The new Illinois QTIP

As most of you know, Illinois' estate tax now kicks in at $2 million, while the first $3.5 million of an estate are exempt from federal tax. That obviously poses a challenge for estate planners. Fortunately, though, in September the governor signed Illinois' QTIP election into law. So what does that mean? I'll let Jason S. Ornduff take it from here (he wrote about the new QTIP law in the latest ISBA Trusts and Estates newsletter): "Before the state QTIP election, estate planning attorneys and their married clients faced a quandary; either fund a credit shelter trust up to the maximum federal exemption and pay Illinois estate tax at the first death, or fund the credit shelter trust with the lesser of the two exemptions, avoiding the Illinois estate tax at the first death, but potentially wasting up to $1.5 million of the federal exemption which could cause federal estate tax to be due at the second death. "After legislation authorizing state QTIP election was enacted, a properly drafted estate plan permits a married couple to leverage at both the federal level and the state level – that is, for federal estate tax purposes, the entire federal exemption is used by (1) a $2 million federal and state credit shelter trust and (2) a $1.5 million federal credit shelter trust that is, for Illinois estate tax purposes only, a QTIP marital trust that qualifies for the marital estate tax deduction." Read the rest of his article, and watch for one by Robert Kolasa on the new QTIP law in the December Illinois Bar Journal.