Good News! The Illinois state death tax exclusion has increased from $2 million to $3.5 million effective January 1, 2012. Therefore, for estates of persons dying in 2012, Illinois’ piece of the estate tax pie will be appreciably reduced. The good news continues in 2013 when the exclusion increases to $4 million.
This still leaves a gap between the federal estate and gift tax exemption of just over $5 million and the state exemption. If you have not updated your will or trust for several years, it is very possible that the language for allocating your assets to take advantage of the maximum marital deduction has not taken into account the Illinois estate tax and the gap between the Illinois and federal estate tax exemption.
If you have not accounted for that gap in your will or trust, your estate could be liable for state death taxes.