Illinois' Dirty Little Secret

Posted By Jay Kaufman || 23-Feb-2011

For Clients, Business Owners and Professional Advisors

I conducted my annual estate planning seminar for financial professionals yesterday. There was some discussion about Illinois’ dirty little secret. It’s called the Illinois estate tax. It may affect you and your family.

Take a minute and do a quick calculation. Total up the value of:

  • Your interest in your home
  • Your life insurance policies (the death benefit)
  • Your retirement plan accounts
  • Your other investments and Illinois based

How much is the total? If it’s more than $2,000,000, then your estate will be subject to the Illinois estate tax! The tax is 8% at $2,000,000 and rises to 16% over $10,000,000. Many individuals are surprised to learn that their families might be subject to this tax.

Illinois has chosen to “decouple” from the Federal tax scheme which – at least for the next two years – grants a $5,000,000 exemption per person from the Federal estate, gift and generation transfer tax.

There are legitimate ways of avoiding the Illinois estate tax for married couples. However, it may require planning separate and apart from the Federal estate tax.

This is an important topic that is part of a thorough estate plan review. Many families have wills and trusts that may be outdated or that have not addressed Illinois’ “Dirty Little Secret”. They should be reviewed at an early date.

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