Estate taxes will not apply to most estates in Illinois, but for those high-asset individuals with significant wealth, the payment of estate taxes upon death is important. The following is a basic overview of the federal estate tax.
The gross estate
The gross estate is comprised of everything subject to the estate tax. These assets are based on their fair market value, not necessarily the price the assets were purchased at. Some examples of assets that could be included in a gross estate includes cash, securities, business interests, real estate, annuities, insurance and trusts. Both probate property and non-probate property can be included in the gross estate. In total, the filing threshold for the estate tax in 2022 is $12,060,000.
In general, assets owned solely by the decedent’s spouse is not included in the gross estate. Complete lifetime gifts are also generally not included in the gross estate. Life estates also generally are not included in the gross estate.
There are a variety of deductions that can be used to lower what you owe in estate taxes. One is the marital deduction. This includes assets passed on outright to the surviving spouse. Other deductions include charitable deductions, mortgages and debt, administration expenses and losses during the administration of the decedent’s estate.
Protect your interests
If you have a high-asset estate, you will want to make sure you understand what you will owe in estate taxes and how to lower this amount. This way you can ensure you are meeting your legal requirements while still providing your heirs with an inheritance.