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IL estate lawyerThe topic of estate planning is important, but it can seem daunting to think about. When a person dies, an estate tax is imposed on the value of the estate left behind, before any beneficiaries (family members or close friends) inherit anything.

An inheritance tax is imposed on an individual who receives any type of inheritance. Although some states do have inheritance taxes, there is no federal or state tax imposed on inheritances in Illinois. It is important to distinguish between these two kinds of taxes in order to protect the rights of those on the receiving end.

Understanding the Illinois Estate Tax

There is both a federal estate tax and an Illinois estate tax, however, the size of the estate must be significant for either one of these types of estate tax to apply. The Illinois estate tax rate is graduated and can go up to 16 percent, but it is only applied on estates worth more than $4 million. This means that if a decedent’s total estate is worth less than $4 million, the estate does not have to pay anything to the state. If an estate is worth more than $4 million, there is a progressive estate tax rate, and the estate will have to pay before money can be distributed to any heirs.


inheritance taxes, DuPage County Estate Planning AttorneyMany people take advantage of the tax savings that estate planning options give them. Utilizing different legal options, such as trusts, will often alleviate how much a person would have to pay to the IRS in taxes for those funds. However, one of the issues to consider is whether or not the plans you are establishing will place a tax burden on your beneficiaries when you pass.

The federal tax exemption statistically affects approximately 1 percent of the country's population. The current exemption is $5.43 million for individuals and $10.86 million for couples. Yet many people fail to consider if the state they live in has required estate tax. There are 16 states, including Illinois, which levy up to a 20 percent estate tax to beneficiaries.

Funds from life insurance policies are exempt from taxes. Everything else is taxable. The only people exempt from paying these taxes are spouses. All other beneficiaries can be taxed between 10 and 26 percent for any property or funds they inherit. Domestic partners are also required to pay the same estate taxes as other beneficiaries.

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