As the person named to be executor of his mother’s Will, Jack is making a list of her assets after her death.  Later, he will get a taxpayer identification number for the estate - for income taxes and also possibly for another, less common, tax – the estate or inheritance tax, often called the death tax in political debates.

Jack must find out whether he needs to file an inheritance tax return.  Fortunately, because his mother died in 2012, he will not have to file that complex tax return so long as all her assets add up to less than $5 million, which Jack says he can guarantee.  Illinois’ 2012 inheritance tax uses $2 million as the minimum number. 

Jack should count himself ‘lucky’ to have those $5 and $2 million limits to think about.  Because, as crazy as it sounds, if his mother were to die next year instead, federal and Illinois estate taxes would be due if her assets were worth over just $1 million, which is not so rare.  

Why?  Unless Congress acts to change the limit, the higher exemption amounts will expire at the end of the year.

As we approach these elections, think of this kind of weird rule change a symptom of our politicians’ procrastination of hard decisions.  In 2010 after the mid-term elections, our lawmakers could not agree to extend the increases past these 2012 elections, so they just kicked the can a bit down the road. 

Jack’s journey into probate has just started, but figuring out whether there could be an estate tax due is crucial to know as quickly as possible.  If you are dealing with the after-death paperwork and finances of a loved one, please call our office to set an appointment for advice.  ©2012 Gruber Law Office, Ltd.