In Illinois, the executors of estates that are worth more than $4 million are required to pay an estate tax. This means that even though an estate isn’t large enough to owe the federal estate tax, which is currently set at $11 million, it may still be required to pay state taxes to Illinois. Valuing an estate and determining which taxes must be paid and by what deadline can be difficult short of having an Illinois estate tax calculator. If you are interested in planning your own estate, it is important to obtain the advice of an experienced estate planning attorney who can answer your questions and address your concerns.
For 2017, estates with an estimated gross value of more than $4 million are required to file an estate tax return. This rule applies to both residents and nonresidents who own real estate or other tangible property in the state. To determine whether or not an estate must file a tax return, an executor will need to add up the fair market value of the estate’s assets, which could include:
Any assets that are given outright to a spouse or to a trust for the benefit of a spouse, however, will not be considered in making the calculation.
If the value of an estate’s assets combined with all taxable gifts made during the decedent’s lifetime is over $4 million and no tax deductions apply, the estate’s executor must file an Illinois estate tax return (Form 700), as well as a federal estate tax return (Form 706) with the state. At this time, the executor must also submit copies of appraisals and other ownership documents. This documentation is due within nine months of the decedent’s death, although extensions are granted in certain cases.
There are a number of methods that Illinois property owners can use to avoid paying estate taxes. One of the simplest is to make gifts throughout the testator’s lifetime. For instance, individuals can make an unlimited number of gifts of up to $14,000 per person every year. Over time, these gifts can lead to substantial tax savings.
Creating a trust can also help cut down on taxes because by transferring life insurance policies to irrevocable life insurance trusts, a person can remove existing benefits from his or her estate. However, this must be done at least three years before the testator’s death or the death benefits will still be included in the estate.
Estate taxes can be hugely expensive and planning ahead of time can make all the difference in how much an estate must pay after someone’s death. In light of this, if you live in Lincolnshire, Evanston, Northfield, Glencoe, Glenview, Highland Park, Northbrook, or Skokie and have concerns about how much your estate will owe in taxes, please contact Orlowsky & Wilson, Ltd. Attorneys at Law to schedule a consultation at 847-325-5559.