Estate Tax Planning Strategies for Virginia Residents

If you’re a Virginia resident, you may be relieved to know the state doesn’t impose an estate tax. But that’s only part of the picture. The federal estate tax still applies to larger estates so it’s important to understand how that could impact your tax burden.

That’s why estate planning should remain a big part of your overall financial strategy. A financial advisor can help you build a plan designed to preserve your wealth, support the people and causes you care about and align with your long-term goals.

Here’s what you need to know about estate tax planning in Virginia, and how the right approach today can help reduce tax exposure tomorrow.

ESTATE TAXES IN VIRGINIA: WHY FEDERAL RULES STILL MATTER

Virginia doesn’t have its own estate or inheritance tax, which is a welcome advantage for residents focused on preserving wealth for future generations.

But that doesn’t mean you’re in the clear. The federal estate tax still applies to estates that exceed the federal exemption, which stands at $13.99 million per person in 2025.

Fortunately, you may be able to take advantage of the exemption and use tools like lifetime gifting, trusts and charitable strategies to reduce the size of your taxable estate.

Effective estate planning isn’t just about minimizing taxes – it’s about ensuring your wealth supports the people and priorities that matter most to you.

HOW TO REDUCE YOUR ESTATE TAX EXPOSURE

If your estate is likely to exceed the federal exemption, smart, forward-looking planning can help minimize potential tax liability and keep more of your wealth working for your family and your future.

Here are some strategies that may help reduce your estate’s taxable value and strengthen your overall legacy plan.

GIFTING DURING YOUR LIFETIME

One of the simplest ways to reduce the size of your taxable estate is by giving assets while you’re still alive.

In 2025 and 2026, you can gift up to $19,000 per person, per year, helping lower your estate’s value for tax purposes without it counting against your lifetime exemption. Larger gifts can still be advantageous; they’ll simply count toward your lifetime limit, which is the combined federal estate and gift tax exemption.

Plus, lifetime gifts let your loved ones benefit from your generosity sooner.

USING TRUSTS TO PRESERVE AND PROTECT

Trusts are powerful tools that can help you do more than reduce estate taxes – they can provide greater control over how your wealth is distributed, protect assets from creditors and support your family and charitable goals over the long term.

Depending on your needs, a trust can help you:

• Remove certain assets from your taxable estate
• Set specific conditions for how and when your wealth is transferred
• Provide income to beneficiaries during your lifetime or beyond
• Ensure business interests or family property are handled according to your wishes

Here are a few commonly used trust strategies:

• Irrevocable Life Insurance Trusts: Exclude life insurance proceeds from your taxable estate
• Grantor Retained Annuity Trusts: Transfer appreciating assets at reduced gift tax cost
• Qualified Personal Residence Trust: Gift a home at a reduced gift tax cost

Trusts can be tailored to your unique financial picture, but selecting the right structure requires careful planning.

PLANNING FOR MARRIED COUPLES

Married couples benefit from a key federal estate planning tool: portability, which allows spouses to combine their exemptions and potentially pass nearly $28 million tax-free in 2025. The federal estate tax exemption will increase to $15 million per person in 2026, meaning that spouses can pass $30 million without paying federal estate tax.

You can also consider tools like credit shelter trusts to preserve your combined exemption and ensure your estate is distributed according to your long-term wishes.

MULTIGENERATIONAL STRATEGIES

If your goal is to create lasting financial security for your children, grandchildren and future generations, multigenerational estate planning can play a key role. These strategies are designed to preserve wealth, reduce long-term tax exposure and help ensure your legacy continues well into the future.

Here are a few tools that can help:

• Dynasty Trusts: Structured to last for multiple generations, these trusts can help protect family wealth from estate taxes, creditors and other risks, allowing assets to grow and transfer across decades
• Generation-Skipping Transfer Trusts: Designed to pass wealth directly to grandchildren or other non-immediate heirs, these trusts can help minimize federal transfer taxes that could otherwise apply at each generational level
• Family Limited Partnerships: Often used by families with businesses, investment properties or significant assets, FLPs allow you to maintain control while gradually transferring ownership, potentially with valuation discounts that lower estate tax exposure

These strategies can be especially effective for families with complex estates, business interests or a strong desire to leave a lasting legacy.

CHARITABLE GIVING: REDUCE TAXES WHILE DOING GOOD

Strategic giving can help you support the causes you care about while also offering meaningful tax advantages as part of your estate plan. The right approach can reduce your taxable estate, provide lifetime income and create a legacy of generosity that lasts well beyond your lifetime.

Talk to your advisor about these common tools:

• Donor-Advised Funds: Make contributions now, take an immediate tax deduction and recommend grants to your favorite nonprofits over time
• Charitable Remainder Trusts: Generate income for yourself or your heirs for a set term, with remaining assets eventually going to charity
• Private Foundations: Establish a formal giving structure that can support causes you care about while involving your family in long-term philanthropy

Whether you want to maximize your impact today or leave a legacy for future generations, charitable planning can be a valuable part of your estate strategy.

PROTECT YOUR LEGACY WITH A PLAN BUILT TO LAST

Virginia’s lack of a state estate tax may simplify planning, but it doesn’t eliminate the need for a thoughtful, forward-looking strategy. With your financial picture likely to evolve over time, having a flexible plan in place is more important than ever.

At Edelman Financial Engines, we work closely with you, and can coordinate with your legal and tax professionals, to build financial plans with estate planning strategies that reflect your goals, support your loved ones and adapt as life changes. Our advisors understand the unique challenges of Virginia estate law and, in concert with your estate attorney and tax professional, we provide guidance that evolves with your life and the legal landscape. Take the first step toward shaping a legacy that reflects your vision and helps safeguard your wealth.