Due to the increasing federal estate tax exemption amount and the federal rule that allows one spouse to “carry-over” a deceased spouse’s unused federal exemption amount, many individuals no longer face a federal estate tax or need to be concerned with dividing assets between spouses for tax planning purposes. But for individuals residing in Illinois, and even non-residents who own Illinois property, not only is there still an estate tax, but the exemption is much smaller. Planning to reduce the Illinois estate tax may be required even if planning for federal estate taxes is not relevant.
Illinois remains 1 of 19 states (including the District of Columbia) that still impose some form of state estate or inheritance tax.
To understand the Illinois estate tax and planning for the Illinois estate tax, it is useful to understand some of the history of estate taxes and estate tax planning. The first part of this alert will cover some of that history, and then the second part will answer some basic questions regarding the Illinois estate tax and planning.
