Kravets Law Group Warns of Illinois Estate Tax Risks for Married Couples

What Happened

Kravets Law Group is alerting Illinois residents to a significant discrepancy between federal and state estate tax regulations. While federal law allows surviving spouses to carry over unused tax exemptions, Illinois does not offer similar portability.

This gap can lead to unexpected tax liabilities for families. If a couple fails to structure their assets correctly, the first spouse’s $4 million state exemption may be forfeited, leaving the surviving spouse with a larger tax burden than necessary.

The firm recommends that married couples review their estate plans to ensure both state exemptions are preserved. Utilizing specific legal instruments like AB trusts can help families manage their assets to avoid hitting the Illinois threshold prematurely.

The Core Points

Illinois lacks estate tax portability for married couples
Federal exemption rules do not apply to state-level taxes
Unused exemptions at the first death cannot be transferred
AB trusts can help protect both spouses' $4 million exemptions
Assets like real estate and retirement funds can push estates over the threshold quickly

Context in 60 Seconds

Estate planning has become increasingly complex as state and federal tax codes drift further apart. Many families rely on federal portability rules, assuming they apply universally, which creates a false sense of security regarding state-level obligations.

As property values and retirement accounts grow, more middle- and upper-middle-class households are finding themselves crossing the $4 million threshold. Proactive legal planning is becoming a standard necessity to prevent the erosion of generational wealth through avoidable state taxes.

Bottom Line

Illinois couples must implement specific trust structures to avoid losing a $4 million tax exemption, as state law does not mirror federal portability rules.