Illinois levies no inheritance tax but has its own estate tax. In this article, we break down Illinois inheritance laws, including what happens if you die without a valid will and where you may stand if you’re not part of the decedent’s immediate family. Estate planning is a complicated topic, though, and it’s a good idea to work with a financial professional to guide you through the process. If you don’t already work with one, consider finding a financial advisor in your area.
Does Illinois Have an Inheritance Tax or Estate Tax?
Some individuals only take the federal estate tax into account while doing estate planning. The vast majorities of families aren’t affected by the federal estate tax, because the federal government only taxes estates worth more than a certain amount. But Illinois residents and those who own property in the state but live elsewhere need to be mindful of the Illinois estate tax. There are no inheritance taxes, though.
Inheritors won’t have to file a state estate tax return if the value of the estate is worth less than $4 million, because the estate tax threshold for Illinois is $4 million. That means if you die and your total estate is worth less than $4 million, Illinois won’t collect any tax.
However, if the estate is worth more than $4 million, there is a progressive estate tax rate that goes up to 16% for everything after the first $4 million. That tax has to be paid before money can be dispersed to your heirs. The exemption is not portable between spouses, so when both individuals in a married couple die the exemption is still $4 million.
Other Necessary Tax Filings
After you pass away, there are many federal and estate tax situations that will become relevant for those who survive you. Besides the state estate and inheritance taxes, you need to look out for the following:
- Final individual federal and state income tax returns –Federal tax returns are due by Tax Day of the year following the individual’s death. State tax returns and payment are due nine months after the death of the estate owner. You can request an extension of time to file the Illinois estate tax return and related forms and to pay any tax due, but you will end up accruing interest on the amount of tax you owe during the extension period. Even if the estate doesn’t owe a federal estate tax, Illinois requires you to file a federal estate tax return along with the state estate tax return, including all schedules, appraisals, and attachments that would go with the federal return. However, you don’t have to actually file the federal return with the IRS.
- Federal estate/trust income tax return – Due by April 15 of the year following the individual’s death
- Federal estate tax return – Due nine months after the individual’s death, though an automatic six-month extension is available if asked for prior to the conclusion of the nine-month period
- This is required only of individual estates that exceed a gross asset and prior taxable gift value of $11.58 million in 2020
The Internal Revenue Service requires each estate to have its own employer identification number (EIN) to represent itself in any tax-related matters. To apply for an EIN, visit the IRS website or apply by fax or mail.
Dying With a Will in Illinois
For a will to be valid in Illinois, the person making the will, or the “testator,” must be at least 18 years old. The testator must also be of “sound mind,” and have the mental capacity to understand the consequences of their actions. That generally means the testator has not been determined incompetent in a prior legal proceeding. The testator must sign their will in front of two witnesses and the two witnesses must sign the will in front of you, at the same time. If the testator is not able to sign their own will, the law allows them to name a different person to sign the will on his or her behalf.
Once the will is determined to be valid, the next step is the probate process. Generally, probate proceedings are only necessary if the deceased person owned any assets in their name only. Other assets, also known as “non-probate” property, can usually be transferred to the other owner without probate.
Smaller estates in Illinois can avoid formal probate court proceedings. The total value of the deceased person’s estate must be less than $100,000 and cannot contain any real estate in order to avoid a formal probate court proceedings. In those cases, the people who inherit can use an affidavit along with a copy of the death certificate to claim their inheritance. The affidavit must state whether there is a will. If there is a will, the inheritor must present a copy of it with the affidavit. Affidavits are signed “under penalty of perjury,” which means that if someone lies on it, they can be prosecuted for the crime of perjury, or lying under oath.
Dying Without a Will in Illinois
If you die without a will in Illinois, your estate is labelled “intestate,” which means there is no will, or no valid will. It is not ideal to die without a will if you care about estate planning or deciding where your assets will end up after your death. The court then has to follow intestate succession laws to determine who inherits your assets, and what share they get.
If there isn’t a will, and the probate process begins, someone must ask the probate court to be appointed as “administrator” of the estate in question. An administrator effectively does the same job as an executor. Executors take care of the estate of the decedent. Executors and administrators are sometimes also referred to as “personal representatives.”
Although there are often extenuating factors when someone dies intestate, if you can help it it’s best to not put your loved ones through that kind of stress. If you’re not sure what the best estate plan is for you, you can get professional help from a financial advisor specializing in legacy planning.
Spouses in Illinois Inheritance Law
If you die intestate in Illinois, the amount your spouse inherits depends on whether or not you have living descendants, including children, grandchildren and great-grandchildren. If you have no living descendants, your spouse gets all of the intestate property.
If you have living descendants, your spouse will get half of the inheritance, and your descendants will get the other half of the inheritance. However, grandchildren will only receive a share if their parents are not alive to receive their share.
Children in Illinois Inheritance Law
If you die without a will, each of your children inherits an “intestate share” of your property. The amount each child’s share is worth depends on your marital status and how many children you have. The table below explains the details.
|Intestate Succession: Spouses and Children|
|Inheritance Situation||Who Inherits Your Property|
|Children but no spouse||– Children inherit everything|
|Spouse but no descendants||– Spouse inherits everything|
|If spouse and descendants||– Spouse inherits half |
– Descendants inherit half
Your children must legally be your children in order for them to inherit under the laws of intestacy. Legally adopted children have just as much right to their intestate share as biological children do, as do children born outside of marriage. If you were not married to the mother of your children when she had them, they will still receive an intestate share if you acknowledged your paternity or if a court established your paternity before or after your death. Foster children and stepchildren will not receive a share unless they have been legally adopted.
If you placed your biological children for adoption and they were legally adopted by another family, they will not receive an intestate share unless the decree of adoption specifically gives them continuation of inheritance rights. However, if your biological children were adopted by your spouse, that won’t affect their right to inherit.
Children you conceived that were born after your death are also entitled to an intestate share. That includes children born through artificial insemination after your death, as long as you consented to it in writing, and the child is born within 36 months of your death.
Unmarried Individuals Without Children in Illinois Inheritance Law
If you die without a will, spouses, or descendants in Illinois, your inheritance then goes to the closest living relatives, as explained by the chart below.
|Intestate Succession: Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|Parents but no siblings||– Parents inherit everything|
|Siblings but no parents||– Siblings inherit everything|
|Siblings and parents||– Siblings and parents inherit in equal shares |
– If only one parent is alive, that parent gets a double share
The intestate process is designed to protect your property and make sure it stays in the hands of your family. However, it is generally best to write your own will to ensure that all of your property ends up in the hands you want it in.
Non-Probate Illinois Inheritances
You may be wondering how to avoid the probate process in Illinois, since it can be difficult and expensive. Some of the assets that do not have to go through probate and instead go directly to the beneficiaries are listed below. They are also not affected by intestate succession laws.
- Any property in a living trust
- Life insurance policies
- 401(k)s, IRAs, other retirement accounts
- Securities in transfer-on-death accounts
- Real estate in a transfer-on-death deed
- Pay-on-death bank accounts
- Joint tenancy real property
- Tenancy by the entirety
Other Situations in Illinois Inheritance Law
Immigration status won’t affect your inheritance under Illinois intestate law. If a relative of yours is supposed to get a share of your assets after your death, they can inherit no matter what their citizenship status is. In addition, half-relatives are also entitled to their inheritance as much as “whole” relatives. For example, half-siblings get the same share of property as “whole” siblings. Posthumous relatives are also entitled to their inheritance. Posthumous relatives are those conceived before, but born after, your death.
There are some protections provided in Illinois inheritance law as well. If you give an heir property during your lifetime, the value of that gift can be subtracted from your relative’s share, but only if it is in writing at the time the gift was made, or if the heir admits it in writing.
If an heir “intentionally and unjustifiably” kills you, they will not be able to inherit. And if you are elderly or disabled, someone who exploits, abuses, or neglects you will also not be permitted to receive their share of your property after your death.
Tips for Estate Planning
- Consider talking to a financial advisor about estate planning. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
- If you’d like an overview of the various tools at your disposal as you do estate planning, you’ll find a clear explanation of five “must-have” tools for you to use. Also, here’s a guide to creating a living trust in Illinois.
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