A tax which is levied on an heir’s inherited portion of an estate if the vaue of the estate exceeds an exclusion limit set by law.
In recent years, the Federal Income tax exemption amount has increased to the point that most investors are exempt. However, be aware that many states also have an estate tax, and the exemptions for the states are often quite a bit lower. Various techniques are used to manage the estate tax, most of which involve gifting assets. Most of these strategies also involve income tax issues as well.