Inheritance tax in Virginia
Northern Virginia Trusts & Estates Law Firm
The attorney at Northern Virginia Trusts & Estates offer several low cost packages that can help you get a handle on inheritance and estate related issues. Contact us for a free consultation to discuss creating a customized plan to fit your particular needs.
Inheritance tax is something that few people fully understand. In fact, it is often confused with estate taxes or what some people refer to as death duty, while it is actually a separate type of tax. Understanding the differences between these two types of taxes can help our clients as they work with an attorney to decide on an estate plan that will address any inheritance taxes that can apply to their assets.
Estate tax vs. inheritance tax
While these terms are often used interchangeably, the two phrases actually refer to two different types of taxes. Using these terms correctly can help you better understand your options as you plan your estate.
Estate taxes are taxes on the right to give your property to someone else. As such, they are the responsibility of the person or people who represent the estate.
Inheritance taxes are taxes on the right to receive assets from others. These taxes must be paid by your heirs.
Does everyone have to pay inheritance taxes?
This is a common question we receive from our clients, and the answer depends on where you live and where you claim legal residence. Estate taxes generally are a federal matter in that the IRS estate tax laws apply to every citizen of the United States. Although states can also apply estate taxes on top of federal ones, most do not. Inheritance taxes, in contrast, are not collected by the federal government and thus are an exclusively state-based decision.
Although Virginia does not require residents to pay inheritance taxes, some other states do, including nearby Maryland.
In states where inheritance tax laws exist, the amount of tax paid usually depends on the value of assets inherited and the person’s relationship to the deceased
One way to avoid these taxes is to declare legal residence in a state where these laws do need exist if you have multiple homes or live in that state for part of the year.
Contact us today for more information
If you would like to find out more about estate planning, contact the team at Northern Virginia Trusts and Estates today. Our firm has been providing clients with quality estate planning in Northern Virginia at a fair price for more than 20 years.