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Friday, June 26, 2015

Minimize Illinois Estate Tax with a Credit Shelter Trust

Photo courtesy of Terry Johnston
Imagine Joe and Mary are a retired Naperville couple with a combined $7.5 million in Illinois assets.  Joe has $5 million in his name, and Mary has $2.5 million in her name.  Both are 85 years old and trying to maximize the amount of money that passes to their children after their deaths.

Let’s discuss how one type of estate planning tool, the credit shelter trust, can make over a $600,000 difference in their Illinois estate tax bill.  We will do this by considering two hypothetical scenarios.  First, we will consider a scenario where Joe and Mary simply have a will giving all their possessions to their spouse upon death, and if neither spouse is alive, to the children.  The second scenario is one where they set up a credit shelter trust.