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In U.S. law, federal and state taxes imposed upon the property (called the estate) of persons after their death. Estate taxes are usually imposed on the net estate of a deceased person. The net estate represents the value of the property at the time of death, less allowable deductions as provided by law.

Estate taxes differ from inheritance taxes in that the former are levied on the estate as a whole (and are paid by the executor of the estate), while the latter are paid by the beneficiaries who receive property from the decedent. Proponents of estate and inheritance taxes contend that such levies reduce the economic and social inequality represented in the transmission of large personal fortunes; the estate tax also encourages giving to charity, since charitable contributions are deducted from the estate's taxable value. Opponents of estate and inheritance taxes argue that such "death taxes" operate as a disincentive to the accumulation of investment capital, represent a "double tax" on earned income (which has already been subject to the personal income tax), and penalize the heirs of a small business or family farm, who may need to liquidate the enterprise in order to pay the taxes due. In practice, this last objection may be met by tailoring estate tax deductions and exemptions to leave small, family-owned enterprises intact when their owners die.

In U.S. law and in the laws of some states, the value of the decedent's insurance policies is not deductible and is included in the estate; gifts of real or personal property made by a testator in contemplation of death also are considered part of the estate. Deductible amounts include funeral expenses, administrative costs, debts to creditors, and (since 1982) an unlimited marital deduction, so that an estate of any size can be left tax free to a spouse. In addition to the marital deduction, federal law provides for a substantial tax exemption from the net estate. The Economic Growth and Tax Relief Reconciliation Act of 2001 provided for an increase in this standard exemption from $675,000 in 2001 to $1 million in 2002-03, $1.5 million in 2004-05, $2 million in 2006-08, and $3.5 million in 2009; for these years the top estate tax rate also was reduced, from 55% to 45%. The 2001 law also repealed the federal estate tax entirely for 2010, but left it in place for 2011 (with a standard exemption of $1 million and a top tax rate of 50%), unless Congress takes action to legislate otherwise.

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For some time there have not been a lot of issues and debate regarding the concept of estate tax The ... View the full answer