More Than a Bank Account: Estate Planning When Your Wealth Is Tied Up in Land or a Business
A lot of wealth isn't sitting in a bank account. It's in the ground, in a storefront, in a rental property, or in a business that took decades to build.
If that sounds like your family, here's the question worth asking: does your estate plan actually account for it?
Many clients assume estate taxes aren't really their problem anymore. At the federal level, that may be true. The federal estate and gift tax exemption is $15 million per person in 2026. With proper planning, a married couple may be able to protect substantially more.
But federal law is only half the picture in Illinois — and it's the half that gets the headlines.
The $4 Million Line Illinois Draws
Illinois has its own, separate estate tax, and it kicks in at just $4 million per person. That threshold hasn't moved in over a decade, and unlike the federal exemption, it isn't indexed for inflation. Worse, it isn't “portable” between spouses the way the federal exemption is. If the first spouse to pass doesn't use their full $4 million exemption, the unused portion simply disappears. It doesn't carry over to the survivor.
Here's the part that catches families off guard: $4 million sounds like a lot — until you add up what it actually takes to run something. A few hundred acres of farmland. A rental property or two. A family business with its building, equipment, and inventory. Add it up, and a lot of families cross that line without ever realizing it.
And Illinois doesn't just charge tax on the amount over $4 million. It's not a simple deduction — once an estate crosses that line, the tax bill can be bigger than families expect, and it's due in cash within nine months of death. For a family whose wealth is tied up in property or a business, not cash in the bank, that timeline can force hard choices, like selling something nobody wanted to sell just to cover the bill.
A Special Valuation Rule for Working Farms
If your family does include a working farm, there's a federal tool worth knowing about. Under Section 2032A of the tax code, the farmland can be valued at what it's actually worth as farmland — not what a developer might pay for it. For deaths in 2026, that can shave up to $1.46 million off the taxable value of the farm. There are strings attached: a family member generally has to keep farming the land for a set number of years afterward, or the tax break gets clawed back. It's a tool, not a cure-all, and whether it fits your family depends on how the farm is titled and run today. That's a conversation worth having with your attorney and your tax preparer, together.
What This Means for Landowners and Business Owners
Good succession planning is about more than avoiding taxes. It's about keeping what you built in one piece and keeping the family working together instead of divided over it. A few tools we regularly help clients put to use, whatever the asset:
A revocable living trust can hold real estate or a business interest and keep it out of probate, so decisions don't have to wait on a court date. An LLC or partnership can hold the farmland, rental property, or business, and make it easier to bring the next generation into ownership gradually — while protecting everyone from personal liability. Life insurance can equalize things between a child who takes over the operation and children who don't, so the one stepping in isn't forced to buy out siblings by selling off part of what they inherited. And a durable power of attorney means that if a health emergency hits at the wrong time, someone you trust can step in and keep things moving — no guardianship proceeding required.
None of these tools work well thrown together at the last minute. They work because they're built around your specific situation: what you own, who wants to keep running it, and who doesn't.
Let's Talk Before the Snow Flies
Whether your family's stake is a farm, a rental property or two, or a business with your name on the door, the decisions you make now will outlast this season by generations. If it's been a while since anyone looked at your estate plan with that asset in mind, now is a good time. Call our Mackinaw office at 309-359-3461 or our Morton office at 309-266-6211, and let's make sure what you built is protected for whoever comes next.
