Preparing for the end of life is always a difficult process, with many emotional challenges for people writing wills as well as their loved ones. One of the most complicated aspects of end-of-life planning is often how to deal with the product of a lifetime of work.
People generally have a high degree of freedom when it comes to deciding who receives their assets and property when a will is executed after death. Those dealing with larger estates, especially if they include active investments or public trusts, may also be concerned about the amount of money claimed by federal and state governments in taxes and fees.
A legal representative is an advisable person or firm to employ during the process of drawing up and officiating a last will and testament. An attorney is more likely to understand the taxes at work in the process. Accountants, life insurance agents, trust officers and financial planners may also have useful roles to play.
An Illinois resident who dies while owning property in the state may face income tax as well as estate taxes applied by the state and the Internal Revenue Service (IRS). Estates of value greater than $5.4 million will face federal taxes, and Illinois estates valued higher than $4 million are subject to the Illinois Estate Tax.
Gifts to individuals or organizations during a person’s lifetime can save on tax liability, and many people choose to give the bulk of their assets to a spouse before death. This may save on immediate tax liability, but such a move should be discussed with an attorney to make sure it has the intended effect.
Source: Illinois State Bar Association, “Your Guide to Estate Planning,” accessed Oct. 04, 2017