Understanding Virginia’s Estate and Inheritance Tax Rules
Estate and inheritance taxes often raise important questions for families handling a loved one’s estate or planning for their own. Virginia’s laws regarding these taxes differ from those in other states, and understanding how they work can make a significant difference in preserving family assets.
Knowing how state and federal rules interact, what exemptions may apply, and how to prepare for estate inheritance claims can help individuals make confident decisions about the future.
At Ryland & Merchak, PC, we help clients protect their families and assets through careful estate planning and administration. If you’re handling an estate or planning your own, our Woodbridge, VA estate lawyers can help you understand how Virginia’s estate and inheritance tax laws apply to your situation. Contact us today to discuss your estate inheritance claims and plan with confidence.
The Basics of Estate and Inheritance Taxes
Estate and inheritance taxes both relate to the transfer of assets after a person’s death, but they apply in different ways.
Estate tax is charged on the total value of a person’s estate before assets are distributed to heirs. It’s paid by the estate itself. Inheritance tax, on the other hand, is charged to the individuals who receive property from the estate. While the federal government currently imposes an estate tax on large estates, Virginia no longer collects either tax at the state level.
Although Virginia doesn’t impose these taxes, federal estate tax rules may still apply to larger estates. When this occurs, the executor or administrator must file federal forms and pay any due taxes before beneficiaries receive their inheritance. Families managing estate inheritance claims often find that understanding both levels of taxation helps avoid unexpected financial issues later on.
Virginia’s Position on Estate and Inheritance Taxes
Virginia repealed its state-level estate tax in 2007 and doesn’t collect an inheritance tax. This means most estates in the Commonwealth aren’t taxed by the state when property passes to beneficiaries. However, the absence of state taxes doesn’t mean families can overlook federal requirements or the value of estate planning.
Federal estate tax applies only to estates exceeding a certain value threshold. For 2025, that exemption is projected to remain above $13 million per individual, though this figure is subject to change based on federal legislation. Married couples can often double that amount through what’s known as the “portability” of the exemption.
While most Virginians won’t pay estate tax under current law, understanding the thresholds, exemptions, and reporting requirements remains critical. Estate inheritance claims can involve substantial administrative steps, especially for larger estates or those with property in multiple states. Families may also encounter income tax considerations related to the estate or beneficiaries’ inheritances.
How Federal Estate Tax Affects Virginia Residents
Even without state-level taxes, Virginians may still face the federal estate tax depending on the size of the estate. The Internal Revenue Service (IRS) imposes this tax based on the total value of all assets owned by the deceased, including real estate, investments, business interests, and life insurance proceeds.
When a Virginia resident passes away with an estate that exceeds the federal exemption, the estate must file a federal estate tax return (Form 706). The executor is responsible for valuing the estate, paying any taxes due, and distributing the remaining assets according to the will or trust.
Key elements of the federal estate tax process include:
Asset valuation: All property, both tangible and intangible, must be appraised at fair market value.
Deductions and credits: Expenses such as debts, funeral costs, and charitable donations can reduce the taxable estate.
Portability for spouses: If one spouse doesn’t use their full federal exemption, the surviving spouse may carry over the unused portion.
These details can influence how estate inheritance claims are processed and how much beneficiaries ultimately receive. Proper planning can minimize the tax burden and streamline asset distribution.
Exemptions and Deductions That May Apply
Even for estates approaching the federal threshold, several deductions can reduce or eliminate tax liability. Executors should evaluate each potential deduction to confirm whether it applies to their situation.
Common deductions include:
Marital deduction: Property passed directly to a surviving spouse is usually exempt from federal estate tax.
Charitable deduction: Bequests to qualifying charities can reduce the taxable value of the estate.
Debts and expenses: Mortgages, medical bills, and administrative costs related to estate management can also be deducted.
These deductions can significantly reduce the taxable portion of an estate. When families pursue estate inheritance claims, understanding these exemptions helps clarify which assets may be transferred without tax consequences.
Gift Tax and Lifetime Transfers
Virginia residents should also be aware of the federal gift tax, which works alongside estate tax rules. The IRS allows individuals to give away a certain amount of money or property each year without triggering gift tax—this is known as the annual exclusion.
In 2025, the annual exclusion allows gifts up to $18,000 per recipient without requiring a tax filing. Larger gifts count toward the lifetime exemption, which is tied to the federal estate tax threshold. This means gifts made during one’s lifetime can reduce the amount exempt from federal estate tax upon death.
For families considering estate inheritance claims or planning to transfer assets early, it’s important to keep detailed records of these gifts. Lifetime transfers can be a useful strategy for reducing estate size, but they should be done carefully to avoid unexpected tax consequences.
How Trusts Influence Estate Inheritance Claims
Trusts are a valuable tool in estate planning, offering flexibility and potential tax advantages. By transferring property into a trust, individuals can manage how and when beneficiaries receive their inheritance. Certain types of trusts can also minimize federal estate tax exposure.
Common trust types used in Virginia estate planning include:
Revocable living trusts: Allow individuals to retain control of their assets during life while simplifying administration after death.
Irrevocable trusts: Remove assets from the taxable estate, potentially lowering future estate tax liability.
Charitable trusts: Combine philanthropic goals with estate tax reduction benefits.
Trusts can also help avoid probate, which simplifies the transfer process and may prevent disputes over estate inheritance claims. Because trust structures vary, consulting with a knowledgeable lawyer can help determine which approach best meets your financial and family goals.
Handling Out-of-State Property and Multi-Jurisdictional Estates
Families who own property outside Virginia should consider how other states’ laws might affect their estate. Some states still impose inheritance or estate taxes, even if Virginia doesn’t.
For example, a Virginia resident with vacation property in Maryland or the District of Columbia may owe taxes in those jurisdictions. The executor must handle filings in each state where property is located, which can complicate estate administration.
Proper estate planning can help avoid conflicting tax obligations and simplify estate inheritance claims across multiple states. Using trusts or specific ownership arrangements can also reduce administrative burdens and prevent delays for beneficiaries.
Executors and Personal Representatives
Executors play a central role in managing estate administration. Their responsibilities include identifying assets, paying debts and taxes, and distributing property according to the will. For estates large enough to trigger the federal estate tax, the executor must also file necessary returns and coordinate any tax payments.
Key duties of executors include:
Inventorying assets: Listing and valuing all property belonging to the deceased.
Managing debts and expenses: Paying final bills, funeral costs, and ongoing estate expenses.
Filing tax returns: Submitting both final income tax returns and federal estate tax forms, when applicable.
Handling estate inheritance claims: Confirming beneficiary entitlements and resolving disputes if they arise.
Because these steps require careful timing and documentation, executors often work closely with estate planning lawyers to make sure all obligations are properly handled. Working with an experienced estate claims lawyer can also help executors address disputes, interpret tax obligations, and protect the estate’s interests throughout the administration process.
Common Misunderstandings About Virginia’s Estate Laws
Even though Virginia doesn’t impose its own estate or inheritance tax, many residents remain uncertain about what that means in practice. Misunderstandings can lead to unnecessary stress or missed planning opportunities.
A few common misconceptions include:
“No taxes apply to my estate at all.” While Virginia doesn’t collect these taxes, large estates may still owe federal estate tax.
“Estate planning isn’t necessary if taxes don’t apply.” Estate planning covers far more than taxes—it directs asset distribution, appoints guardians, and prevents family disputes.
“Inheritance and income taxes are the same.” Inheritance tax is paid by the recipient of the assets, while income tax applies to earnings, including certain inherited assets like IRAs or annuities.
Clarifying these points can help families approach estate inheritance claims with confidence and avoid costly mistakes. Taking time to verify the facts about Virginia’s laws allows individuals to make informed choices and prevent avoidable complications during estate administration.
Practical Ways to Prepare for Future Estate Issues
Good planning can prevent confusion later and protect the value of your estate for your loved ones. A few proactive steps can make estate administration far easier:
Review your will regularly: Update it after major life events such as marriage, divorce, or the birth of a child.
Consider establishing a trust: This can help manage assets and minimize taxes while keeping financial matters private.
Keep detailed financial records: Accurate information helps executors process estate inheritance claims efficiently.
Discuss your plans with family members: Transparency can reduce disputes and help everyone understand your intentions.
By taking these actions early, you’ll help your loved ones handle your estate smoothly while preserving your wishes. These steps also provide clarity for beneficiaries, making the process of managing estate inheritance claims more straightforward and less stressful for those you leave behind.
How Our Firm Supports Clients with Estate Inheritance Claims
At Ryland & Merchak, PC, we understand that estate planning and administration can feel challenging. Our lawyers assist with every stage of the process—from drafting wills and setting up trusts to managing estate inheritance claims after a loved one’s passing.
We work with families across Northern Virginia to:
Draft clear, legally sound estate documents
Coordinate with financial professionals on tax-efficient strategies
Guide executors through probate and estate administration
Resolve disputes related to wills or inheritance claims
Every family’s situation is different, and our firm takes the time to craft solutions that reflect each client’s goals and values. Whether you’re planning your estate or managing someone else’s, we’re here to help protect what matters most.
Contact Our Lawyers Today
If you’re dealing with estate inheritance claims or want to prepare for the future, Ryland & Merchak, PC can help you make informed decisions and secure your family’s financial stability. Located in Woodbridge, Virginia, our attorneys serve families and individuals throughout Northern Virginia, including Prince William County, Stafford County, Fairfax County, and the surrounding areas. Call our firm today to schedule a consultation and discuss your estate planning needs.
