimited marital deduction unless … Read more
Updated Rules Provide New Estate and Gift Tax Savings Opportunity
Recent tax developments may save substantial taxes for your clients’ beneficiaries (post-death). Since 2010, a surviving spouse can claim their deceased spouse’s unused estate and gift tax credit shelter amount (“estate and gift tax exemption”) of $5,000,000 or more by filing a federal estate tax return (Form 706) within nine months after death to secure … Read more
Retirement accounts: Tips for taxpayers turning 70½
It’s a big year for the first set of baby boomers: They’re turning 70 1/2. And that means getting prepared for their first mandatory distributions from tax-sheltered retirement accounts. The first thing to keep in mind is that the amount of your required annual withdrawal is based on the assets in the account as of … Read more
Moving an elderly relative? Think about state taxes
It’s a common scenario: An elderly relative is no longer able to live alone, so family members sell the relative’s house and have the relative start living with them or in a nursing home or assisted living facility that’s closer to the family. One thing you might not consider during this stressful process is that … Read more
Survivorship life insurance can be good vehicle for estate planning
Survivorship life insurance (also known as “second-to-die”) can be an important vehicle to consider for estate planning. This type of insurance policy covers two lives and pays out the proceeds when the second insured dies. One benefit is that the premium tends to be lower than it would be for two separate policies because the … Read more
Be careful with inherited IRAs
In order to achieve tax savings and accomplish your goals, you should pay careful attention to naming primary and contingent IRA beneficiaries The laws governing inherited IRAs are complicated and it’s easy to make mistakes. If you want to discuss naming beneficiaries and/or creating a “standalone” trust for your IRA (and other retirement account assets), please let us know. Standalone trusts for IRAs can be especially useful in a second marriage, when minor or disabled beneficiaries are potential beneficiaries and/or when the beneficiary may need protection from creditors or a divorcing spouse.