Keep Your Illinois Farm in the Family Through Estate Planning

 Posted on June 17, 2025 in Estate Planning

The state of Illinois is a leading producer of soybeans, swine, and corn. With its varied soil types and climate, farmers also cultivate a range of crops, including fruits, vegetables, and grains, as well as raise livestock such as sheep, poultry, and cattle, and produce hay, oats, and sorghum. As you drive across the state, you will see farms representing decades of family legacy, dedication, and back-breaking work.   

Most families that own farms in the state want to pass the farm down to future generations. Unfortunately, in some instances, the Illinois Estate Tax can be a barrier to those goals. If there are no clear estate and succession plans, a family farm could be lost following the death of the primary owner.

If your family owns an Illinois family farm, you need to ensure that your heirs will be able to continue operating the farm for many more generations. An experienced Wheaton, IL estate planning attorney can help you do this in the easiest way possible.

Reasons Why You Should Have a Comprehensive Estate Plan for Your Family Farm

While there are many good reasons to ensure there is an estate plan and succession plan in place, the primary reasons include:

• Family conflicts can be avoided regarding how the farm should be divided or managed.
• A well-thought-out estate plan provides clarity and ensures wishes are properly carried out.
• The family farm can remain in the family and operational.
• Heirs can avoid estate taxes, capital gains taxes, and other financial burdens.

How the Illinois Estate Tax Could Prevent a Smooth Transition of the Farm to the Next Generation

Estates worth more than $4 million in Illinois incur an estate tax. While this sounds like a high threshold, for farming families, it can be reached quickly, even when huge annual profits are not being generated. This is largely true because of the value of the land. The farmlands have appreciated in value over the years, and when combined with other farm assets, such as machinery, buildings, and livestock, the total value of the farm can quickly exceed the threshold amount.   

Federal estate tax allows "portability," which is the surviving spouse’s ability to use any unused portion of the deceased spouse’s exemption. Illinois does not offer portability for state estate taxes. Each resident of the state has a $4 million exemption; if a spouse has used little of this exemption upon his or her death, the surviving spouse is not entitled to use the remaining portion.

Challenges for Illinois Farm Families

Along with the Illinois estate tax, Illinois farm families have other challenges, such as:

• Farm assets are not generally "liquid," meaning the farm’s tractor cannot be sold to pay estate taxes because it is necessary for the operation of the farm.
•  Family farms are often land and asset-rich but cash-poor, making it difficult to pay a hefty estate tax.
• The forced sale of land, livestock, or equipment to generate the cash necessary to pay the Illinois estate tax can end up breaking up the family farm when that was never the intention.

How Can an Estate Planning Attorney Help?

An estate planning attorney will obtain an accurate valuation of the farm assets, then utilize trusts like Bypass Trusts that can help married couples utilize both spouses’ exemptions, potentially shielding up to $8 million from state estate taxes. Other kinds of trusts can be created to hold life insurance policies or specific assets.  

The farm may be organized as an LLC to facilitate easier gifting or ownership interests, and the attorney may advocate strategically gifting portions of the farm assets to reduce the overall value of the estate. Farm assets could also qualify for valuation based on farming use as part of the overall strategy.

Contact a DuPage County, IL Estate Planning Attorney

The best decision you can make is to speak to a knowledgeable Naperville, IL estate planning lawyer from The McCormick Law Firm, LLC. Attorney McCormick makes estate planning easy and comfortable, clearly explaining your options. To schedule your free consultation, call 630-517-8570.