FEDERAL
Estate and Gift Tax Applicable Exclusion:
The amount that can be passed free of federal tax. Whatever amount is used during lifetime is no longer available for use to pass assets at death. The Estate and Gift Tax Applicable Exclusion is currently $11.7 million for 2021.
Annual Gift Tax Exclusion:
The amount that can be given to each person you want without using any Applicable Exclusion. The Annual Gift Tax Exclusion is currently $15,000 and be increased to $16,000 in 2022.
Generation-Skipping Tax Exemption:
This allows for giving to people who are grandchildren or other “skip persons.” It may also be used as a sophisticated way of avoiding Federal estate tax at the death of a child. Each person currently has $11.58 million of Generation-Skipping Tax Exemption.
STATE
State Estate Tax:
In addition to the Federal Estate Tax, Illinois has an estate tax. The Illinois Estate Tax Exemption is currently $4 million with a graduated estate tax rate up to 16%.