Understanding the rules around inheritance and taxes can help individuals manage their financial planning. Virginia does not impose its own inheritance tax, which means that beneficiaries generally do not pay state taxes on what they inherit. However, federal estate taxes could still apply, depending on the value of the estate.
Federal estate tax exemption
The federal estate tax applies to estates above a certain value. As of 2024, this threshold sits at $13.61 million per person. If an estate’s total value falls below this amount, beneficiaries will not owe federal estate taxes. This exemption allows most people to inherit without worrying about federal taxes.
Exemptions for spouses
Inheritances left to a surviving spouse usually do not face taxes. This exemption allows spouses to transfer assets without worrying about federal estate taxes, regardless of the estate’s size. This benefit can ease financial burdens during a difficult time, ensuring that the surviving spouse can maintain their standard of living.
Gifting as a strategy
One way to minimize estate taxes involves gifting assets before death. In 2024, individuals can give up to $17,000 per year to as many people as they wish without triggering gift taxes. By doing this, one can reduce the size of their taxable estate and provide financial support to loved ones during their lifetime.
Planning for the future
Inheritance is a great way to ensure the financial future of the members of one’s family. By knowing the limits, we can better manage our estate planning and ensure that our loved ones benefit fully from our legacy.
