Observers of tax changes are paying close attention to the federal government's recent focus on rewriting the tax code. If it becomes law, the new code will certainly affect deductions on charitable contributions and medical expenses, while it is also likely that estate planners will find changes as well.
The proposed federal tax code could bring so many changes to taxes as they stand today that people may have trouble planning the best outcome for the transfer of their assets during life or after death. A Chicago columnist postulates that families in the south suburbs of the Windy City may suffer most.
Although proposed changes to the tax code are numerous and complicated, they may prove advantageous to estate planning with the right approach. Federal estate taxes may be cut or eliminated, and state tax codes occasionally follow suit when changes are made in Washington.
The largest number and amounts of tax breaks will benefit larger estates. The maximum limit of exemption on federal estate taxes - currently $5.49 million - may rise. Illinois applies its own estate tax to personal assets in excess of $4 million, although this measure is not currently under review in Springfield.
There are several ways to reduce tax liability on large estates, such as gifts during a planner's lifetime and deductions for charitable causes. An attorney may help make the right decisions to preserve large and complicated estates, distributing the assets to the people and organizations named in wills as the intent of the estate holder.
Source: Chicago Tribune, "Slowik: Here's how Illinois should respond to the GOP's tax breaks for the rich," Ted Slowik, Dec. 01, 2017