What is the difference between an estate tax and a gift tax?

Question

A.
An estate tax is on the assets of someone who has died; a gift tax is on assets given from one living person to another.

B.
An estate tax is paid by the executor of an estate; a gift tax is paid by both parties of the gift.

C.
An estate tax is paid on money; a gift tax is paid on money and property.

D.
An estate tax is assessed on all inherited money; a gift tax is only assessed on amounts over $5,000.

Answer 1

The correct answer is:

A. An estate tax is on the assets of someone who has died; a gift tax is on assets given from one living person to another.

This option accurately describes the fundamental difference between estate tax and gift tax. The estate tax is levied on the total value of a deceased person's estate, while the gift tax applies to the transfer of assets and money from one living individual to another during their lifetime.