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Estate Tax Status There was no Federal or Illinois state estate tax or generation skipping tax in 2010. The gift tax was still in effect. Estate and generation skipping taxes have been reinstated for 2011 and 2012. After that there are no provisions. In 2010 there was carryover basis. When someone takes an appreciated asset from a decedent they realize gain or loss when they sell the asset. The gain or loss is normally determined by deducting the basis of the asset (usually its cost with certain adjustments) from the amount of proceeds realized on sale. But when an asset was acquired from decedent, basis was defined differently. Up until December 31, 2009 and after January 1, 2011, the basis used to compute gain or loss was and will be the date of death value. In 2010 basis was decedent's basis (cost) or the value on the date of death - whichever was less. There were certain exceptions. For each estate the basis could be increased by up to $1,300,000 of estate assets. In addition property passing to the surviving spouse qualified for a basis increase of up to $3,000,000. The new law allows you to elect the 2010 tax treatment or the 2011 tax treatment for a decedent dying in 2010. The new law makes some other major changes as of January 1, 2011. Among other things: 1. The tax free amount under both the gift tax and estate tax is $5,000,000. Many estate plans give the maximum tax free amount to a family trust in which the surviving spouse has restricted or no rights. All the rest goes to a marital trust benefitting the surviving spouse. For a decedent dying in 2010 with $5,000,000 or less under these plans, the whole trust estate will go to the family trust and nothing will go to the marital trust. Modification of these plans is usually desirable. || Back
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Illinois Wills
Lawyer Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL
60603 |
