The Estate Tax (aka the Death Tax) is a tax on property that is transferred upon one's death. The estate tax applies to everything one owns (cash, securities, real estate, business interests, etc.). The IRS assesses the estate tax on the fair market value of property at the time of death. In other words, the IRS does not necessarily use the original purchase price of the property (for more info see Cost Basis). Estate Planners often use trusts as a means to avoid estate taxes. At the time of this writing, the estate tax exemption (the amount an individual can leave to heirs without having to pay federal estate tax) is approximately $5 million.