Wealth preservation is an important consideration for those with substantial assets in Illinois. Whether you own real estate, investment accounts or a business, you likely want to pass as much of your personal property on to your loved ones as possible.
Estate taxation at the federal and state level can reduce how much of your wealth goes directly to the people you love. The progressive nature of both the Illinois and federal estate taxes means that those with more assets are at risk of losing more of their estates to taxation.
The basics of the Illinois estate tax
Estates worth $4 million or more may be subject to estate taxes in Illinois. The more the value of the estate exceeds that $4 million threshold, the higher the tax rate is that the state will apply to it. The maximum tax rate, applied to estates worth $14.04 million or more, is 16%.
The basics of the federal estate tax
If your estate is large enough to qualify for state estate taxes, you may still be exempt from federal taxation. Estates worth up to $11.7 million may not have to pay any federal estate taxes. If your estate is worth more than that, federal taxes will also apply.
Like the Illinois estate tax, the federal tax is progressive. It can consume substantially more of your estate, with a top tax rate of 40%. Planning to minimize your tax liability is one of the most important things that you can do to preserve your wealth when passing a legacy to the next generation.