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Estate Taxes and Rates in Virginia

The Law Firm of Northern Virginia Trusts and Estates

Estate taxes in the United States are taxes on the transfer of a taxable estate of a deceased person. The property of the taxable estate can be transferred as a result of a will or intestacy paid after the death of the owner. Even certain life insurance benefits can trigger an estate tax payment.

If you are looking for advice on estates and estate planning in Northern Virginia, consult with Northern Virginia Trusts and Estates –Attorneys at Law.

Virginia Estate Tax

As a result of the extension of the so-called “Bush tax cuts”, there is currently no estate tax in Virginia. This tax is known as a “pickup tax” and will be reinstated after the extension of the Bush tax cuts expires after 2012.  You can read more about the 2011 changes to the estate tax law.

Spouses and Charitable Organizations

Estate taxes are part of the Unified Gift and Estate tax system in the United States. The other part is a gift tax that imposes a tax on the transfer of property within the gift giver’s lifetime.

With assets left to a spouse or charitable organizations, the tax usually does not apply. Overly simplified, in 2011 up to $5 million can be passed on without occurring a tax or $10 million for a married couple.

Federal Estate Tax

Issues affecting the Federal Estate Tax include:

  • The gross estate which may include more property than the probate estate
  • Various deductions
  • Tentative tax
  • Credits against tax
  • Requirements for filing and paying the tax

Each of these items and more must be considered and calculated to determine the estate tax obligation.

Exemption and tax rates

A certain amount of an estate is exempted from paying the Federal estate tax.

Exemptions and tax rates table:

Lower LimitUpper LimitInitial TaxationFurther Taxation
0$10,000$018% of the amount
$10,000$20,000$1,80020% of the excess
$20,000$40,000$3,80022% of the excess
Year  Exclusion AmountMax/Top tax rate
2001$675,00055%
2002$1 million50%
2003$1 million49%
2004$1.5 million49%
2005$1.5 million47%
2006$2 million46%
2007$2 million45%
2008$2 million45%
2009$3.5 million45%
2010Repealed35%
2011$5 million35%

The current schedule of rates is temporary pending further legislation.

As you can see, estate planning and taxation is complicated and anyone expecting an estate tax obligation should consult a qualified attorney.  In Virginia, contact the estate planning attorneys at Northern Virginia Trusts and Estates for a free consultation.