Monday, March 19, 2012

Oak Lawn Estate Planning | Want to Avoid Estate Taxes? Move!

So you know you may have to pay estate taxes but are not sure how to minimize them. I would bet you did not consider that changing residency would be one of the best options you have. You may not know that there are two different types of Estate Taxes that are due upon your death. First there is the Federal Estate Tax. This tax is a national tax that applies to individuals in every state. On top of the Federal Estate Tax, each state has their own State Estate Tax. On top of these taxes, there is also exemptions for each state and for the Federal Tax. As you may be aware of, the current Federal Estate Tax Exemption is $5,000,000.00. This means that you can have an estate that is less than $5,000,000.00 and have no Federal Estate Tax liability. There is a different exempt amount for Illinois Estate Tax. The Illinois Exemption is $3,500,000.00. This means that if your estate falls in the 1.5 million dollar gap, you will only be liable for Illinois Estate Tax.

How does this translate into financial terms. Assume that a married couple have a 10 million dollar estate. They would owe $704,316.00 in Illinois Taxes because of the gap between the Federal and State Estate Tax. In order to avoid this Estate Tax Gap, it might be wise to declare your residential status in another state. In order to do that though, you will need to spend less than nine months in Illinois. If you spend more than none months in the state, there is a presumption that you are a resident.

I know that this may seem like an extreme solution, but it is a viable solution for some who do not want to give almost three-quarters of a million dollars to the Illinois Government. For more information on how to avoid Estate Taxes, call the Estate Planning Attorneys at:

Law Office of Jonathan W. Cole
5013 W. 95th St.
Oak Lawn, IL 60453

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