Kravets Law Group, an Illinois business, real estate, and estate law firm, is alerting married couples to a mismatch between federal and state estate tax rules that can quietly cost families millions. Under federal law, a surviving spouse may use any exemption left unused by the deceased spouse through portability. Illinois offers no such mechanism, so a couple relying on a basic estate plan can lose one spouse's $4 million state exemption outright.
The divergence matters because the two tax systems operate on different thresholds. In 2026, each person can pass $15 million free of federal estate tax, and spouses can combine unused amounts through portability. Illinois, by contrast, applies its own estate tax to estates above $4 million, meaning an estate can owe state tax even when no federal tax is due. Because Illinois has no portability, an exemption left unused at the first death simply disappears.
The practical effect is easiest to see in a common scenario. If a couple with an $8 million estate leaves everything outright to the survivor, the first spouse's $4 million exemption goes unused, and the survivor's estate stands well above the state threshold. The result is an Illinois estate tax bill that the couple may never have anticipated.
"Many couples assume the federal rules carry over to Illinois, and that assumption is where the problem starts," said founding attorney Daniel Kravets. "A home, retirement accounts, and a business interest can add up to more than $4 million faster than most families expect. Married couples estate tax planning has to address the state tax directly."
One strategy the firm highlights is the AB trust, also called a credit shelter or bypass trust, which divides a couple's assets at the first death. Assets up to the first spouse's exemption fund a trust that the surviving spouse can benefit from during life, and those assets are not counted in the survivor's estate. The remaining assets pass to the survivor, so both exemptions are used and as much as $8 million can reach heirs without Illinois estate tax. Setting up an AB trust in Illinois must happen before the first spouse dies, which is why the firm frames the issue as time-sensitive rather than theoretical.
"An AB trust is not right for every couple, but for those near or above the threshold, it is often the most direct way to use both exemptions," Kravets added.
For readers, the announcement carries implications beyond tax liability. Estate plans drafted years ago may assume rules that no longer reflect the current federal exemption or the persistent absence of Illinois portability, and a plan that once seemed adequate can leave heirs with an avoidable state tax burden. Business owners and families holding real estate or retirement accounts are especially exposed, since those assets can push an estate past $4 million without obvious signs of wealth.
Kravets Law Group is a Chicago-based firm serving clients across Illinois, Pennsylvania, and New Jersey in real estate and property law, estate planning, and business and corporate law. It was founded in 2020 by Daniel Kravets and built around the belief that legal representation should feel like a partnership rather than a transaction. The firm notes that it offers free consultations for couples who want to review their estate plans in light of the Illinois estate tax.
