Illinois imposes its own estate tax at a threshold well below the federal exemption, and that difference drives a substantial share of the trust planning done in this state. A proposal now before the General Assembly would change how the tax applies to farm estates. Whether or not it becomes law, the debate illustrates how Illinois treats property passed between generations.
The Estate Tax Debate Underway in IL
Capitol News Illinois reported this spring that a deceased farmer’s family is required to pay tax on the whole estate if it is valued above $4 million, while the pending proposal would exempt the first $6 million. Governor Pritzker indicated that estate tax reform is something he could support, though he declined to characterize it as a priority.
The reporting also explained why the issue recurs. Family farmers frequently fall into what the article described as a land rich, cash poor category, in which the income an operation generates does not reflect the market value of the land itself. Supporters anticipate that the fall veto session will present the next opportunity for a vote, according to coverage of the proposal.
A Threshold Is Not an Exemption
This distinction carries more weight than the dollar figure. Under current Illinois law, an estate that crosses the threshold becomes taxable in its entirety, not merely as to the amount above the line. Farm organizations have pressed for a true exemption for that reason.
Why the Issue Reaches Beyond Farmland
Aurora sits at the intersection of Kane, DuPage, Kendall, and Will counties, and a number of families in the area hold acreage. The same threshold applies to households with no connection to agriculture.
An Illinois estate is generally measured to include:
- Equity in a primary residence
- Retirement accounts, pensions, and deferred compensation
- Life insurance death benefits, counted at face value
- Business interests, farmland, and rental property
- Vehicles, deposit accounts, and personal property
Two of those categories alone can approach the threshold. Married couples who assumed the tax reached only substantial estates often find otherwise.
Where Trusts Fit
Illinois does not provide a spousal portability provision comparable to the federal one. When the first spouse dies without planning in place, that spouse’s exemption amount is generally lost rather than preserved for the survivor.
Trust structures address that outcome directly. A properly funded revocable living trust can also keep assets outside probate, shorten the administration timeline for beneficiaries, and keep the terms of distribution private.
None of this requires a farm or a large estate. It requires a plan that reflects what you actually own. An Aurora, IL trust lawyer can evaluate where an estate stands under current law and what would change if the legislature acts.
If you would like that review conducted at a flat rate, Kravets Law Group advises Illinois clients on trust planning, and a trust lawyer in Aurora, IL can explain the options available to your household.