A more thorough explanation:

Estate tax is a type of tax that is charged on the property that a person owns at the time of their death. This tax can take the form of an estate tax, which is charged on the estate before any transfers, or an inheritance tax, which is charged on individuals who receive property from the estate.

For example, if a person dies and leaves behind a house worth $1 million, their estate may be subject to an estate tax. The tax would be charged on the full value of the house, regardless of who inherits it.

The federal government imposes an estate tax, which is set forth in the Internal Revenue Code. Many states also impose their own estate tax.

The federal estate tax is integrated with the federal gift tax, which is designed to prevent people from avoiding estate tax by giving away their assets before they die. The gift tax applies to any transfer made without receiving value in return and without regard to intent.

Each individual has an applicable exclusion amount, which allows a set lifetime amount of gifts and estates to be excluded from the tax. The federal tax rate for gifts and estates is around 40%, but Congress changes this rate frequently.