When a person dies, their assets get distributed to their heirs through their estate. Illinois has an estate tax that gets charged based on the estate’s total assets.
The federal government also has an estate tax, but the exemption amount for federal estate tax is much higher than that for Illinois.
Illinois estate tax rates
Illinois taxes all estates worth more than $4 million. The law imposes a graduated tax, with the maximum rate topping out at 16%. Estates exceeding this threshold must file an Illinois estate tax return and pay the due amount. The estate must file the Illinois return even if it does not have to file a federal estate tax return.
Exemptions to Illinois estate tax
Illinois exempts all estate assets worth less than $4 million from taxation. In addition, transfers made between married couples or persons in a recognized civil union are exempt from estate tax.
Planning for estate tax
Most persons want to avoid paying estate tax where possible. Estate planning attorneys have ways to structure estates to minimize any taxes owed. Illinois specifically recognizes Qualified Terminable Interest Property elections that allow estate property to transfer to trust but still get treated for tax purposes as though passed to a spouse or civil union partner. An estate planning attorney can review the entire estate financial picture and recommend how to best structure an estate to accomplish the testator’s goals.
The Illinois legislature does not always make tax changes known to the public promptly. A tax planning expert will have more information and can advise of impacts on estate plans with regular review.