The transfer tax is a tax on the right to transfer property, either while alive or at death. Fortunately, both the gift tax and the estate tax allow deductions and exemptions that make it possible to transfer considerable property without taxation. Estate planning, in part, is about transferring property in a way that takes maximum advantage of those exemptions and deductions.

The gift tax imposes a federal tax on the value of gifts exceeding the lifetime exclusion equivalent of $1 million. The exclusion equivalent applies to the sum of all gifts made over a lifetime that exceed the annual gift tax exclusion.

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