Assets owned by an individual at that time of death are subject to federal estate tax.  This tax is calculated by taking the fair market value of assets in the gross estate at death, subtracting certain deductible items, calculating the tax at rates ranging from 18% to 50%, and applying the applicable credit to determine the amount of tax due.  The estate tax is due nine months after the date of death unless one of the few narrow exceptions applies.

              The term "gross estate" is quite inclusive and covers among other things a home, business, car, savings, investments, IRAs, 401(k)s, TSAs, life insurance, and all other assets under the ownership or control of the deceased.  The principal deductions include debts, expenses of last illness, charitable payments to be made from the estate, funeral expenses, and expenses of administration.  The computation of tax is at the rates set forth in the Internal Revenue Code Section 2001(c) which provides as follows:

Year

$675,000

              If the decedent made taxable gifts during his or her lifetime, the credit may be partially used up during lifetime.  Most gifts fall within an annual exclusion which allows gifts of $11,000 or less per person per calendar year to be made without any gift tax consequence.  This annual exclusion applies to gifts of a present interest and applies to any number of donees within one calendar year.