Illinois Estate Tax Cases
Last updated: 10 Nov 2025 •
Illinois Estate Tax — Case Notes & Practitioner Commentary
Illinois administers its estate tax under 35 ILCS 405 (Illinois Estate and Generation-Skipping Transfer Tax Act). Appellate opinions focused solely on this Act are limited; day-to-day positions lean on statutory text, administrative rules, and Attorney General/Treasurer guidance. Below are authorities-first notes on issues that most often drive filing and audit outcomes.
Framework & Federal Conformity (35 ILCS 405/2–3)
What it’s about
The Act pegs Illinois estate tax to the revived “state death tax credit” computation (as of 12/31/2001), with Illinois-specific exclusion amounts and mechanics.
Holding / Rule
Tax is computed as the state tax credit reduced for non-Illinois property. Illinois maintains a fixed exclusion for decedents dying on/after 2013 (commonly referenced as $4,000,000 in current guidance), independent of federal changes.
Comment
Always check the current Attorney General instruction fact sheet and Form 700 for thresholds, attachments, and examples. Illinois computes using an interrelated method; the AG’s calculator reflects this.
Separate State QTIP Election (35 ILCS 405/2(b-1))
What it’s about
Illinois expressly allows a state-only marital deduction for QTIP property, independent of any federal QTIP election.
Holding / Rule
The personal representative may make a QTIP election on a timely filed Illinois return even if no federal QTIP is made. Inclusion at the survivor’s death follows IRC § 2044 concepts for Illinois purposes.
Comment
Attach clear election statements and QTIP schedules. For prior state-QTIP property, include the predeceased spouse’s Illinois QTIP asset schedule at the survivor’s death per administrative rules.
Nonresident Situs & Apportionment (35 ILCS 405/3(c), /5)
What it’s about
Illinois taxes nonresidents only on real property and tangible personal property physically located in Illinois. Intangibles are generally not Illinois-situs for nonresidents.
Holding / Rule
Compute the state credit then reduce by the fraction for non-Illinois property; only Illinois-situs assets (for nonresidents) remain in the base.
Comment
Establish asset location and character early (deeds, appraisals, storage/garaging records). Avoid inadvertently creating an Illinois business situs for intangibles through in-state management.
Due Dates, Filing & Payment (35 ILCS 405/6)
What it’s about
Illinois return timing generally follows federal estate tax due dates and extensions; returns are filed with the Attorney General and payments go to the Illinois State Treasurer (post 7/1/2012).
Holding / Rule
File the Illinois transfer tax return with the AG; pay tax to the State Treasurer. If federal § 6166 applies, Illinois allows proportional deferral/installments for Illinois-situs business interests.
Comment
Use Form 700 with full federal attachments (or alternate schedules if no federal 706). Reconcile extension payments and any § 6166 alignment in the Illinois computation.
Administration, Attachments & Interrelated Calculation (AG Guidance)
What it’s about
Illinois expects robust federal-style attachments (706 pages/schedules, appraisals, wills/trusts). The tax uses an interrelated method reflected in the AG’s calculator and instructions.
Holding / Rule
Even if no federal return is required, estates may submit an alternate package containing all necessary schedules and valuations to compute Illinois tax.
Comment
Stick to the AG checklist; it smooths review and avoids re-requests. Keep proof of situs and deduction support (court orders, invoices, proof of payment).
References
- Illinois Compiled Statutes — Illinois Estate & GST Tax Act (35 ILCS 405): Act index (esp. § 2(b-1) QTIP; § 3(c) reduction; § 5 situs; § 6 returns/payments).
- Illinois Administrative Code — Estate Tax Rules (86 Ill. Admin. Code Part 2000): Part 2000 (includes schedules for Illinois QTIP property).
- Illinois Attorney General — Estate Taxes hub (forms, calculator, fact sheets): Estate Taxes.
- Form 700 — Illinois Estate & GST Tax Return (latest posting): form700.pdf.
- Instruction Fact Sheet (examples, thresholds, civil union QTIP): Instruction Fact Sheet.
- Illinois State Treasurer — Estate Tax payments (post 7/1/2012): Payment guidance.
- IRS Form 706 (federal reference): About Form 706.