Taxes And Death
This is Dial Law with information on taxes at death. Some of this
information may not be applicable if the deceased did not or the
executor or administrator does not, live in Illinois. In that situation,
we suggest you contact your local county bar association.
When an Illinois resident dies, the estate may have taxes deducted from
its value before distribution to beneficiaries. These may include
federal estate taxes, Illinois estate taxes, death taxes in other states
or nations, and federal and state income taxes. The size of the estate
or the amount of income usually determines what taxes must be paid.
The filing requirements for the federal estate tax returns are based on
the gross estate value for federal purposes, that is, total assets
located in Illinois and elsewhere being above certain levels. These
levels are $325,000 for one who dies in 1984, $400,000 for 1985,
$500,000 for 1986, and $600,000 thereafter.
As an example, if the estate of a person who dies in 1985 exceeds
$400,000, the executor or administrator must file a federal estate tax
return to determine whether taxes are due. Both the federal and Illinois
returns are due nine months after date of death. Although a federal
estate tax return will be required, no federal estate tax is imposed on
property to a surviving spouse. In connection with estates of
individuals who died after December 31, 1982, if no federal estate tax
is payable, no Illinois estate tax will be imposed. If a federal estate
tax is imposed an Illinois estate tax will be payable equal to the
federal credit for state death taxes.
In addition, other states or other nations may have legal right to
impose death taxes on parts of the estate located within their borders,
or may impose a tax equal to their proportionate share of the state
death tax credit allowed by the federal government.
Finally, income taxes also must be paid. The executor or administrator
of the estate must file decedent's final income tax returns with federal
and state authorities and pay the taxes due. If property in the estate
continues to produce income, for example, from bank accounts or stocks
in excess of the $600 per year estate exemption, the executor or
administrator of the estate may have to file additional returns on that
continuing income. All income earned, in excess of exemptions, whether
by an individual before death or his estate after death, is reportable
on the appropriate federal or state income tax return.