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Estate Planning and Charitable Planning

Illinois Estate Planning and Charitable Gift Planning

We are experienced estate planning experts serving clients throughout Illinois and other nearby states from our office just outside of Chicago. We can help you minimize estate taxes, implement charitable planning goals, and assure the effective transition of your estate to heirs.

What is estate planning?

Estate planning is the process of creating a plan for the management of your property and financial assets during life and the orderly distribution of that property at death. Effective estate planning helps maximize the assets that are passed to heirs, while eliminating the uncertainty over the administration of those assets upon your death. A good estate plan minimizes the depletion of estate assets through taxation and other expenses and sets clear intentions for the distribution of assets to avoiding a lengthy probate process. 

What assets comprise an estate?

Your estate is comprised of everything you own: your investments, life insurance, business assets, home and other real estate, bank accounts, cars, furniture, personal possessions, and other material assets. However, a good estate plan should also include instructions for passing values, traditions, and important life lessons, as these are often most cherished by heirs when you’re gone.

What should an estate plan include?

At a minimum, your estate plan should include the following:

  • Will/Trust
  • Durable power of attorney
  • Beneficiary designations
  • Letter of intent
  • Healthcare power of attorney
  • Guardianship designations

Benefits of estate planning

Estate planning gives you the peace of mind that the assets you’ve worked hard to build in your lifetime will benefit heirs when you die. It helps assure you will be cared for if you become disabled, while preserving assets for heirs and charitable goals. Estate planning gives you control your wealth, allowing you to transfer assets to whom you want, when you want, at the lowest possible cost.

Asset protection and minimization of estate taxes

For your wealth to do the most good in the way that you desire, asset protection and minimization of estate taxes is important. An effective estate plan protects your wealth from creditors and excessive estate taxes through the use of trusts, maximization of estate tax exemptions, and nontaxable financial vehicles. Some common asset protection and estate tax minimization strategies include the use of AB trusts, ABC trusts, irrevocable life insurance trusts (ILITs), charitable remainder trusts, and qualified personal residence trusts. Other alternatives include gifting through a family limited liability company and using the $13,000 annual gift exclusion (rising to $14,000 in 2013) to gift assets directly to family members or charity.

What is the Illinois estate tax exemption limit?

The Illinois estate tax exemption for 2012 is $3.5 million. For 2013, the Illinois estate tax exemption rises to $4 million. This is a significant increase from the $2 million estate tax exemption for 2011. The Illinois tax rates on taxable estates can be as high as 16%, however the state allows a marital deduction for assets passing to certain qualifying trusts for the benefit of the surviving spouse.

What is the federal estate tax exemption?

The federal estate tax exemption stands at $5.12 million per spouse in 2012, up from $5 million in 2011, with a top marginal estate and gift tax rate of 35%. The federal estate tax exemption and top marginal tax rates are in constant flux and what rules Congress sets for 2013 and beyond is anybody’s guess. That makes it even more important to create an effective estate plan and constantly revise it as the laws change. It’s important to be aware of the estate tax exemption gap between the state and federal exemption limits, as the difference can make your estate liable for taxes and diminish the wealth passed on to heirs.

Contact us for a free estate planning consultation.

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