Debts and taxes can negatively impact an individual’s legacy. A personal representative administering an estate generally needs to officially notify creditors of upcoming estate administration. They also have an obligation to file any necessary tax returns on behalf of the decedent and the estate itself.
The fulfillment of financial obligations is a key element of successful estate administration. Testators thinking about their legacies may need to plan carefully to minimize the risk of estate taxes after they die.
What tax rates generally apply to larger estates probated in Virginia?
Only federal estate taxes apply
The good news for individuals residing in Virginia is that the state does not collect an inheritance tax or estate tax. The only tax that may apply is the federal estate tax. Even then, the estate must be worth $15 million or more in cases where people die in 2026.
However, once estate taxes might apply, they can quickly diminish the resources left for an individual’s heirs or beneficiaries. Current federal tax rules allow for a tax rate of between 18 and 40%, depending on the overall value of the estate.
Estate tax obligations imposed by the federal government can significantly reduce the pool of resources that beneficiaries ultimately inherit. People who plan in advance can take on co-owners, make gifts that diminish their personal holdings and transfer assets to trusts to reduce what their estates are worth when they die.
Asset protection planning, including estate tax planning, can help people maximize what their intended beneficiaries inherit and minimize what outside parties intercept. Consulting with an attorney can help people at risk of estate taxes create effective plans to protect their resources after their passing.