Strategies overview
Not personalized advice. Illinois estate tax and family facts may change recommended structure.
Married couples — federal estate tax
| Strategy |
Mechanism |
Tradeoff |
| Credit shelter / bypass trust |
Allocate exclusion at first death to non-marital trust |
Administrative complexity; state tax coordination |
| QTIP + bypass (A-B / ABC) |
Marital deduction for spouse's share; control remainder |
QTIP in survivor's estate at second death |
| Clayton QTIP |
Formula funds QTIP only if needed after bypass |
Flexibility; requires skilled drafting |
| Portability |
Elect DSUE on Form 706; spouse uses combined exclusion |
Requires timely 706; no asset protection for DSUE amount |
| Disclaimer |
Spouse disclaims to bypass within 9 months |
Uncertainty; spouse must not accept benefits |
| Outright to spouse + portability |
Simplest |
No creditor protection; survivor controls all assets |
Lifetime gifting
| Strategy |
Mechanism |
Tradeoff |
| Annual exclusion gifts |
$19,000/donee (2026) per Form 709 instructions / Rev. Proc. |
No step-up on gifted asset appreciation |
| Spousal gift splitting |
Form 709 consent |
Requires filing if over annual exclusion |
| GST exemption allocation |
Form 709 Schedule D for dynasty trusts |
Irrevocable; professional drafting |
| SLAT |
Irrevocable trust for spouse and descendants |
Gift tax on funding; reciprocal trust doctrine risk if mirror SLATs |
| IDGT / sale to grantor trust |
Estate freeze and appreciation shift |
Complexity; intentional income tax to grantor |
Income tax and retirement
| Strategy |
Mechanism |
Tradeoff |
| Roth conversion |
Tax now, tax-free later |
Conversion tax; estate still includes balance |
| QCD |
IRA to charity age 70½+ |
Not for trust; individual only |
| See-through conduit trust as IRA beneficiary |
Stretch/10-year via individuals |
Drafting and custodian compliance |
| Section 645 QRT election |
Tax revocable trust as part of estate temporarily |
Irrevocable election; limited window |
Charitable
CRT, CLT, or outright charitable bequests reduce taxable estate and support philanthropy; rules in Pub. 526 (notebook) if needed.
When simpler may win
- Combined net worth well below federal and state exclusions.
- All assets transfer by beneficiary designation with coordinated wills.
- Single individual with no estate tax exposure: RLT for probate avoidance only.
Coordination checklist
- Align will, trust, and beneficiary designations.
- Fund and retitle assets to trust where intended.
- Confirm Form 706 filing for portability or QTIP elections.
- Review IRA beneficiaries after SECURE Act changes.
- Revisit on residence change, divorce, death of beneficiary, or law changes.
Sources
