In May 2023, officials from the Illinois Farm Bureau urged state lawmakers to support their proposal to match the federal estate tax exemption threshold. Illinois is considered to be a moderately high jurisdiction in terms of estate taxation, and this has a lot to do with the relatively few opportunities to claim exemptions.
The federal threshold that triggers estate taxation is $12.92 million. By comparison, the Illinois threshold is just $4 million. What this means for some Illinois residents is that they may be taxed at the state level even if the Internal Revenue Service doesn’t come after them. Thankfully, there are various ways to reduce estate taxation in Illinois. Here are two strategies that a seasoned Grayslake estate planning lawyer would recommend:
Lowering the value of the estate through marriage deductions: Of all the ways to lessen estate taxes with proper planning, this is one of the most commonly used. In essence, you can leave assets and property to your spouse until the value of the estate falls below the $4 million threshold.
Charitable donations: A Grayslake estate planning lawyer can help you structure and execute a charitable trust, which can be revocable or irrevocable so that you can not only lower the value of the estate but also trigger a nice tax break. Among the various ways to lessen estate taxes with proper planning, setting up trusts is one of the most effective.
Get more information about estate taxation from Orlowsky & Wilson Ltd, an estate planning law firm with offices in Chicago, Lincolnshire, and Northfield.