By Mike Gibbons, RICP®
If most of your net worth sits in company RSUs and retirement accounts, a basic will may not control where much of it goes. Many of those assets pass by beneficiary form or plan rules, and Illinois taxes estates at a level far below the federal limit. That's why estate planning for executives and business owners starts with how your assets are titled, then moves to who should receive them.
Why Estate Planning for Executives Looks Different
Executive estate planning requires a specialized approach because equity grants, beneficiary designations, and pensions operate outside the rules of a standard will.
Your Grant Agreement Controls Your Equity Awards
The agreement for each RSU or stock option grant spells out what happens if you pass away or become disabled. Some plans let unvested RSUs vest immediately at death, while others cancel them. Stock options usually give your estate a limited window to exercise them. How vested shares are titled also determines whether they pass through probate, the court-supervised process of settling an estate.
Our guide to equity compensation strategies for executives covers account titling in more detail.
Beneficiary Forms Override Your Will
Retirement accounts and life insurance go to the people named on each beneficiary form, even if your will says otherwise. Those forms are easy to forget after a job change or a divorce, and an outdated one can send money to the wrong person.
Most non-spouse heirs also have to empty an inherited IRA within 10 years, which can push your children into higher tax brackets during their peak earning years. Roth dollars can ease that burden because qualified withdrawals are income-tax-free, one reason a backdoor Roth IRA strategy can help your heirs as well as your retirement.
Pension Survivor Elections Are Usually Permanent
If you have a pension, the survivor option you pick at retirement generally can't be changed once payments start. If you're within five years of retiring, weigh that choice alongside your life insurance and your spouse's income needs.
Illinois Estate Tax Can Apply Long Before Federal Tax
The One Big Beautiful Bill Act set the federal estate and gift tax exemption at $15 million per person for 2026, with no scheduled expiration and inflation adjustments beginning in 2027, according to the IRS. Few families owe federal estate tax at that level.
Illinois sets its own threshold at $4 million per person, and that number doesn't rise with inflation. A surviving spouse also can't use the first spouse's unused Illinois amount. According to the Illinois Attorney General's estate tax fact sheet, a $5 million estate held entirely in Illinois owes about $285,714 in state estate tax while owing nothing federally.
Once you add up a paid-off home, retirement savings, vested company stock, and life insurance proceeds, an Abbott or AbbVie household can pass $4 million sooner than expected. Married couples often use a credit shelter trust, which holds the first spouse's share at death so both spouses' $4 million amounts get used.
Estate Planning for Business Owners
If you own a business or a stake in a practice, your plan should answer two questions:
Who runs the business if you can't?
How does your family get paid for your share?
A buy-sell agreement sets the price and terms for your partners or the company to buy your interest at death or disability. Life insurance often funds the purchase, giving your family cash instead of a stake they may not want to manage.
Your durable power of attorney should also cover business interests, so a trusted person can sign contracts and run payroll if you're incapacitated.
The Core Documents
Whether you lead a team or run your own firm, a complete plan usually includes:
A will, plus a revocable living trust if you'd like to avoid probate and keep your estate details private
A durable financial power of attorney
A health care power of attorney and living will
Current beneficiary designations on every account and policy
How We Work With Your Estate Attorney
Your estate attorney drafts the legal documents, and we help align your investment accounts and equity awards with what those documents say.
We also review your beneficiary designations after a job move or retirement, when those forms often get missed.
Call 224-419-5550 or email me at Mike@gibbonsfinancialgroup.com to schedule a complimentary consultation.
And be sure to join our free webinar, Retiring Early From Pharma.
Frequently Asked Questions
Does Illinois have an estate tax in 2026?
Yes, Illinois taxes estates worth more than $4 million at death, far below the $15 million federal exemption. Two features tend to surprise families:
The $4 million amount isn't adjusted for inflation.
A surviving spouse can't use the first spouse's unused amount.
Married couples often use a credit shelter trust to keep both exclusions.
What happens to my RSUs when I die?
Your grant agreement decides what happens. Some companies vest unvested RSUs immediately at death, while others cancel them. Vested shares pass according to how the account is titled or who's named as beneficiary. Gibbons Financial Group reviews these award terms with clients so their equity compensation lines up with the rest of their estate plan.
Do I need a trust if my estate is under $15 million?
Yes, many Illinois residents benefit from a trust well below the federal limit, especially if you:
Have an estate above Illinois's $4 million threshold
Want to avoid probate, a public court process
Have minor children or want to control when heirs receive money
Own real estate in more than one state
How does a buy-sell agreement work?
A buy-sell agreement is a contract that sets who can buy a co-owner's share of a business, and at what price, if that owner dies or becomes disabled. Life insurance on each owner often funds the purchase, so the departing owner's family receives cash while the remaining owners keep control of the business.
About Mike
Michael J. Gibbons, RICP®, is the founder and president of Gibbons Financial Group, leveraging over 25 years of experience to provide custom-tailored wealth management for pharmaceutical and healthcare professionals. He specializes in asset management, Social Security, and pension planning, helping pre-retirees and retirees navigate early retirement with confidence. A Lake Forest College alumnus and multi-year Five Star Wealth Manager*, Mike is an active community volunteer and golfer who enjoys spending time with his wife and children.
*Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2016/2018 Five Star Wealth Managers.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.