What is an estate tax?

An estate tax is a tax imposed on the total value of a deceased person's assets before they are distributed to beneficiaries. It is calculated based on the fair market value of the property owned by the deceased at the time of their death, minus any debts or allowable deductions. The purpose of the estate tax is to tax the transfer of wealth from the deceased to their heirs.

This definition aligns with the character of the correct answer and reflects the function of the estate tax in the context of inheritance and estate planning. The estate tax differs from other tax types, such as income tax on earnings, which is not applicable upon death, or the fees associated with the probate process and estate management, that deal more with the administration of the estate rather than taxation on the estate’s value itself.