How the 2020 Election Could Impact Illinois Estate Planning

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How the 2020 Election Could Impact Illinois Estate Planning _ Mario Godoy _ Lombard Estate Planning Lawyer

During the November 2020 elections, Illinois voters rejected a proposal to increase tax rates on high earners through a graduated income tax to raise new revenue for the state. The “Fair Tax Amendment was defeated because opponents said that the tax increase would eventually also be applied to middle-class residents. The amendment needed 60% of the vote to pass and only received approximately 45%.

Illinois Estate Tax Exemption

Illinois has an estate tax exclusion amount of $4,000,000. If you die and your estate is valued at less than $4,000,000, your estate won’t owe taxes to the state of Illinois. If all your assets – including life insurance, retirement and investment accounts, real estate, personal property, businesses – are valued over $4,000,000, your estate will be subject to Illinois estate taxes when you die.

The Illinois estate tax rate is graduated and the top rate is 16%. Unlike many other states, the Illinois estate tax exemption is not portable between spouses. When one spouse dies, all their wealth transfers to the surviving spouse and is not subject to the estate tax. When the second spouse dies, the estate can only use one spouse’s exemption. This means that when both people in a married couple have died the exemption is still $4 million.

Tax Avoidance Strategies

There are common estate planning strategies to reduce or eliminate the Illinois estate tax – even for non-residents of Illinois who own real estate in Illinois. Legal trusts can decrease the estate tax. Trusts are commonly used to plan for the management of assets after someone’s passing, but living trusts are rapidly gaining in popularity avoid probate.

Illinois residents and non-residents who own property or businesses in Illinois should consult an experienced estate planning attorney to discuss strategies to minimize Illinois estate taxes.

Learn More: Impact of President-Elect Biden on Estate Planning

DuPage County Estate Planning Attorney

Do you have questions about estate planning? Our experienced estate planning lawyers in Lombard, 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 630-687-9100.

We provide legal services in Cook, DuPage, Kane, Lake, and Will counties.