What Is Estate Tax?
Estate taxes are the taxes that, in the United States at least, are paid when an estate transfers ownership from a deceased person.
This tax will be applied to any property that transfers ownership whether through a will or through some form of state law of intestacy or through an intestate estate or trust or if some form of life insurance or financial account is paid out to beneficiaries of the deceased.
In general, estates must be more than $11.58 million or more in order to be subject to the estate tax. This means that most people never do have to pay this tax for the federal government and most states do not have an estate tax or inheritance tax. This means that most do not pay these types of taxes on the transfer of ownership.
The gross estate is calculated first and then deductions are taken, which creates the amount that is considered ‘taxable estate.’ Deductions could include things like specific debts, property passed to a surviving spouse, property passed to a charity and estate administration expenses.