Many people know about the federal inheritance tax, but many are not aware that Illinois also has one. You should speak to an Illinois estate planning attorney promptly to understand how the Illinois inheritance tax may affect your estate. Learn about the details of this tax in this article, then call our estate planning attorneys at Orlowsky & Wilson at (847) 686-2445 for legal advice. For years, our attorneys have helped individuals and businesses plan for their future, build wealth, and reduce tax liability.
There are many things to understand about the state inheritance tax, but this is the most critical for most of our Illinois readers: If your estate is worth under $4 million, you are not required to pay the tax. While $4 million is a substantial estate, it is considerably smaller than the limit for the federal tax – $11 million. So, many people in this state may have to pay the Illinois inheritance tax but not the federal one.
That said, determining what your inheritance tax payment may be is a complex matter. Figuring out what is owed requires you to use algebra because the state inheritance tax is based on the death tax credit in Illinois, which was written based on an outmoded federal law. These aspects of the law could be clearer, but the government of Illinois offers guidance to help you. Plus our Illinois estate planning lawyer at Orlowsky & Wilson understands the finer details of the law and can advise you.
Like many taxes with a progressive bent, different tax rates are applied to different areas of the estate’s value. Thus, there are various tax rates.
As stated above, you are not required to pay inheritance taxes in Illinois if your estate is worth under $4 million. However, if your estate has a value of $5 million, the party may have to pay at least $300,000 in state estate taxes. If your estate is worth $5 million, this means you have a 29% tax rate. So, if someone has an estate worth $4.2 million, they may have a lower tax amount in dollars, but their tax rate could be higher than someone with a $15 million estate.
Yes, there are a number of effective means to reduce the taxes you owe. For example, your estate tax is based on what your assets are worth when you die, not what they were worth when you acquired them. They also are not valued at what they may be worth next year.
Furthermore, you might take advantage of several deductions to lower your burden. Also, you can give gifts to your husband or wife, or place them in a trust. So, these assets may not be considered part of your estate when the bill is calculated. You also can give away your property to beneficiaries, but there are annual IRS limits on what you can give each person annually.
Illinois inheritance tax laws are complicated, but your estate planning attorney at Orlowsky & Wilson is uniquely qualified to help reduce your tax burden. Our Illinois estate planning attorneys are available for legal consultation if you have any questions about the Illinois inheritance tax. Just call us today – (847) 686-2445.
