Estate tax (sometimes called inheritance tax at the state level) is affectionately referred to as the “death tax” in political circles. The gist of it: You die and the government taxes a portion of the estate you turn over to your surviving relatives.
The good news is, unless you have a pretty substantial estate, you don’t have to worry about it. For 2011, the estate tax exemption is $5 million, although this is scheduled to decrease to $1 million in 2013, which would affect a lot more people.
Once the estate owner dies, there isn’t much beneficiaries can do to reduce estate taxes, so if you plan to leave a sizable estate behind, the time to act is now. Read more in my new post on GoBankingRates.com: http://bit.ly/IszgRR