The IRS released the new 2019 estate and gift tax exemptions, which have increased slightly to keep pace with inflation. Illinois, however, has not changed their estate tax exemption…it is still locked at $4 million.
$11.4 million estate/gift tax exemption per person
$15,000 annual gift exclusion
Unlimited marital exclusion
As you know, the federal gift and estate tax exemptions are coupled together, so that each taxpayer can give away during life or death a total of $11.4 million. If married, the deceased spouse can transfer the unused federal exemption to the surviving spouse. You still can gift $15,000 per taxpayer to as many individuals as you wish without gift tax consequences.
The Illinois estate tax, however, does NOT allow portability or transfer of unused exemption amounts between spouses. This means that each spouse can only transfer $4 million to their heirs each. This is a use-it-or-lose-it exemption, in that if the decedent transfers all of his assets to his surviving spouse, the surviving spouse will only have a $4 million exemption available, where with good estate planning the couple could have excluded $8 million of assets from tax.
The moral of the story: review your estate plan annually to ensure your tax planning is still sensible given the changes to law. Call us today to review your plan.