Tips for Estate Tax Planning in Illinois

 Posted on March 22, 2021 in Estate Planning

The topic of estate planning is important, but it can seem daunting to think about. When a person dies, an estate tax is imposed on the value of the estate left behind, before any beneficiaries (family members or close friends) inherit anything.

An inheritance tax is imposed on an individual who receives any type of inheritance. Although some states do have inheritance taxes, there is no federal or state tax imposed on inheritances in Illinois. It is important to distinguish between these two kinds of taxes in order to protect the rights of those on the receiving end.

Understanding the Illinois Estate Tax

There is both a federal estate tax and an Illinois estate tax, however, the size of the estate must be significant for either one of these types of estate tax to apply. The Illinois estate tax rate is graduated and can go up to 16 percent, but it is only applied on estates worth more than $4 million. This means that if a decedent’s total estate is worth less than $4 million, the estate does not have to pay anything to the state. If an estate is worth more than $4 million, there is a progressive estate tax rate, and the estate will have to pay before money can be distributed to any heirs.

The federal estate tax is also dependent on how much an estate is worth. The amount of the estate tax that is owed also depends on what year the decedent passed away. For example, if a person dies in 2021, and their estate has combined gross assets and prior taxable gifts that exceed $11,700,000, the estate would be required to pay a federal estate tax. According to the IRS, prior years’ requirements are as follows:

• 2021: $11,580,000
• 2019: $11,400,000
• 2018: $11,180,000
• 2017: $5,490,000
• 2016: $5,450,000
• 2015: $5,430,000
• 2014: $5,340,000

Contact a Wheaton, IL Estate Planning Lawyer

The tax implications of estate planning can be complicated, and that is why it is imperative to secure professional legal counsel when thinking about the future and your wishes. Stock, Carlson & Duff LLC has over 40 years of legal experience, helping families throughout DuPage, Cook, and Kane Counties resolve numerous types of estate planning matters. Our seasoned DuPage County estate planning attorneys recognize the impact that taxes can have on your estate plan. We will help you understand the ways that taxes can impact your family. Call our office today at 630-665-2500 to schedule a confidential consultation.

Sources:

https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=609&ChapterID=8

https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax