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10 Death Tax Myths

        Money | Taxes

9
Estate taxes and inheritance taxes are the same thing
You have the right to choose who receives your treasures when you die.
You have the right to choose who receives your treasures when you die.
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Taxpayers sometimes confuse estate taxes with inheritance taxes, or lump both taxes under the term "death tax." While both taxes concern the transfer of wealth to others, each focuses on specific types of wealth transfers.

The estate tax taxes your right to transfer your property to others when you die. If you amassed a fortune in your lifetime, or collected a significant gallery of fine art, it stands to reason that you should have the right to decide which relatives, friends or organizations receive your wealth when you die. The state can't simply come in and take these items just because you're no longer around to protect them [source: Jacobson].

Inheritance taxes, or gift taxes, are slightly different. These are taxes on gifts you give another person, where you receive nothing (or something of much lower monetary value) in return [source: IRS]. The transfer of wealth doesn't have to be an actual gift for it to qualify for this tax; the recipient simply has to receive much less in return for it.


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