Estate and Inheritance Tax

Key Takeaways

  • Surviving spouses and heirs often have many questions regarding estate and inheritance taxes.
  • Estate taxes can be at both the federal and state levels.
  • The rate at which inheritance taxes are paid varies by state.

Many years ago, Will Rogers said, “The difference between death and taxes is death doesn’t get worse every time Congress meets.” If you’ve ever tried to navigate the ins and outs of estate and inheritance taxes, you may agree, as they tend to cause a lot of confusion. In fact, wondering what is owed in taxes is the number one question we at Coyle Financial receive from surviving spouses and heirs.

Now, for surviving spouses, there’s an unlimited marital deduction that usually takes place between spouses. Regardless of the amount of money, the surviving spouse can receive it without any tax whatsoever.

The taxes usually start to occur upon the death of the second spouse. With estate tax, an estate can be taxed at both the federal level and the state level.

Looking at the federal level, the estate tax currently starts at anything over $11.58 million per person. Done correctly, that’s $23 million per couple. So you’d have to have a pretty good-sized estate to have to pay the federal estate tax.

There are currently 17 states that have a state estate tax, and the amount varies depending on the state. Using Illinois as an example, the deduction is $4 million (times two, if it’s a couple, it’s $8 million). If a couple’s estate is over $8 million, an Illinois estate tax must be paid, and it can be pretty hefty, so good planning here makes sense.

Moving on to inheritance tax, this is a tax that is paid by those inheriting the estate. The amounts vary by state – for instance, New Jersey’s is 16% and Nebraska’s is 18%. So for those inheriting $1 million, they may owe anywhere from $0 to $180,000 for example if you resided in Nebraska, it depends on the state and the situation.

Now, this is a pretty high-level overview of estate and inheritance taxes, and there are also capital gains taxes that are a whole separate issue. This is a very heavily taxed area, so it takes a lot of planning and consideration. If you haven’t already, make sure your estate’s in order so that you and your heirs aren’t paying unnecessary taxes in the future. Until next time, enjoy.


Gary Klaben is in our Glenview, IL office and serves our clients who are now located all over the country. He has over 30 years of experience and is the author of Changing the Conversation, Wealth of Everything and co-author of The Business BattlefieldWhether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.

Learn more about The Coyle Process, approach designed to get your arms around the big picture, so you can make informed financial decisions. Ask Gary about The Coyle Process and schedule a complimentary consultation and start living the Good Life Managed Well™.
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All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness.   This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client.  The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment.  Those seeking information regarding their particular investment needs should contact a financial professional.  Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material.  The opinions expressed were current as of the date of posting, but are subject to change without notice due to market, political, or economic conditions.

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