What are federal and state estate taxes and how do they differ from gift taxes?
Estate taxes are assessed at one’s death, whereas gift taxes are assessed at the time a gift is made or transferred during one’s lifetime. Estate taxes may be due from the estate of the last to die of a husband and wife, or from the estate of an unmarried individual. There is a 100 percent tax exemption for bequests between spouses, but when the surviving spouse then dies, a higher, graduated tax may be owed on the entire estate if planning is not done before the first spouse dies. For both estate and gift tax purposes, it is essential to plan ahead. For example, the federal estate, gift, and generation-skipping transfer (GST) taxes form a transfer tax system that was formerly unified but became separated in 2004. The GST tax exists in order to make sure property does not skip a generation without a transfer tax. While the federal gift tax exemption will remain at $1 million for now, unlimited marital and charitable deductions may be made from this exemption. The estate and GST tax exe
