I will be receiving a distribution from my late uncle's estate. He lived in California. I live in Virginia. I know the amount of my distribution ($50K).
1) What are the estate tax rates that I can expect to pay on my distribution?
2) Can I pay my taxes on my distribution to the IRS immediately upon receipt or do I have to wait for the IRS to contact me and tell me how much I owe them?
3) Do I also have to pay taxes on my distribution to the State of Virginia as well?
Thank you for your response.
You will owe no taxes -- to the Feds or Virginia -- on your receipt of your uncle's estate distribution. Recipients of gifts or inheritances don't pay tax on those receipts. Only the giver of gifts, or the deceased person's estate in this case, is subject to gift/estate tax, and then only if the total given is over $5.34 million. This is a common misconception. Please see the attached FAQ for further clarification.
Evan is Certified as an Elder Law Attorney by NELF (National Elder Law Foundation), which is approved by the American Bar Association, and is a member of the Council of Advanced Practitioners of NAELA (National Academy of Elder Law Attorneys). Virginia has no procedure for approving certifying organizations. NOTICE - Unless expressly stated otherwise, this communication: (1) is not legal advice absent an existing attorney-client relationship between us; (2) does not create an attorney-client relationship; (3) does not constitute an offer, acceptance, or contract amendment; (4) may contain confidential or legally privileged information protected by the attorney-client relationship and/or work product privilege; (5) is only for the use of the individual to whom it is intended by the sender to be sent, and if you are not such recipient, disclosure, copying, distribution or reliance upon this communication is prohibited; and (6) is not intended, and cannot be used, to avoid tax-related penalties pursuant to treasury department circular 230.
I concur with Mr. Farr's excellent summary. One added note is that the result can be different in other states. While there is no estate tax to the recipient. Some states have a tax on inheritances - apparently not VA.
Your receipt of an inheritance from your Uncle is not subject to estate tax. You do not owe anything to the federal government or Virginia. (Virginia has no estate tax or inheritance tax.)
Years licensed, work experience, educationLegal community recognition
Peer endorsements, associations, awardsLegal thought leadership
Publications, speaking engagementsDiscipline