Business, Legal & Accounting Glossary
n. generally a federal tax on the transfer of a dead person’s assets to his heirs and beneficiaries. Although a transfer tax, it is based on the amount in the decedent’s estate (including distribution from a trust at the death) and can include insurance proceeds. Currently, such federal taxation applies to the amount of an estate above $600,000, or as much as double that amount if the estate is distributed to a spouse. Some states have an estate tax, more commonly called an inheritance tax.
The estate tax is simply a tax on assets charged by the government at one’s death, less liabilities. The total credit amount of the estate tax is applicable to the sum of the property transferred at death. When a death occurs, the estate tax is levied based on the fair market value of one’s property. Characteristically, the bearers of the estate tax are those who inherit the remaining assets. Thus, family members, friends, or anyone who becomes heir to the estate as instructed, is subject to the estate tax. However, the surviving spouse is excluded from the estate tax. This provision of the estate tax is known as “unlimited marital deduction”. There are numerous other deductions associated with the estate tax, and the tax law governing them can be quite complex. In the United States, the estate tax is also known as “the death tax”.
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This glossary post was last updated: 28th April, 2020 | 0 Views.