inheritance tax

(redirected from Estate taxation)
Also found in: Dictionary, Thesaurus, Legal, Financial.

inheritance tax,

assessment made on the portion of an estate received by an individual; it differs from an estate tax, which is a tax levied on an entire estate before it is distributed to individuals. The inheritance tax is usually progressive and is determined by the amount of property received by the beneficiary, as well as by his or her relationship to the deceased. Strictly speaking, it is a tax on the right to receive the property; the estate tax can be characterized as a tax on the right to transmit the property. All states impose either an estate tax or an inheritance tax, some states employing both. A related federal levy is the gift tax, designed to prevent people from avoiding inheritance and estate taxes by giving away property before death.

In the United States, the federal government levied inheritance taxes during the Civil War period and again during the Spanish-American War; since 1916, however, a progressive estate tax has been imposed. The U.S. tax law of 1981 greatly reduced estate and gift taxes by raising exemptions (from $175,000 to $600,000) and lowering rates, and a 2001 law called for phasing out the federal estate tax by 2012, but that was reversed and the tax remained in place on estates worth more than $5.49 million (twice that for couples). Changes in 2017 doubled those thresholds for 2018–25.

inheritance tax

1. (in Britain) a tax introduced in 1986 to replace capital transfer tax, consisting of a percentage levied on that part of an inheritance exceeding a specified allowance, and scaled charges on gifts made within seven years of death
2. (in the US) a state tax imposed on an inheritance according to its size and the relationship of the beneficiary to the deceased
References in periodicals archive ?
Wealth replacement strategy using life insurance: Individuals with taxable estates may wish to increase assets given to individual beneficiaries when they die, reduce estate taxation at death, receive current income tax benefits and make a significant gift to charity at death.
Any theoretical analysis of estate taxation requires taking a stand on the nature of intergenerational links.
For example, the sale of LLC or partnership interests to a TPT removes "value" from the reach of creditors and from estate taxation, especially in light of the discounts available for these interests.
It was written for practitioners wanting a convenient work on real estate taxation to keep at their desks for reference (but not for exhaustive research), which also limits the book's usefulness as a classroom tool.
Use of the term 'political subdivision' demonstrates that the drafters were clearly cognizant of the double taxation issues that might arise as a result of estate taxation imposed during state probate proceedings.
The fundamental justification for estate taxation is [the belief] that great private wealth is socially undesirable," writes Bruce Bartlett, a senior fellow at the National Center for Policy Analysis, in the Public Interest (Fall 2000).
According to Ari Fleischer (a former spokesman for Archer, who now works for the Bush presidential campaign) the chairman is "philosophically opposed" to estate taxation as a form of "double taxation.
Although the minimum distribution rules are intended to preclude the unreasonable deferral of benefits, they are not truly needed inasmuch as benefits deferred are subject to income taxation upon eventual distribution and may be subject to estate taxation on a participant's death.
Republican proposals to reduce capital gains and estate taxation would especially benefit the very rich and add more momentum to these trends.
Little change took place in the basic structure of estate taxation during this period.
Keep in mind that when using this distribution technique an alternative source of payment for estate taxation should be provided other than the IRA.
In the future, the policies can be transferred to a life insurance trust to remove the policy proceeds from estate taxation.