estate tax


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Estate tax

A federal or state tax imposed on an individual's assets inherited by heirs.

Estate Tax

A tax on the assets a deceased person leaves behind. These assets include all personal property, real estate, securities and other things. In the United States, the estate tax is applied to the value of an estate that remains after all the debts of the deceased are paid, if the value of the estate exceeds a certain amount, which is always over $1 million. The estate tax should not be confused with an inheritance tax, which is a tax on the income one receives from an estate.

estate tax

A tax on the estate of the deceased before any distribution is made to the heirs. A federal unified gift and estate tax provides an exemption before any tax is paid. Although some states also levy an estate tax, it is generally at a much lower rate than the federal tax. Also called death tax. Compare inheritance tax.

Estate tax.

Your estate owes federal estate tax on the value of your taxable estate if the estate is larger than the amount you are permitted to leave to your heirs tax free.

That amount, which is set by Congress, is $2 million for 2006, 2007, and 2008 and is scheduled to increase to $3.5 million in 2009.

Under current law, the estate tax will be eliminated in 2010. Without further Congressional action, the tax will be reinstated in 2011. However, modifications to the law may be made before that date.

If your estate may be vulnerable to these taxes, which are figured at a higher rate than income taxes, you may want to reduce its value. You could do this by using a number of tax planning strategies, including making nontaxable gifts and creating irrevocable trusts.

Further, if you're married to a US citizen and leave your entire estate to your spouse, there are no estate taxes, no matter how much the estate is worth. However, estate taxes may be due when your surviving spouse dies.

You may also face estate taxes in your state.

estate tax

A tax imposed on the value of the estate of a decedent.The conceptual justification is premised on a peculiarly American notion that it is undesirable for generations to accumulate wealth by passing it to each other in a manner similar to that of English aristocracy and that each generation should make its own mark and earn its own way. As a result, it is considered advantageous to remove wealth from each generation by way of estate taxes and use the money for the common good.For details,see Publication 554,“Survivors,Executors and Administrators”available at the IRS Web site,www.irs.gov.

References in periodicals archive ?
The amendments on estate taxes were enacted with the end in view of enticing the heirs to declare the real value of their deceased kin's estate and to pay the proper estate tax.
Under proposed tax legislation, if the federal estate tax is repealed, the stepped-up basis will also be repealed.
2001(a), the estate tax is imposed on the transfer of the taxable estate of every decedent who is either a citizen or a resident of the United States.
The unitary estate tax by amending the National Internal Revenue Code is part of the Department of Finance tax reform package proposal.
In addition, New York's estate tax cliff is such that no estate tax will be due on a New York estate that is less than the exemption amount, which will increase over the next few years until parity with the federal exemption is reached in 2019.
Recently, the concept of estate tax exemption portability has been introduced to the Internal Revenue Code.
Tennessee is scheduled to fully phase out the estate tax in 2016.
Disagreements about the estate tax within the Democratic caucus became more publicly apparent when the Senate voted to extend "middle-class" tax rates without fixing the estate tax, allowing it to return at a 55% rate and a $1 million exemption through inaction (S.
While households can use life insurance proceeds on the deceased to pay the estate tax, LIMRA analysis indicates that 55 percent of these households do not have enough coverage to pay the tax.
Section 304 of the 2010 tax act also extended the sunset provisions for the federal estate tax through January 1, 2013, provided in [section] 901 of the 2001 tax act.
Under the pay-as-you-go law, changes to the estate tax beyond 2011 would require hundreds of billions of dollars in offsets.