Many people worry about inheritance tax as an aspect of their estate planning, when in reality, it is a non-issue.
Sometimes referred to as ‘death tax,’ inheritance tax is charged on the value of the property transferred at the time of death. This tax is not applicable in every state; Virginia does not charge an inheritance tax. Some clerk’s fees may apply for recording wills or administering probate estates, but are not exorbitant.
This leaves only the issue of federal estate tax. As of January 1, 2017, there is an estate tax, but it is only assessed against estates in excess of $5.49 million. Married couples are able to combine their exemption amounts and then only pay tax for combined estates over $10.98 million.
A person or married couple with assets anywhere near these amounts should recognize the importance of working with a professional attorney or tax advisor to discuss the fine details (for example certain lifetime gifts would be deducted from the amount that can be transferred at death).
In short, for most individuals in Virginia, inheritance tax is a boogeyman. It doesn’t exist.