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Key Dates

Why Dates Matter

Key Dates - Updating Your Documents


How do you know when it is time to update your existing estate planning documents?  The first question you may need to answer is when was the last time you visited your existing documents?  If it was 10 to 15 years ago or longer, your documents may not be current anymore due to either ➀ changes in the law, and/or ➁ changes in your family and personal situations.

  • Perhaps when your current documents were prepared you had minor children who are now adults and married.  Will your current instructions drafted for minor children make sense for adult children?

  • Perhaps you now have grandchildren that have been born since you last updated your documents and you now wish to provide for them.

  • Do you have a child or grandchild with a disability that requires changes to your current instructions?

  • Are your documents compliant with changes in the trust laws and/or the tax laws that have occurred since your current estate plan was put in place?

  • Have you reviewed the individuals who are currently named in positions of authority in your existing documents, such as your medical agent under a Power of Attorney for Health Care or the individual you designated as your trustee?

  • Do you still have a relationship with the financial institution, financial advisor or professional trustee you have designated to administer your estate for your beneficiaries upon your death?


While your current estate planning documents may still be legally valid, the instructions and/or the individuals you have designated in the various administrative positions may no longer meet your desires or work the way you initially intended.  Below is a summary of some of the key changes in the estate tax laws that have occurred over the past 15-20 years.  If your documents were implemented before some of these dates it is probably time for a review.


January 1, 2020
The Illinois Trust Code was officially enacted by the State of Illinois on January 1, 2020 and governs all trusts created in Illinois.  The Illinois Trust Code replaces the Illinois Trusts and Trustees Act and several other statutes, including (1) the Trusts and Dissolutions of Marriage Act, (2) the Uniform Powers of Appointment Act, (3) the Statute Concerning Perpetuities, (4) the Perpetuities Vesting Act, and (5) the Trust Accumulation Act.  The Illinois Trust Code applies to all trusts, no matter when they were established with certain exceptions.  The Illinois Trust Code imposes new affirmative duties on the trustee, including some mandatory duties that were previously either non-existent or allowed to be modified via the trust instrument.  Trustees now have a new “laundry list” of obligations with respect to providing information and accounting to different “classes” of beneficiaries.

January 1, 2020

The "Setting Every Community Up for Retirement Enhancement" (SECURE Act) was enacted by the federal government on January 1, 2020.  This act is now the largest retirement reform to impact the economy since the Pension Protection Act of 2006.  A major change, from an estate planning perspective, is the 10-year distribution rule.  Prior to this Act non-spouse beneficiaries of an inherited retirement account were able to spread the mandatory distributions (and accompanying income tax liability) over their life expectancy as set forth under the IRS life expectancy tables.  With the enactment of the SECURE Act non-spouse beneficiaries of an inherited retirement account, with some very limited exceptions, must withdraw the entire balance (and pay all of the corresponding income tax returns) with in 10 years of the account owner's death.  This 10-year rule applies both to traditional IRAs and Roth IRAs. 

December 22, 2017
The "Tax Cut and Jobs Act" of 2017 essentially doubled the federal estate tax exemption  amount from $5,000,000 (inflation adjusted) to $11,180,000 (2018 - but inflation adjusted thereafter) per person, through 2025.  Estate plans put in place before this date were typically designed when the estate tax exemption was $600,000 or $1,000,000 and often directed the funding of a “Family Trust” or “Credit Shelter Trust” at the death of the first spouse with this lower exemption amount.  With the substantial increase in the estate tax exemption amount the formula set forth in these older documents may result in the "over-funding" of the Family (Credit Shelter) Trust at the first spouse's death.   This, in turn, could lead to an unintended loss of a "step-up" in cost basis at the surviving spouse's death.


January 1, 2015
A revision of the Illinois Power of Attorney for Health Care Act creates a new and updated Statutory Short Form Power of Attorney for Health Care.


January 1, 2013
The State of Illinois raises the state estate tax exemption from$3,500,000 to $4,000,000.
                    
January 2, 2013
The American Taxpayer Relief Act of 2012 (ATRA) became law on January 2, 2013.  This Act created a new "portability election" for federal estate taxes (this does not apply to Illinois state estate taxes).  Upon the death of the first spouse, to the extent they do not utilize all of their federal estate tax exemption, the surviving spouse may file an estate tax return and make an election to transfer the deceased spouse's unused federal estate tax exclusion to themself.  This will allow the surviving spouse to add the deceased spouse's estate tax exemption on top of their her own exclusion.


January 1, 2012
The State of Illinois raises the state estate tax exemption from $2,000,000 to $3,500,000.


July 1, 2011
A revision of the Illinois Power of Attorney for Property Act creates a new and updated Statutory Short Form Power of Attorney for Property.


December 17, 2010
The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (often called "TRA 2010") is enacted.  This Act increased the federal estate tax exclusion amount from $3,500,000 to $5,000,000, and further indexed this amount to inflation adjustments after that. 


January 1, 2006
The State of Illinois raises the state estate tax exemption from $1,500,000 to $2,000,000.


January 1, 2004
The State of Illinois raises the state estate tax exemption from $1,000,000 to $1,500,000.


April 14, 2003
While the Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996, on this date the federal government imposed substantial penalties for failure to comply with the privacy regulations under this Act.  If your Power of Attorney for Health Care was created before 2003 it will not be in compliance with this HIPAA laws and the individual designated as your power of attorney may not be able to receive or discuss medical information with your medical providers.


January 1, 2003
Illinois implements a State estate tax and will levy an estate tax against decedent’s dying with an estate > $1,000,000.

 

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