Planning a $5 Million Estate in Illinois: The $4 Million Cliff
There is an important point in Illinois estate planning where the conversation changes. It happens when family assets total around $4 million, often referred to as the $4 Million Cliff. An Illinois family with approximately $5 million requires a very different planning conversation than a family with $1 million.
Meet David and Jennifer
David and Jennifer are 58 and 56. They own a $900,000 home in Frankfort. Their retirement accounts total approximately $1.8 million. They have $1.3 million in investments and cash. David also owns an interest in his business worth approximately $1 million. Altogether, they’re around $5 million. They’ve done well. But they certainly don’t think of themselves as extraordinarily wealthy. Their assumption is:
“ We are married so estate taxes aren’t something we need to worry about.”
That’s where Illinois changes the conversation.
Illinois Has Its Own Estate Tax
Illinois currently has a $4 million estate tax exclusion. That is dramatically lower than the federal basic exclusion amount, which is $15 million per individual in 2026.
That means an Illinois resident can have no federal estate tax liability but still have an Illinois estate tax issue. And there is another important distinction for married couples: Illinois does not simply provide the same portability treatment available under federal law. m So saying, “Everything goes to my spouse, and we’ll deal with taxes later,” can miss valuable tax planning opportunities and savings.
Why Married Couples Need to Look at Both Estates
Suppose David dies first and leaves everything outright to Jennifer. Transfers between spouses can often qualify for the marital deduction, so there may be no estate tax due at David’s death.
But now Jennifer owns the combined estate. If the estate continues growing, the tax problem may become larger, not smaller. That is why planning for married couples around and above the Illinois threshold may include considering strategies designed to avoid or minimize estate taxes, rather than unintentionally wasting the first spouse’s opportunity. The right structure depends heavily on the couple’s assets, goals and need for flexibility.
Asset Ownership Matters
At $5 million, we don’t just ask:
“How much are you worth?”
We also ask:
“Who owns what?”
If virtually everything is owned by one spouse, the planning analysis can be very different than if assets are divided more evenly.
We also look closely at what makes up the estate. A $5 million estate consisting primarily of liquid investments is different from a $5 million estate consisting of a business, real estate and retirement accounts. Each asset has different tax, beneficiary-designation and succession considerations. At Marketti Law Firm, we plan for all of the different assets to make sure they work together.
Don’t Forget Growth
One of the biggest planning mistakes is looking only at today’s number. A couple may have $5 million today. But what might they have in 10 or 20 years?
Investments can appreciate. Retirement accounts can grow. Real estate can increase in value. A business can become significantly more valuable. Life insurance may also increase the value included in an estate. Estate planning should consider where the family is headed—not simply where it is today.
The $5 Million Planning Question
For a $1 million Illinois family, the primary question may be:
“How do we make things easy for our children?”
At $5 million, another question enters the room:
“Are we structuring our estate intelligently to reduce or minimize Illinois estate tax?”
That doesn’t necessarily mean giving assets away or creating an unnecessarily complicated plan. It means understanding the exposure and building flexibility into the plan while there is still time to do something about it. For Illinois families around or above $4 million, estate planning and tax planning should work together. To schedule your private estate planning consultation today click here: https://markettilawfirm.cliogrow.com/book/251f4271d78bb0d2a5995810a5877e0f
This article is for general educational purposes and is not legal or tax advice. Estate and tax laws change, and planning depends on individual circumstances.