SimplyTrust Knowledge Base

A: A revocable trust avoids probate for assets you title into it. That’s true in Illinois and Nevada—real estate, accounts, even vehicles can pass outside court. Also, privacy improves, and timelines shrink. However, there are differences between revocable trusts in the two states.With a standard revocable (grantor) trust, trust income is taxed to you. If you live in Illinois, state income tax applies; if you live in Nevada, there’s no state income tax at all. Also, a revocable trust doesn’t change whether an estate or inheritance tax could apply. Illinois has an estate tax, Nevada doesn’t. Finally, Nevada allows very long “dynasty” timelines (up to 365 years under its rule against perpetuities). Illinois follows its own trust code and common-law principles, but does not offer Nevada’s ultra-long horizon.

A: Illinois once had an inheritance tax, but it no longer applies to recent passings. The Illinois Attorney General notes that an “Illinois Inheritance Tax Release” is needed only if a person passed before January 1, 1983—a practical marker that the old tax is a thing of the past for modern estates. For context, some states levy inheritance taxes on beneficiaries, with rates and exemptions that vary by relationship. Illinois is not on that list. Nationally, only a handful of states still use inheritance taxes. Iowa’s phase-out finished on January 1, 2025, leaving five states with an inheritance tax. (Again, not Illinois.)An inheritance tax bills the person receiving the property. That doesn’t happen here. Instead, Illinois may tax the estate itself (via its estate tax) if its value exceeds the state threshold, which is separate from federal rules. The state Attorney General’s office administers those filings and provides worksheets and instructions.

A: The Illinois estate tax affects more people than many expect (although there's no inheritance tax). If your taxable estate tops $4 million, the Illinois estate tax may apply—whether you live in the state or simply own Illinois real estate. Rates are graduated, topping out at 16%.If the gross estate plus adjusted taxable gifts exceeds $4,000,000, the representative files Illinois Form 700. That often means attaching a completed federal Form 706 (even when not required federally) so Illinois has the schedules and valuations it needs. Filings go to the Attorney General’s Estate Tax Section per the latest instructions.Because the Illinois estate tax threshold is lower than the federal level, Illinois planning focuses on that $4 million line. Many households keep a close inventory, consider how gifts affect adjusted taxable gifts. It’s also important to understand how the state QTIP election and the lack of portability change outcomes for the Illinois estate tax compared with federal rules.

A: At its core, community property means earnings during marriage—and items bought with those earnings—are jointly owned. By contrast, assets owned before marriage, plus gifts and inheritances to one spouse, usually remain separate. Debts work similarly: many obligations taken on during marriage are shared. Rules vary by state, but that’s the broad frame.Nine states use community property as the default marital property system (as opposed to equitable property). They are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Several states also offer opt-in community property—typically by creating a special trust or agreement. These include Alaska, Florida, Kentucky, South Dakota, and Tennessee. Opt-in frameworks can give couples certain community property benefits even in otherwise non-community jurisdictions.

A: Overall, both states deliver probate avoidance and privacy. Nevada stands out for having no state estate or inheritance tax, while Hawaii has no inheritance tax but overlays a separate estate tax that can matter for larger estates. Hawaii’s trust rules track the Uniform Trust Code (UTC). You’ll find a dedicated “Revocable Trusts” part and clear rules on creating, revoking, and administering trusts. Nevada’s framework lives in NRS Chapters 163 and 164, which add features like modern decanting and flexible administrative rules. The biggest difference comes in taxes. Nevada has no state estate or inheritance tax, and there hasn’t been a filing requirement since 2005. Hawaii, by contrast, imposes a stand-alone estate tax. That tax can apply to larger estates, with an exclusion fixed to the old federal 2017 level. Meaning some estates that owe nothing federally can still trigger Hawaii estate tax.

A: For years, many states relied on a federal “pick-up” system that shared federal estate tax revenue with the states. When Congress phased out that credit in the early 2000s, some states let their taxes lapse, while others rebuilt independent systems. Hawaii chose the estate-tax route. It enacted Chapter 236E to apply to residents’ estates and to nonresidents with Hawaii-situs property for transfers after January 25, 2012. The state did not add an inheritance tax. Today, six states impose inheritance taxes, and Hawaii isn’t one of them. Why that choice? Estate taxes are assessed on the estate before beneficiaries receive property, which aligns cleanly with federal concepts and simplifies administration. Hawaii’s law expressly coordinates with federal rules while remaining a state-level system. That structure let lawmakers restore revenue after the federal credit disappeared—without creating a separate levy on heirs. Bottom line: inheritance tax in Hawaii doesn’t exist, and it hasn’t been part of the state’s modern framework. Hawaii opted for an estate tax that works alongside federal law, keeping beneficiaries free from a separate, state-level inheritance levy.

A: For decades, most states didn’t run standalone estate taxes. Instead, they used a “pick-up” tax that matched a federal credit; the state simply “picked up” part of the federal tax bill. When Congress began phasing out that credit in 2001, pick-up taxes faded.Hawaii responded by enacting the Estate and Generation-Skipping Transfer Tax Reform Act (HRS Chapter 236E). The act applies to estates of residents and to nonresidents with Hawaii property for transfers after January 25, 2012. The policy tracks federal rules in many places but sets its own exclusion amount and rate table. Hawaii estate tax isn’t about penalizing success. Rather, it’s a targeted system, built after the old pick-up era, that funds state priorities while aiming squarely at the largest estates. The basics: Hawaii’s progressive estate tax applies above a $5.49 million exclusion, with rates from 10% to 20%. (Note: The state has no inheritance tax.)

A: An inheritance tax is paid by the beneficiary and depends on the recipient’s relationship to the person who passed. Only a handful of states still use it—currently Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania (Iowa ended its tax January 1, 2025). Nevada is not on that list.Nevada historically relied on a pick-up estate tax tied to a federal credit—not a separate inheritance tax. When Congress eliminated that credit for passings after December 31, 2004, Nevada’s pick-up system went dormant. While some states “decoupled” and enacted their own estate or inheritance taxes to preserve revenue, Nevada chose not to. The state did not then create a new estate or inheritance tax to replace it. So, there was no inheritance tax in Nevada before that and none since.

A: Nevada once had an estate tax. But it wasn’t a standalone tax. It was a “pick-up” tax that simply claimed a portion of the federal estate tax already owed. When Congress phased out the federal credit that funded pick-up taxes (effective for passings after December 31, 2004), Nevada’s tax effectively disappeared. The Nevada Department of Taxation confirms that only estates for passings on or before December 31, 2004 might still file. Later passings owe nothing to the state. After the federal credit vanished, some states created their own estate taxes to replace the lost revenue. The federal credit repeal in 2005 pushed states to decide whether to keep, repeal, or redesign their taxes. Nevada landed on repeal-by-inaction and chose not to decouple. Therefore, there has been no estate tax in Nevada since 2005.

A: No, there is no requirement for grantors or trustees of a Nevada trust to be residents of Nevada.

A: Nevada is a favorite for its lack of state taxes, strong privacy protections, and robust asset protection laws. Therefore, it's an ideal jurisdiction for trust formations.

A: Yes, Nevada allows the use of spendthrift clauses. They offer significant protection from creditors, making it difficult for creditors to access trust assets.

A: The day-to-day benefits are similar—control now, smoother administration later. In either state, a revocable trust lets you keep control while you’re living and designate who steps in later. Properly funded trusts can keep most assets out of probate, which can save time and reduce paperwork for loved ones. The standout differences between revocable trusts in Washington versus Nevada come from Washington’s estate tax and Nevada’s specific community-property title tools. In short, Washington has an estate tax (although no inheritance tax) while Nevada doesn’t. And while both states are community property states, Nevada goes one better by adding a statutory form for right of survivorship in a deed.

A: For decades, Washington State imposed an inheritance tax (a tax on what heirs receive). In November 1981, voters approved Initiative 402, repealing the inheritance and gift taxes effective January 1, 1982. In their place, the state kept a “pick-up” estate tax equal to the federal state death-tax credit—essentially piggybacking on federal law. So, no. Washington does not impose an inheritance tax anymore. It levies an estate tax instead (a tax on the estate itself before assets are distributed). The switch away from an inheritance tax dates to that 1981 vote and took effect in 1982. Then, in the early 2000s, Congress began phasing out the federal credit that Washington’s pick-up system relied on. In Estate of Hemphill (Feb. 3, 2005), the Washington Supreme Court confirmed that, under existing statutes, the state tax was tied to current federal law—so as the federal credit faded, Washington’s linked tax did, too.

A: For passings on or after July 1, 2025, Washington’s exclusion amount is $3,000,000. Therefore, only amounts above that figure are subject to state estate tax (but no inheritance tax). Also, the rate schedule is graduated. It starts at 10% and rises in steps to 35% for Washington taxable estates over $9 million. Earlier dates of passing use prior brackets and a $2,193,000 exclusion. Washington also adjusts key amounts annually beginning in 2026, based on a CPI calculation the Department of Revenue updates each year. Check the state’s estate-tax table for the latest thresholds and rates.