The federal estate tax is a tax on your right to transfer property at your death—whether by will or intestate succession (transfer to heirs when a person dies without a will, as provided by state statute). The estate tax consists of an accounting of everything you own or have certain interests in on the date of your death.

The fair market value of these items is used—not necessarily what you paid for them or what their values were when you acquired them. The total of all your assets at death is your "gross estate." The property included in your gross estate may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

In Illinois, the federal estate tax applies to the transfer of property at death, including transfers through a will or according to state intestacy laws when there is no will. The tax is based on the fair market value of the decedent's assets at the time of death, which constitutes the 'gross estate.' This includes a variety of assets such as cash, securities, real estate, insurance, trusts, annuities, business interests, and more. For the year 2023, the federal estate tax exemption is $12.92 million per individual, meaning that estates valued below this threshold are not subject to federal estate tax. Estates exceeding this amount may be taxed at rates up to 40%. It's important to note that Illinois also imposes its own state estate tax, which has a lower exemption threshold than the federal tax. As of 2023, the Illinois estate tax exemption is $4 million, and estates valued above this amount may be subject to state estate tax, even if they are not subject to federal estate tax. Individuals concerned about estate tax implications should consult with an attorney to understand the potential tax liabilities and to explore estate planning strategies.