This question can be answered differently, depending on what we mean by “estate”.
Your “probate estate” includes all assets that are titled in your own individual name, with no joint owner and no named death beneficiary.
In Illinois, if the total value of your probate estate exceeds $100,000, or you own any real estate in your name alone, then opening an estate in the probate court of the county in which you resided will be likely be required following your death. Additionally, if you own real estate in your own name in more than one state, then ancillary probate administration in such other state or states will also be required.
Your “taxable estate” includes all assets in which you own an interest, whether it is an outright interest, a beneficial interest in certain trusts, or a partial interest (such as a joint owner), less any liabilities or allowable deductions at your death. This includes real estate, bank accounts, CDs, stocks and bonds, brokerage accounts, mutual funds, and interests in a small business (e.g., S corporation, C corporation, limited liability company or partnership), whether these assets are held in your name, in joint tenancy, or in a trust under which you are a beneficiary (e.g., a revocable living trust). Also included in your taxable estate are your IRAs, 401Ks, other retirement plans, annuities, the death benefit of any life insurance policies owned by you, and beneficial interests in a land trust.
If your taxable estate exceeds the federal gift and estate tax exemption, or the Illinois (or other applicable state) estate tax exemption in the year of your death, then your estate will need to pay the estate tax before any distributions can be made to your beneficiaries. For 2024, the federal gift and estate tax exemption is increased to $13.61 million per person, and the Illinois estate tax exemption is $4 million per person. Note that taxable lifetime gifts (i.e., gifts in excess of the annual exclusion amount, which is $18,000 for 2024) made by a person will reduce the remaining exemption available at their death.
Because it is possible to have a probate estate without a taxable estate, or a taxable estate without a probate estate, you must consider both when preparing your estate plan so that you can take the steps necessary to minimize your taxable estate, if necessary, and consider whether avoiding probate is something you wish to do.
Kelleher + Holland, LLC can help you sort through the different types of assets that you have, find out what is important to you, and then help you create an estate plan that will address your priorities and accomplish your goals to best take care of yourself during your life and your family after your death.
