estate tax

noun
Updated on: 16 Nov 2017

Definition of estate tax

: a tax in the form of a percentage of the taxable estate that is imposed on a property owner's right to transfer the property to others after his or her death — compare inheritance tax 1

Recent Examples of estate tax from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'estate tax.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of estate tax

1928


Financial Definition of ESTATE TAX

estate tax

What It Is

An estate tax is levied on assets inherited by the heirs to a deceased person's estate.

How It Works

The estate tax is applied differently according to U.S. Federal and state laws as well as international law. Typically, estate taxes are only levied once a certain threshold, known as the exclusion limit, has been reached.

Estate taxes are not applicable if a person bequeaths (transfers) the assets from the estate to a living spouse. This type of transfer is known as the unlimited marital deduction. However, in the event that the spouse dies, the beneficiaries may be required to pay estate taxes if the exclusion limit is exceeded.

[InvestingAnswers Featured Article: A Simple Plan to Avoid Estate Taxes]

Why It Matters

Estate taxes, like other taxes on unearned incomes, are a source of revenue for governments that use it to finance various projects. The issue of the estate tax has become highly politicized, and it is sometimes referred to as the "death tax" by people who oppose it.

But estate taxes are not inevitable. In the U.S., there are many different estate planning techniques that individuals can use to reduce the size of their taxable estates.

[InvestingAnswers Tutorial: Reduce Your Federal Estate Tax With These 4 Powerful Estate Planning Tools]


ESTATE TAX Defined for English Language Learners

estate tax

noun

Definition of estate tax for English Language Learners

  • : a tax that you pay on the money and other property that comes to you because someone has died : a tax on an estate that you inherit


Law Dictionary

estate tax

noun

legal Definition of estate tax

: an excise in the form of a percentage of the taxable estate that is imposed on a property owner's right to transfer the property to others after his or her death called also succession tax; see also unified transfer tax — compare gift tax, inheritance tax

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