According to the Congressional Budget Office, the federal government received $17.6 billion in 2020 from estate taxes. Planning for the future involves considering various aspects of our financial landscape, and estate taxes are an integral part of that picture.
In Virginia, individuals and families must be aware of estate tax laws to ensure a smooth transition of assets to the next generation.
Virginia does not impose an estate tax on the transfer of a deceased person’s estate to their heirs. It is essential to recognize that the federal government does have estate taxes. For estates with significant value, the combined impact of federal estate taxes can be substantial.
Calculating the value of an estate is paramount for determining estate tax liability. It involves more than just adding up the dollars and cents. Assets such as real estate, bank accounts, investments and personal property contribute to the overall value. Deductions, such as funeral expenses and debts, reduce the gross estate value to determine the taxable estate.
Strategies to minimize estate taxes may include gifting assets during one’s lifetime, establishing trusts or leveraging other planning tools. These approaches require careful consideration and may vary based on individual circumstances.
It is worth noting that estate tax laws can change and staying informed about any updates or amendments is important for effective planning. By proactively addressing these considerations, individuals can work towards preserving their assets for the benefit of their heirs and ensuring a smooth transfer of wealth to the next generation.