Estate Tax

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Otherwise known as death tax, an estate tax is a federal government tax on the assets that you leave when you die (your estate). It really only affects wealthier people, because you are allowed to leave quite a lot of assets before the tax takes effect. The actual amount you can leave taxfree - known as the estate tax exemption - is adjusted on a regular basis by the federal government. An estate tax is also levied by at least fifteen state governments, and around eight states impose an inheritance tax. Inheritance tax is imposed on the transfer of property after the owner's death. Inheritance tax differs from estate tax in that it is generally the beneficiaries of the inherited property who must pay the tax. At least two states impose both estate tax and inheritance tax. See also Gift Tax.