Financial obligations can diminish the legacy of an individual after their passing. Creditors with valid claims and tax authorities can potentially demand payment from an estate before heirs and other beneficiaries receive their inheritances.
Estate taxes are among the most significant obligations that could diminish a Virginia estate’s total value. Understanding when estate taxes apply and the tax rate itself can be beneficial for those concerned about optimizing what their loved ones inherit.
Federal estate taxes can be costly
Like most other states in the country, Virginia has officially abolished its state-level estate tax. There is no Virginia estate tax or an inheritance tax to address during estate planning or probate proceedings.
Even so, large estates that are probated in Virginia may be subject to federal estate taxes. In 2026, the exemption threshold for federal estate taxes is $15 million. Testators with more than $15 million in property will likely want to take steps to minimize or even potentially eliminate their federal estate tax obligations.
The federal estate tax rate is progressive. The more the estate exceeds the exemption threshold, the higher the tax rate is. Some estates are subject to an 18% tax, but the maximum tax rate that applies to especially larger estates is 40%. The only way to prevent the loss of estate assets to federal taxes is to plan carefully.
Sitting down with an estate planning professional can help people determine the best way to preserve their assets for the people they love and the causes they care about instead of sending a large portion of their estate to the government.
