Definition: A tax imposed by a state or the federal government upon the right to transfer a person's assets to his or her heirs after death. In other words, an estate tax is based on the overall value of the deceased person's estate, not on who inherits the estate.
Contrast this with an Inheritance Tax, which is a tax imposed by a state government upon the privilege of an heir to receive assets from an estate or trust. In other words, an inheritance tax is based on who receives the deceased person's property and, in some states, how much they receive.
To confuse matters even more, Tennessee imposes a state death tax that is based on the value of property the deceased person's estate to his or her heirs but refers to it as an "Inheritance Tax" in its state statutes. In either case, the applicable estate or inheritance tax is paid from the deceased person's assets.
Chart Showing Federal Estate Tax Exemption: 1997 - 2009
State Estate Tax Chart
State Inheritance Tax Chart
Other Terms Beginning With E
Also Known As: Death Tax
