While planning estate trust and will, it’s essential to understand the tax implications it may attract. Maryland and D.C. are two states that impose an estate tax. However, in Virginia, there is no tax on the estate. However, in Virginia, the estate’s value determines how much federal tax will be implicated on the property. Thus, it’s always advised to consult a qualified tax lawyer Virginia Beach when preparing an estate plan.
As of 2017, an estate worth over $5,490,000 is subjected to a 40% of the federal estate tax. Similarly, if your estate worth is less than $5,490,000, no federal tax will be imposed on you. It’s not mandatory to file an estate tax return. Estates worth exceeding $5,490,000 are counted as taxable estate, and the owners are taxed according to the federal tax law.
Estate tax return
In many states of the U.S., estate owners must pay estate tax upon transferring the ownership of their property after their death. If your estate’s value is more than $5,490,000, you will have to file an estate tax return. Since Virginia doesn’t have an estate tax, one must file a federal estate tax return if their estate value reaches a specific limit.
All assets, including probate and non-probate assets, should be mentioned while filing the tax return. Some common examples of these assets are cars, property, jewelry, bank accounts, investments, insurance policies, etc. Assets that a person owns at their death are also included while filing the estate tax return.
It’s worth noting that all the assets are valued from the date of a person’s death. For determining the value of the real estate and properties owned by the deceased person, a professional appraisal may be required. The timeline assigned for filing the federal estate tax return is nine months from the date of death.
Required documents for estate tax return
While filing a federal estate return, one must submit the death certificate of the estate owner. Along with this, a copy of the last will and testament, trust, and inventories of assets are also needed.
What are some other tax returns?
The personal representative of the decedent plays a crucial role in the matters of estate planning. They are tasked with the responsibility of filling the income tax return of the deceased person. Filing a personal income tax return is different from filing an estate tax return. However, in a certain situation, one may not be required to file an estate tax return.
If a person dies at the start of a year, it’s the personal representative’s responsibility to file the income tax return of the current year. In case a person dies in the mid-year, the personal representative should file the income tax return by the following year.
How to mitigate the impact of Fairfax estate taxes
In Virginia, there is no separate estate tax. If you are a resident of Virginia with estate and property in the state, you must be aware of the federal tax system. Consulting a will and estate lawyers Virginia Beach is the best way to comply with federal law.