Filing an Illinois Estate Tax Return After Death

When someone close to you passes away and leaves behind an estate in Illinois, there's a good chance you'll need to deal with the Illinois estate tax return. This isn't something most people think about until they're staring at the paperwork. But if you're serving as the executor or personal representative, getting this filing right directly affects how much of the estate goes to beneficiaries and how much goes to the state. Miss a deadline or fill out the wrong form, and the estate could face penalties, interest, or delays in distribution. This guide walks you through exactly how to complete the Illinois estate tax return after death, step by step.

What Is the Illinois Estate Tax Return?

The Illinois estate tax return is a state tax filing required when a deceased person's gross estate exceeds Illinois's exemption threshold. As of 2024, that threshold is $4 million. This is separate from the federal estate tax, which currently has an exemption of about $13.61 million per individual.

The return is filed using Form 700 (Illinois Estate and Generation-Skipping Transfer Tax Return), issued by the Illinois Department of Revenue. It calculates how much estate tax the estate owes to the state of Illinois.

It's worth noting that Illinois is one of only a handful of states that still imposes its own estate tax. If the decedent was an Illinois resident or owned real estate or tangible property in Illinois the estate may need to file even if the estate would owe nothing at the federal level.

Who Needs to File the Illinois Estate Tax Return?

You need to file if the gross estate of the decedent exceeds $4 million in value. The gross estate includes:

Real property in Illinois
Bank accounts and cash
Investments, stocks, and bonds
Retirement accounts and life insurance proceeds (in some cases)
Personal property, vehicles, and valuables
Business interests
Gifts made within three years of death

The responsibility to file falls on the executor or administrator of the estate. If no executor has been appointed, anyone in possession of the decedent's property may be held responsible.

Non-residents who owned property in Illinois may also have a filing obligation. If that applies to your situation, reviewing the filing requirements for non-residents can clarify what's expected.

When Is the Illinois Estate Tax Return Due?

The return is due nine months after the date of death. However, the Illinois Department of Revenue allows an automatic six-month extension to file the return (though not to pay the tax). To get that extension, you must submit a request before the original due date.

Interest accrues on unpaid tax starting from the original due date, even if you've received a filing extension. So it's smart to estimate the tax owed and make a payment by the nine-month mark, even if the return isn't fully prepared.

What Forms Do You Need to Complete?

The primary form is the Illinois Form 700. Depending on the estate's complexity, you may also need:

Federal Form 706 (United States Estate Tax Return) required for the federal filing and used as a starting point for the Illinois return
Schedule PC for credits and deductions
Various supporting schedules for assets, deductions, and transfers

The Illinois return largely mirrors the federal return but has its own adjustments. Many of the line items on Form 700 reference corresponding sections of the federal Form 706, so completing the federal return first is the most practical approach.

If you need help understanding which schedules apply and how to fill them out, the instructions for executors on Illinois inheritance tax forms provide detailed guidance.

How Do You Calculate the Illinois Estate Tax?

Illinois uses a graduated rate schedule that starts at rates lower than the federal estate tax rates. Here's how the calculation works in practice:

Determine the gross estate value Add up all assets the decedent owned or had an interest in at the time of death.
Subtract allowable deductions These include debts, funeral expenses, administrative costs, charitable deductions, and the marital deduction for property passing to a surviving spouse.
Calculate the tentative tax Apply the Illinois rate schedule to the taxable estate.
Apply the state death tax credit Illinois uses a "pickup tax" approach tied to the federal state death tax credit, which is currently zero at the federal level. So Illinois applies its own rate schedule independently.
Factor in any credits Including credit for estate taxes paid to other states on property located there.

For married couples, the unlimited marital deduction can eliminate or greatly reduce the estate tax when assets pass to a surviving spouse who is a U.S. citizen. The exemptions available to surviving spouses are worth understanding before filing.

Practical Example

Let's say Robert, an Illinois resident, passes away with an estate valued at $5.5 million. After subtracting $300,000 in debts and $100,000 in administrative expenses, the taxable estate is $5.1 million. Since this exceeds the $4 million exemption, the estate owes Illinois estate tax on the amount above $4 million meaning about $1.1 million is subject to tax under the Illinois rate table.

The tax would be calculated as the tax on the full $5.1 million minus the tax that would have been due on the $4 million exemption amount. The result is the estate tax owed to Illinois.

Step-by-Step: How to Complete the Illinois Estate Tax Return

Step 1: Get Appointed as Executor or Administrator

Before you can do anything, you need legal authority to act on behalf of the estate. If there's a will, file it with the probate court in the county where the decedent lived. The court will issue Letters of Office that give you authority to gather assets, pay debts, and file tax returns.

Step 2: Gather All Financial Records

Collect statements, deeds, titles, appraisals, and account records for every asset the decedent owned. You'll need fair market values as of the date of death. For real estate, get a professional appraisal. For financial accounts, request date-of-death balances.

Step 3: Complete the Federal Form 706

Even if the estate is below the federal filing threshold ($13.61 million), you may still want to prepare the federal return because Illinois Form 700 references it heavily. Some executors file the federal return solely to establish portability of the federal exemption for the surviving spouse.

Step 4: Complete Illinois Form 700

Transfer the relevant information from Form 706 to Form 700. Pay close attention to:

Asset valuations (Illinois uses the same valuation date as the federal return)
Deductions that may differ between federal and Illinois law
The generation-skipping transfer tax adjustments, if applicable

Step 5: Calculate the Tax Owed

Use the Illinois rate table included in the Form 700 instructions to compute the tax. Double-check your math errors here can lead to overpayment or underpayment.

Step 6: File and Pay

Mail the completed Form 700 and all supporting schedules to the Illinois Department of Revenue. Payment should accompany the filing unless you've arranged an installment plan. Illinois does allow payment in installments under certain conditions, similar to the federal option.

For a broader view of all the paperwork involved in estate administration, see the full overview of completing the Illinois estate tax return.

What Are the Most Common Mistakes?

Executors make several recurring errors when filing the Illinois estate tax return:

Undervaluing assets Using outdated or inaccurate appraisals. The IRS and Illinois Department of Revenue can audit and reassess values.
Missing the filing deadline The nine-month window goes fast, especially during probate.
Forgetting life insurance Life insurance payable to the estate (or over which the decedent held incidents of ownership) is included in the gross estate.
Not filing when required Some executors assume that because no federal tax is owed, no Illinois tax is owed either. That's often wrong.
Ignoring gifts made within three years of death These are pulled back into the gross estate under the three-year rule.
Incorrectly claiming the marital deduction Property must pass to a surviving spouse who is a U.S. citizen to qualify for the unlimited marital deduction.

Avoiding these errors can save the estate significant money. The most common mistakes on Illinois estate tax forms are covered in more detail if you want to double-check your work.

Can You File the Illinois Estate Tax Return Without a Lawyer?

Technically, yes. There's no legal requirement to hire an attorney to file Form 700. But in practice, most executors benefit from professional help especially if the estate includes business interests, out-of-state property, blended family situations, or assets near the $4 million threshold.

A tax professional or estate attorney can help you:

Properly value hard-to-price assets
Maximize deductions and credits
Avoid triggering unnecessary tax liability
Coordinate the federal and state filings

For straightforward estates with mostly cash and a home, self-filing is more realistic. Just be careful and methodical.

What Happens After You File?

After the Illinois Department of Revenue receives your return, they'll review it and either accept it or issue a notice requesting additional information. Processing times vary, but you can generally expect a response within a few months.

Once the tax is paid and the return is accepted, you can request a Release of Estate Tax Lien from the Illinois Attorney General's office. This is important because Illinois places an automatic lien on the decedent's real property until the estate tax is resolved. Without the release, you may have trouble transferring or selling real estate.

Quick Checklist Before Filing

☐ Confirm the gross estate exceeds $4 million (including gifts within three years of death)
☐ Obtain Letters of Office from the probate court
☐ Get professional appraisals for real estate and valuable personal property
☐ Gather date-of-death statements for all financial accounts
☐ Complete federal Form 706 first
☐ Transfer data to Illinois Form 700 and all required schedules
☐ Verify all deductions and credits claimed
☐ Calculate the tax using the Illinois rate table
☐ File Form 700 and pay the tax within nine months of death (or request an extension)
☐ Request a Release of Estate Tax Lien after acceptance

Tip: Start gathering documents as soon as you have authority to act. The nine-month deadline arrives faster than most executors expect, and professional appraisals can take weeks to complete. If the estate is close to the $4 million line, get a preliminary valuation done early so you know where you stand.

For reference, the Illinois Department of Revenue provides official forms and instructions on their tax portal. You can also reference the IRS Form 706 instructions for federal estate tax guidance that feeds into the state filing.