If you do any estate-planning work and have at least one client of means – a small-business owner, say, or a farmer or other landowner – you’ll want to familiarize yourself with Senate Bill 2115, Illinois’ spanking new QTIP legislation. “[The Illinois QTIP law] allows married couples with estates of more than $2 million to set up a QTIP trust (“qualified terminable-interest property trust”) to use marital tax deductions to defer estate taxes until both spouses are deceased,” writes ISBA Director of Legislative Affairs Jim Covington in the upcoming (August) issue of the Illinois Bar Journal. The law, which will take effect as soon as the governor signs it, started life as HB 255 only to end up as a senate bill. It’s a response to the "decoupling" of the federal and Illinois inheritance tax. The federal and Illinois tax used to kick in at the same dollar amount, but last January the federal exclusion went up to $3.5 million while the Illinois tax continues to apply to estates of $2 million or more. Chicago lawyer and Illinois Bar Journal estate-planning columnist Katarinna McBride explains further in another article that will appear in the August IBJ. “Prior to the Illinois QTIP legislation, estate plans that did not actively elect to defer the payment of Illinois estate tax until the second death or that funded the credit portion of the trust with the federal applicable exclusion amount of $3.5 million could have resulted in an Illinois estate tax on the difference between the federal exclusion of $3.5 million and the Illinois equivalent of $2 million for decedents dying in 2009,” she writes. Ouch. She goes on to quote Justin Karubas, chair of the legislation committee of the ISBA Trusts and Estates Council: “We need this law to avoid surprises to those couples who have planned their estates and expect no tax will be due when the first spouse dies. For the last 23 years the surviving spouse has not had to pay any estate tax to Illinois because they had a traditional estate plan. But because of a quirk in the Illinois law the surviving spouse may have to pay estate tax to Illinois.” For dated but still helpful background on the whole business, see the February IBJ article by Sterling lawyers (and father/daughter coauthors) Gary Gehlbach and Emily Vivian.