As the temperatures drop in Illinois and the snow begins to accumulate, many people start thinking about retiring to a warmer, more tax-friendly state. Many people are surprised to learn that Illinois is a tax-friendly state for retirees! Retirees in Illinois are not assessed a tax on any kind of retirement income. Retiring in Illinois means that almost all your retirement income is tax-exempt including social security benefits, pension income, and income from retirement saving accounts, including 401(k)s.
Illinois is one of six states that levy taxes after death, often called a death tax. Death taxes are taxes levied by the state and the federal government on an estate after someone dies. Federal estate taxes apply to large estates valued over $11.8 million and is up to 40%. There are two types of state death taxes: estate taxes and inheritance taxes.
The assets in an estate tax are basically every single thing that a person owned when they died. This also includes proceeds that are commonly thought of as non-probate assets, such as grants, trust assets, life insurance, retirement accounts, beneficiary accounts, payable on death accounts, and everything that was in the decedent’s name when they died. Assets also include the value of land, the value of a business, the value of partnerships, stocks, bonds, cash, and all over assets of the decedent.
Minimizing death taxes is an important part of estate planning. By reducing taxes and creating the smallest possible tax burden on your loved ones and heirs, you are maximizing the amount of money that will be available to protect your loved ones after you are gone.
Careful estate planning also can eliminate the need for your estate to go to probate court, which will can your loved one’s money, time and stress.
Do you have questions about protecting your loved ones after you are gone? Our experienced estate planning attorneys in Cook, Dupage, Kane, Lake, and Will counties in Illinois can advise you on the best options to protect your assets and loved ones. To talk to an estate planning attorney contact the Estate & Probate Legal Group at 630-864-5835.
