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This is a trust that is held for the benefit of successive generations for a very long time. The trustee holds the assets with a direction to pay the income to children, then grandchildren, then great grandchildren and so on.

Since each person only has a life interest in the trust the trust assets would not be in his or her taxable estate. The trust would be subject to generation-skipping taxes so the value of such trusts on creation is usually limited to the exemption under the generation-skipping tax.

In the past the duration of a trust was limited by the rule against perpetuities. A trust could last only so long as a life in being upon creation of the trust plus 21 years. The “life in being” refers to all the current beneficiaries. Certain states now allow you to opt out of this rule.

For more information on creating an Illinois Dynasty trust or other type of trust contact Chicago estate planning attorney Don Thompson.

The terms of an A & B trust provide that after the death of the person who created the trust the assets will be split between two sub-trusts, the A Trust and the B Trust. The A Trust benefits the surviving spouse. The B Trust supposedly benefits the children. A formula is set forth in the trust to determine how the assets are split. The reason for this device is to minimize estate taxes by placing the amount upon which there is no tax in the B or children’s trust. This trust is structured so that when the surviving spouse subsequently dies the children’s trust is not in his or her taxable estate. Everything else goes to the A Trust which is structured so as to qualify for the marital deduction. The A Trust will be in the surviving spouse’s estate when he or she dies later.

By using this type of trust parents can pass double the tax free amount to their children. If the first to die merely left everything to the surviving spouse then only one tax free amount would pass to the children on the death of the surviving spouse. Everything else would be subject to tax.

Naturally this type of device is useful only for taxable estates. And it works only if the assets are split between both spouses so that the first to die has the tax free amount to pass to the children’s trust.

The surviving spouse can be the income beneficiary of the children’s trust.

The A Trust is often called a marital trust and the B Trust is often called a family trust.

When the surviving spouse’s rights to the A Trust are limited to income and the executor of the estate is given an option to elect how much of the trust will be used for the marital deduction, it is called a Q-Tip Trust.

Contact Chicago wills and trusts lawyer Don Thompson today for further information about setting up an A-B trust.

This allows the deductible gift to the surviving spouse to be made in trust so a trustee can manage the investments. The tax law provides that the gift, while not absolute, still qualifies for the marital deduction if the spouse must get all the income and has the power to say who gets the money remaining in the trust at his or her death. This is usually used together with a family or credit shelter trust which takes advantage of the credit to pass $3,500,000 tax free. Remember the spouse can get all the income from that trust too, but cannot have the power to say who gets the remaining assets of the family trust on his or her death. That power would cause the family trust assets to be in the surviving spouse’s taxable estate.

NOTE: There currently is no Federal or state estate tax or generation skipping tax. The gift tax is still in effect. Whether or not the estate and generation skipping taxes will be reinstated this year is not known. Many people expect that they will be reinstated, but what will happen is not known. What the rates and exemptions will be if the taxes are reinstated is also not known. Click here for more.

Contact Chicago estate tax lawyer Don Thompson for help with a marital deduction trust in Illinois.

Persons with larger estates should review their estate plans at a set time each year. Estate plans are prepared on the basis of certain things. As these things change, so should the plan. Births, deaths, changes in marital status, changes in law, changes in residence, changes in wealth, changes in the composition and titling of one’s assets are all things which can require estate plan changes.

NOTE: There currently is no Federal or state estate tax or generation skipping tax. The gift tax is still in effect. Whether or not the estate and generation skipping taxes will be reinstated this year is not known. Many people expect that they will be reinstated, but what will happen is not known. What the rates and exemptions will be if the taxes are reinstated is also not known.

To learn further about planning your Chicago, IL estate contact Chicago estate planning lawyer Donald Thompson.

This is for persons who are charitably inclined and also want to make discounted gifts to their children or someone else. The gift to charity leads to an income tax deduction if the trust is structured properly. The remainder which is given to the kids is valued for gift tax purposes at its present value, which is less than the full value of the assets in the trust because of the prior charitable interest.

NOTE: There currently is no Federal or state estate tax or generation skipping tax. The gift tax is still in effect. Whether or not the estate and generation skipping taxes will be reinstated this year is not known. Many people expect that they will be reinstated, but what will happen is not known. What the rates and exemptions will be if the taxes are reinstated is also not known. More information here.

For further information about charitable trusts in Chicago contact IL trust attorney Don Thompson.

It’s exactly what it sounds like.

There are a variety of bank accounts which pass on death to a named survivor. During the life of the owner of the account the survivor has no rights. That is, the survivor cannot withdraw funds from the account like a joint tenant could. A will does not affect these accounts. They pass to the person designated in the bank records regardless of any will or probate court action. Whether or not such an account has been created depends on the agreement with the bank. Sometimes these accounts are called “Pay on death” accounts. Sometimes they are called “Totten Trusts”. Sometimes the account ownership designation merely says “X in trust for Y”, although there is no trust agreement.

For further information on pay on death accounts or to handle other matters related to your Illinois Estate contact Chicago Estate Planning Attorney Donald Thompson.

A trustee is someone who holds legal title to assets or property for the benefit of someone else. The trustee can be an individual or an entity such as a bank trust department. The trustee is responsible for managing the property and paying it out according to the terms of the trust. A trustee should be someone who has the requisite skill and time to manage the assets and investments. The trustee should also be trustworthy. It also helps if the trustee knows the beneficiaries. Professional trustees are often selected to act because of their ability to manage investments. Often an individual is appointed to act in conjunction with the professional to add insight into the beneficiaries.

Professional trustees charge for their services and this means the trust must be large enough to pay the fees.

Trustees are subject to the supervision of the courts and their duties can be enforced by legal action.

To learn more about estate planning in Illinois or to decide whether to use a professional trustee of someone you know contact Chicago estate planing attorney Don Thompson.

All property passing to a spouse is deductible – whether by lifetime gift or at death. This means that while the value of these transfers is in the estate, it is also deductible. Whatever is given to a spouse is not taxable. If you give your spouse $10 million during life or at death there is no tax. But when the spouse dies later there is no marital deduction unless the spouse has remarried. At this time the spouse could give your property to his or her second spouse, unless you take steps to avoid it.

To learn more about marital tax deductions in Illinois contact Chicago wills, trusts and estate planning attorney Donald Thompson.

Part of estate planning involves providing for the event of your illness or disability. In fact for most people the odds of becoming disabled and unable to work for at least a short period are higher than the odds of dying. Disability insurance provides a monthly income if that happens. And many more people incur high medical expenses at one time or another without becoming disabled. Both types of insurance are a desirable part of any estate plan.

Although things of this nature are never pleasant to think about and seemingly plan on, but there possibility is a reality and they should be taken care of when properly planning an estate in Chicago, IL. Contact Chicago Estate Planning and Wills lawyer to plan your estate.

Today: Income splitting in Illinois

Sometimes it is possible to shift income within a family from someone in a higher tax bracket to someone in a lower bracket. This is difficult with children under 14 since their unearned income (except for the first $1600) is taxed at their parent’s tax rates. However, not all children are under 14. Basically income is split by giving property to children. Thereafter the income from it belongs to the children. Interests in family businesses or farms are ideal. Gifts of cash work too if available. Employing your children also is a good way to shift income to them. However, they must actually work and the pay cannot exceed a reasonable amount for what they do.

If this sounds like something that could work for you contact Chicago Estate Planning Attorney Don Thompson for further information.