Illinois imposes an estate tax on all real and tangible personal property physically  situated Illinois.  35 Illinois Compiled Statutes (ILCS) 405/3  -405/5.  The gross value of property located in Illinois is determined by using the federal estate valuations  The federal estate tax statute provides for a Qualified Terminable Interest Property (QTIP) election under 26 USC 2056(b)(7), which is a mechanism by which estate taxes are deferred until the death of the surviving spouse.  The federal  estate taxes are paid by the estate after both spouses have passed away.   In Illinois, there is a QTIP provision that is independent of the federal QTIP election.  The Illinois QTIP allows for the deferral of Illinois estate taxes until the death of the surviving spouse.  The Illinois estate taxes are paid by the estate after both spouses have passed away.   35 ILCS 405/2