This past Friday, December 16th, Governor Quinn signed the tax-break package aimed at keeping Sears, the Chicago Mercantile Exchange and other financial exchanges based in Illinois. A less widely-reported component of the legislation, however, actually has a more sweeping impact on Illinois residents. The new law also increased the Illinois estate tax exemption.
Currently, an Illinois estate tax of as much as 16% is imposed on each Illinois resident who dies with assets in excess of $2 million. Under the new legislation, the exemption for Illinois estate tax purposes is raised to $3,500,000 for persons dying in 2012 and to $4,000,000 for persons dying in 2013 and beyond. As a result, Illinois residents will be able to leave larger sums to family members at death without the imposition of Illinois estate tax.
Even with the higher Illinois estate tax exemption, however, a disparity still exists between it and the $5,000,000 federal estate tax exemption. Therefore, as we highlighted in a DataPoint in January of this year, it remains important to review existing estate plans to ensure that both federal and state estate tax can be avoided to the greatest extent possible.
