People establishing estate plans need to take many different matters into consideration. They may need to think about the relationships among their beneficiaries and the value of different assets.
They may also need to consider issues that could reduce what their beneficiaries inherit. For those with significant assets, estate taxes could be a major concern. Developing an appropriate estate tax strategy can make a major difference for those who want to ensure that their beneficiaries inherit as much as possible.
Why is a tax strategy especially important for individuals who live in Illinois?
Two estate taxes could apply
Most states have abolished state-level estate taxes. However, Illinois still collects estate taxes. Estates probated in Illinois could therefore be subject to both state and federal estate taxes.
More estates are at risk of the state tax than the federal tax, as the threshold for tax exemption is lower. For people who die in 2025, an estate value of $4 million or greater could trigger estate taxes. The tax rate that applies depends on the overall value of the estate. It could be as low as 0.08% or as high as 16%.
The federal estate tax exemption is significantly more generous. People must have at least $13.99 million in estate assets for federal estate taxes to apply if they die in 2025. Unfortunately, the tax rate is also higher and ranges from 18% to 40%.
An appropriate tax strategy can help ensure that a testator’s assets go to their beneficiaries, not tax authorities. Reviewing personal resources with an attorney can help people begin developing a tax strategy and an estate plan accordingly.
