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Will taxes impact my estate?

by | Jun 22, 2021 | Estate Planning

When someone passes away, their estate faces a variety of financial concerns. The executor of your estate will be responsible for selling assets as appropriate, distributing assets among your beneficiaries and addressing financial details like your final tax return. When considering these financial details, you may want to consider another question: will your assets be taxed after your death?

Does Virginia tax inherited property?

An estate may be taxed on the estate and the federal level, and some states tax the estate (estate tax) or the beneficiaries (inheritance tax) for the value of property distributed or received. However, Virginia does not collect either inheritance or estate taxes.

In some cases, you may need to consider other tax concerns.

If your beneficiaries live in a state that collects an inheritance tax—Maryland or Kentucky, for example—then those beneficiaries will be responsible for that tax on the assets they receive. Depending on the assets you leave to these beneficiaries, you may want to consider those taxes when creating your plan.

It is also important to remember that federal taxes may apply depending on the value of your estate. While this tax only applies if the value of your assets totals $11.7 million or more, federal estate taxes can have a significant impact on your estate if it exceeds that threshold. People whose estate may be subject to federal estate tax should consider estate planning options like trusts that could limit the impact of those taxes.

If you wonder whether taxes will impact your estate, you may want to speak to an attorney with experience in planning for complex estates. They can help you create a plan tailored to your estate and your goals, allowing you to create a plan that effectively provides for your loved ones.

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