LawMeaning

Estate Tax

Also known as: Death Tax

In one sentence

A federal tax on the total value of a deceased person's estate.

Plain English

Estate tax is a federal tax imposed on the total value of everything a person owns when they die. Only very large estates pay this tax—the federal threshold is quite high (over $13 million as of 2023), so most people's estates don't owe it. Some states also impose their own estate taxes at lower thresholds. The tax is paid from the estate's assets before the remaining money and property go to heirs.

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Example

When billionaire investor Harold died, his estate was valued at $500 million. His executor calculated the federal estate tax owed, paid it from estate assets, and distributed the remainder to his heirs.

Used in a sentence

“The executor consulted a tax professional to determine whether the estate tax applied to the $15 million estate.”

Related terms

Executor
The person appointed to carry out the instructions in a will.
Probate Estate
Property owned by a deceased person that passes through the court-supervised probate process.
Marital Deduction
A federal tax benefit allowing unlimited transfer of property between spouses without estate or gift tax.
Testamentary Trust
A trust created within a will that takes effect after the person dies.
Disclaimer
A legal refusal by a beneficiary to accept an inheritance or gift.
Probate
The court process of validating a will and distributing a deceased person's estate.
Intestate Succession
The legal process of distributing a deceased person's property when they leave no valid will.
Elective Share
A surviving spouse's right to claim a portion of the deceased spouse's estate despite the will.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.