House Bill 3920 was introduced on February 22, 2021, to generate extra revenue to support Illinoisans with disabilities. To generate additional revenue, the bill proposes raising the Illinois estate tax by 5 percentage points, which would be the highest in the country. Often called a “death tax” the bill would raise the existing Illinois state tax on estates of over $4 million to 9.95% from 4.95%.
After someone’s death, an Illinois estate tax is levied on estates that exceed $4 million in value. Illinois estate tax rates can be as high as 16% and payments are due nine months after someone’s death. If the assets of the deceased’s estate exceed $11.8 million, the estate is subject to both federal and estate death taxes.
Illinois is one of only 12 states that have a death tax.
Opponents of raising the estate tax fear that Illinois residents will move to other states without a death tax, and that the increased death tax will:
• hurt farmers
• discourage entrepreneurship
• reduce investment in Illinois
Neighboring states Wisconsin, Michigan, Indiana and Missouri no longer have a death tax.
The assets in an estate tax are all the things 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.
Reducing taxes is an important part of estate planning. By reducing taxes and creating the smallest possible tax burden on your heirs, you are maximizing the amount of money that will be available to protect your loved ones after you are gone. Estate planning also can eliminate the need for your estate to go to probates, 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.
