what is the federal estate taxs relationship to the federal gift tax?
Unlike most tax structures, the Estate Tax and Gift Tax are unified – integrated – into one tax system. The federal Estate and Gift Tax impose a tax on transferring assets: one tax catches transfers made during your life — the Gift Tax, the other catches transfers at death — the Estate Tax. Transfers while you were alive and at your death are combined and subject to one progressive tax. The rates are the same for both taxes. There are circumstances in which a sophisticated estate planning attorney will recommend that a person make large gifts that require the payment of Gift Tax during one’s lifetime. In these circumstances the impact of making the large gift and paying Gift Tax earlier results in a significantly lower Estate Tax later. In appropriate circumstances, the combined total of both the earlier Gift Tax and the later Estate Tax would be lower than the Estate Tax alone would have been, with the net effect that the person can pass on significantly higher values to his chosen
