State Estate Tax

The Commonwealth of Virginia has repealed its estate tax law. There is currently no estate, gift, GST or separate inheritance tax in Virginia. 

When there are real estate properties outside of Virginia, the executor shall check whether these states have an estate tax (payable by the estate) or an inheritance tax (payable by the beneficiary).[4] The residence of the decedent determines the levy of inheritance or estate tax, but a state where the decedent had real estate may impose estate or inheritance tax calculated on the value of the real estate property. Seeking the assistance of local tax counsel is highly recommended. 

Before the EGTRRA, states were following the federal estate tax, and they had a death tax credit carved out of the federal estate tax reported on line 15 of the Form 706. However, their due date and filing requirements may have been different. The death tax credit has been replaced with a deduction that is reported on line 3b of Form 706. If EGTRRA sunsets, the state death tax credit will be resurrected. 
Some states have refused to see their income reduced and have decoupled from the federal estate tax. Among these are the state of Maryland and the District of Columbia. Both jurisdictions have an estate tax for estates above $1 million with a 16% tax but with different filing requirements. When there are real properties located in several states, the executor needs to check the estate and inheritance tax of each state. 

While the District of Columbia does not have inheritance tax, the State of Maryland has in addition to its estate tax an inheritance tax. Close family members of the decedent are exempted from the inheritance tax: surviving spouse, children, parents, grandparents, and siblings. Other individuals pay a 10% tax on the estate assets that they receive. The estate tax gives a tax credit to the inheritance tax. 

Please note that the new Tax Act provides a Federal extension for disclaimers. Since a qualified disclaimer must satisfy state law, state disclaimer statutes may need to be amended to accommodate an extended deadline.