Inheritance taxes and estate taxes are the two types of "death tax" that are used in the U.S. to bring in revenue for the state or Federal government. Most estates are too small to be impacted by Federal estate taxes. There are also a number of exemptions available for property passed to a spouse and for funds placed in an irrevocable trust, etc. Advance planning is usually necessary to take full advantage of all tax shelters. Estate taxes are owed by the estate of the deceased and not by heirs (unless the estate fails to pay the taxes as required.)

In contrast, inheritance taxes are paid directly to the state by each beneficiary who inherits assets from an estate. These taxes are calculated after assets are actually distributed to the beneficiaries. This is because the value of assets bequeathed to a person in a will may have to be reduced by paying off the debts of the estate during probate. Fewer than a dozen states have an inheritance tax and fewer than 20 have an estate tax. The Federal government does not levy an inheritance tax.