Illinois Trust Taxation Deemed Unconstitutional

By and on March 31, 2014
Posted In Illinois, Income Tax

In Linn v. Department of Revenue, the Illinois Fourth District Appellate Court reviewed the state’s statutory framework for taxing trusts.  Linn v. Department of Revenue, 2013 Il App (4th) 121055.  On constitutional grounds, the court limited Illinois’ power to impose taxes under its “once subject to tax, forever subject to tax” regime.

This case creates planning opportunities to minimize Illinois income taxes.  However, it should be noted that the Linn case applies to trusts that pay Illinois income tax on trust dividends, interest, capital gains or other income retained by the trust and not distributed to a beneficiary.  This case does not apply to income distributed to an Illinois beneficiary; that income clearly can be taxed by Illinois.

Read the full article.

James H. Cundiff
James H. Cundiff (Jim) advises clients on family wealth and business planning, federal estate, gift and generation-skipping tax planning, and estate and trust administration. Jim represents entrepreneurs, corporate executives, and other business leaders and wealthy individuals on estate and tax planning matters. Read James H. Cundiff's full bio.

L. Timothy Halleron
  L. Timothy Halleron focuses his practice on high-net-worth tax and estate planning matters. Tim advises individuals and family offices in planning for the preservation and transfer of wealth within families without the imposition of gift, estate or generation-skipping transfer tax. Read L. Timothy Halleron's full bio.




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