Estate Tax
A tax on the transfer of an estate at death. The federal exemption is high enough that very few estates owe it, though some states impose their own with far lower thresholds.
Federal estate tax is a much smaller concern than most people assume — the exemption is high enough that the overwhelming majority of families never come near it. It is worth confirming the current threshold rather than relying on a number you half-remember.
State-level taxes are the more common issue. Some states levy their own estate or inheritance tax at far lower thresholds, so where you live and where you own property matters more than the federal rule for most families.
For most households the real problem is liquidity, not tax: whether the family can reach cash quickly enough to cover what must keep getting paid.
Related Terms
Step-Up in Basis
The tax rule that resets an inherited asset’s cost basis to its value at the date of death, which can substantially reduce capital gains tax if the heir sells.
Probate
The court process that validates a will, settles debts, and transfers what someone owned in their own name after they die.
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