Estate planning is essential to ensure that your family inherits what you own and it is not lost to excessive state and federal estate taxes. Learn below about how to plan your estate to reduce state and federal taxes, then our Illinois estate tax attorney is available if you have questions.
Not every state has an estate tax, but Illinois does. If you live in this state and have an estate worth more than $4 million, you could end up paying the Illinois estate tax. For example, if your estate is worth $5 million, you could owe the state of Illinois almost $300,000 without careful estate planning. You also could pay the federal estate tax if you have an estate that is more than $12.92 million as of 2023.
The good news is that even if you need to file an estate tax return in Illinois, you do not always have to pay the tax. Rather, your estate could use tax deductions to lower the value of your estate. Popular tax deductions to lower Illinois and federal estate tax obligations are:
Your Illinois estate planning tax attorney can review these and other tax deductions to determine if your estate qualifies.
Most of us do not want our hard-earned money to be lost to estate taxes. There are several effective ways to reduce estate taxes owed, and you might be able to avoid the issue entirely:
You can lower your state and federal estate tax burden by gifting some of your money to your family. As of 2023, you can gift a single family member $17,000 tax-free. If you give gifts to the family annually within these limits, you can reduce your estate tax burden.
Another excellent way to reduce your state and federal estate taxes is to give some of your money to a charity with a trust. For instance, you can establish a charitable lead trust (CLT) or charitable remainder trust (CRT). With a CLT, some trust assets are donated to a tax-exempt charity. Donating to charities lowers the value of your estate and gives you a tax break. If you establish a CRT, you can transfer stock or other assets to an irrevocable trust. When you pass away, the income from the investment is given to charity.
State and federal estate tax laws are complex when estate planning. But with the assistance of an experienced estate planning attorney, you can ensure your legacy is preserved for your family. Our Illinois estate tax attorney at Orlowsky & Wilson, Ltd., can help plan your estate to reduce your tax obligation, so please call (847) 325-5559 to set up a consultation.