Law Offices of Robert H. Glorch
Client Login
847-991-2250 Call For a Consultation
Plan for the Road Ahead
Road by the ocean. Road in the desert. Road by mountains. Snowy road. Road by grassland. Road leading to a bridge.

2015 Estate Tax Summary

2015

Previously I wrote summaries of estate and gift taxes for 2013 and 2014. As with last year, the changes this year are primarily inflation adjustments. The unified federal estate, gift and GST tax exemption rose from $5.34 million in 2014 to $5.43 million in 2015 (big fun for those who like to transpose numbers!).

Here is an executive summary of the current Federal and Illinois estate, gift and generation skipping tax exemptions and rates for 2015:

Federal Estate Tax
  • Exemption Equivalent: $5,430,000 (minus lifetime adjusted taxable gifts)
  • Annual Inflation Indexing: Yes (rounded annually to the nearest $10,000)
  • Portability of unused exemption to surviving spouse: Yes (by timely election on Form 706 Estate Tax Return of deceased spouse)
  • Rate: 40% (flat rate on taxable estate above exemption)
Federal Gift Tax (unified)
  • Lifetime Gift Tax Exemption: $5,430,000 (total lifetime taxable gifts)
  • Annual Inflation Indexing: Yes (rounded annually to the nearest $10,000)
  • Annual Gift Tax Exclusion: $14,000 (same as 2014; increased by inflation indexing in $1,000 increments)
  • Rate: 40% (flat rate on gifts above exemption)
Federal Generation-Skipping Transfer (GST) Tax (unified)
  • GST Exemption: $5,430,000 (minus lifetime GST exemption used)
  • Annual Inflation Indexing: Yes (rounded annually to the nearest $10,000)
  • Portability of unused exemption to spouse: No
  • Rate: 40% (flat rate on GST transfers above exemption)
Illinois Estate Tax
  • Estate Tax Exemption: remains at $4,000,000 (not scheduled to rise)
  • Inflation Indexing: No
  • Gift Tax: None
  • Portability of unused exemption to spouse: No
  • Rate: Varies (effective rate up to around 28.5%)
Federal Trust and Estate Fiduciary Income Tax
  • Tax Brackets: Reaches top marginal rate at $12,300 income
  • Marginal Rate: 39.6% top rate applies to income over $12,300.
  • Medicare Surcharge: Subject to 3.8% Medicare surcharge tax on net investment income
  • Pass Through: Income passed through to beneficiaries via K-1 to the extent of distributions

To review all inflation-adjusted numbers for federal tax purposes for 2015, see IRS Rev. Proc. 2014-61.

Planning Considerations

The current stability in Estate, Gift and GST taxes makes this a good time to complete an estate plan. Particularly for married couples that have trusts that have not been updated within the past 6 to 8 years, a review and possible update may be in order. The gap and differences between Federal and Illinois estate taxes creates potential traps for older estate plans created under different rules, but also provides some unique planning opportunities.

Image courtesy of freedigitalphotos.net/Stuart Miles