Watch Out for Illinois Estate Tax

There is an Illinois inheritance tax. Watch out for it, because it takes a bite from large estates. I just finihsed working on an estate for a client of mine who died in 2005 with an estate of 2.0 million. His children owed $180,000 to IRS and $91,000 to the state of Illinois. The first $1.5 million of his estate was not taxed because that was the tax-free amount in 2005. So, only $500,000 of the estate was subject to tax and Illinois took almost 20% of that!

For 2006, the Illinois tax will affect those estates greater than $2.0 million any stays there until 2010 when there is no Illinois inheritance tax (or federal tax) for 1 year. Then, in 2011 the Illinois inheritance tax will affect those estates of $1 million or more. The Illinois attorney general’s web site explains this messy situation.

The solutions to this problem: Make Florida your residence if you can. It has no "state" estate tax. Try to reduce your estate to under $2.0 million with proper estate planning. GRATs, QPRTs and ILITs can help reduce large estates.

Share and Enjoy:
  • Print
  • Digg
  • Facebook
  • Google Bookmarks
  • LinkedIn
  • StumbleUpon
  • Twitter
  • email
  • Netvibes
  • Posterous

Related posts:

  1. Small Estates Can Hit $100,000
  2. Truth about Annuities
  3. Why LLC's Work for Real Estate Investors
  4. Land Trusts: How to Mess Up Your Estate