Illinois is one of the few states that still charges its residents a death tax. This means that when you die, depending on the size of your estate, your estate may be subject to pay part of its value to the state of Illinois. The question is, will your estate be subjected to the death tax, or will it be exempt?
Since 2013, Illinois estates will receive an estate tax exemption up to $4 million. For estates valued at more than $4 million -- on the other hand -- they will be subjected to the death tax. The state of Illinois will estimate the value of your estate for the purpose of taxing it by looking at the value of all your assets, including bank accounts, real estate and other items of value.
Ultimately, Illinois will apply the death tax to assets that remain after applying the $4 million exemption. The top rate at which these assets may be taxed is 16 percent.
Because Illinois residents with multimillion-dollar estates face the risk of their families losing a lot of money due to estate taxes, some Illinois residents choose to implement various estate tax planning strategies. These strategies can -- in many cases -- reduce a family's death tax burden entirely. In other cases, tax reduction strategies can serve to dramatically lower a family's death tax burden.
Do you want to evaluate where you estate stands in terms of potential estate tax and death tax liabilities? An Illinois estate planning lawyer can review your financial circumstances to determine the most appropriate estate planning strategies for your needs.
Source: The Balance, "Overview of Illinois Estate Tax Laws," Julie Garber, accessed Sep. 15, 2017