On December 16, the Governor of Illinois, Pat Quinn, signed into law a bill that, among other things, raises the Illinois estate tax exclusion amount, raising the amount that an Illinois resident can transfer at death without the imposition of Illinois estate tax.
Under current law, an Illinois resident has an estate tax exclusion amount of $2,000,000 for purposes of the Illinois estate tax. Under the new law, the $2,000,000 exclusion amount remains in effect for decedents dying prior to January 1, 2012. Those dying on or after January 1, 2012, and prior to January 1, 2013, will have an Illinois estate tax exclusion amount of $3,500,000. Those dying on or after January 1, 2013 will have an Illinois estate tax exclusion amount of $4,000,000.
While the increased Illinois exclusion still does not match the federal estate tax exclusion amount, as many other states do, it does reduce the amount of state estate tax payable by Illinois estates.
The 7520 rate for January 2012 fell to 1.4%.
The January 2012 Applicable Federal Rates can be found here.
If you are administering an estate for the first spouse of a married couple to pass away in 2011 or 2012, you should consider whether or not to make a “portability election” under Section 2010(c)(5)(A) of the Internal Revenue Code.
Section 2010(c), as recently amended, generally allows a surviving spouse of a U.S. citizen decedent who passes away in 2011 or 2012 to use the decedent’s unused Federal estate tax exclusion amount in addition to the surviving spouse’s own basic Federal estate tax exclusion amount. This eliminates the need for spouses to re-title property and/or create trusts solely to take advantage of each spouse’s full basic Federal estate tax exclusion amount.
Under the current tax law, a person’s applicable Federal estate tax exclusion amount is the sum of (1) the basic Federal estate tax exclusion amount (currently, $5,000,000 minus any taxable lifetime gifts) and (2) in the case of a surviving spouse, the deceased spousal unused exclusion amount, if any. (more…)
Bryan Cave has been ranked number 2 out of approximately 650 law firms which serve Fortune 1000 companies, in BTI Consulting Group’s annual “Client Service A-Team.” BTI’s annual survey of law firm client service performance is designed to identify and recognize those firms which deliver best-in-class service. This marks the 4th consecutive year in which Bryan Cave has been included in the top 30 firms in the survey. “The results of this independent survey are a very important confirmation of our emphasis on client relationships and service,” said Don Lents, Chair of Bryan Cave LLP. Read More.
Maybe it is all the time spent with friends and family, or the spirit of giving, or maybe it’s just all the mistletoe, but whatever the reason, the few months from Thanksgiving through Valentines Day always seem to be filled with engagements. As all of these happy couples begin to plan their weddings, and their lives together, many spend more time thinking about the band, picking out the perfect cake or looking for that perfect starter home than they do preparing for what may happen if things unravel down the road. Unfortunately, today the odds are not in favor of happily ever after.
Divorce is a difficult reality that many couples will eventually face. Entering into a prenuptial agreement before walking down the aisle can protect both parties should divorce become a reality. A prenuptial agreement is an agreement between the engaged couple to address how specific issues will be handled should the marriage end in divorce and on death. While these agreements may not be necessary for everyone, they are not just for the rich and famous!
Yes, they are important for the super wealthy, particularly important if one spouse brings substantially more wealth into the marriage; however, they may also be important for a host of other reasons. (more…)
We are delighted to announce the combination of Holme Roberts & Owen LLP into Bryan Cave LLP, effective January 1, 2012.
Please click here for more information
Shoppers around the country got a jump on holiday shopping, taking advantage of Black Friday sales and Cyber Monday online pricing. What shopper doesn’t love the rush of getting that great deal? And who doesn’t love receiving a gift wrapped in pretty paper, tied up with a big bow?
It can be easy to forget during the hustle and bustle of this season, sometimes the best gifts don’t fit in those pretty wrapped packages at all. You are allowed to give the gift of tuition to your children and grandchildren. More specifically, you can pay tuition to an educational institution on behalf of a loved one without triggering any gift tax or generation skipping transfer tax.
With the costs of education skyrocketing, more and more tuition bills are ringing in upwards of $20,000 or even $30,000 per year. Making gifts of that magnitude during life through tuition can save thousands down the road. At the end of a four year college education, the student graduates with a college degree, with less student debt, or perhaps even debt free, and you have gifted as much as $120,000 for the benefit of that student without paying any gift tax or generation skipping transfer tax! It may not be as tangible, but that is a much better deal than the sweater you were eyeing!
This tax-free tuition gift is not limited to paying college tuition and graduate school tuition. Often, nursery school, private elementary school, and high school tuition will qualify as well. So long as the primary purpose of the organization is formal instruction and the organization normally maintains a regular faculty and curriculum and has a regularly enrolled student body, the educational organization should qualify and you can pay the tuition as a gift.
Of course, there are some restrictions. The tuition must be paid directly to the qualifying institution. It may not go to the student, or to the student’s parents for reimbursement of tuition already paid. Also, the tax-free gift can only cover the actual tuition. It must not be used for room and board, books and supplies, or other expenses associated with the student’s education. Best of all, a gift of tuition has no impact on your ability to take advantage of other methods of gifting, like annual exclusion gifts, or lifetime cash gifts as discussed earlier in our Methods of Gifting post.
A Georgia court in a recent case, Villas at Stone Mountain Condo. Ass’n, Inc. v. Blair (Ga. App., 2011), No. A11A0912 (the “Blair Case”), held that the children and heirs of a decedent owed the homeowner association fees on the decedent’s condominium despite the fact none of the heirs wanted the condominium. The fees accrued between the decedent’s death and foreclosure of the condominium by the mortgage company.
In the Blair Case, the decedent died without a Will and the decedent’s children (also her heirs under Georgia law) never opened an estate administration with the probate court nor signed any documentation to disclaim ownership of the condominium. When a Georgia resident dies without a Will, which is known as an intestacy, title to real property automatically vests in the decedent’s heirs effective as of date of death subject to an administration of the estate. An heir may decline an inheritance if proper procedures are followed. While an heir is not liable for the debts incurred by a decedent prior to death, an heir is liable for ongoing expenses of any property inherited from the decedent.
Many individuals are intimidated by the administration of a decedent’s estate, or the probate process, and often feel that the government or local court system places too great a burden upon them after losing a loved one, particularly when the estate is small and the procedure appears unnecessary. Our current system of ownership, however, requires a title holder to property. When an individual dies, probate provides a temporary title holder of property, which does not pass by law or contract, and a standard procedure to collect assets, pay debts and expenses and ultimately distribute property to the proper beneficiaries or heirs. (more…)