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 ?
According to the BIR, the estate tax amnesty shall not extend to the following: delinquent estate tax liabilities which have become final and executory, in which case the tax amnesty on delinquencies may be applied; and properties involved in cases pending in appropriate courts.
Recent political publicity has certainly brought the estate tax to light for many Long Island patriarchs and matriarchs of family owned businesses who now realize that without proper planning, their heirs might eventually be put into a position where they would be forced to sell the family business to pay estate taxes.
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.
* In an estate tax case involving a family limited partnership (FLP), the Tax Court concluded that Sec.
Exemptions from the estate tax also vary, with some states like Hawaii and Maine using the same credit as the federal estate tax -- $5.49 million for individuals - while Oregon exempts just $1 million and Rhode Island $1.15 million.
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.
He criticised the failure to implement the Minister of Finance's decision to increase the real estate tax employees' incentives to 100% from 1 July.
See also: How the permanent estate tax will impact life insurance ownership
There is also variation in the effect of the estate tax by type of farm.
Republicans in Congress and candidates across the country supported permanent repeal of the estate tax. In 2012, more than 400 candidates signed pledges to "eliminate the death tax." Gov.