A death tax is a tax that may be levied on your estate after your death. The U.S. Internal Revenue Service (IRS) calls it an estate tax. The death tax has been a source of major controversy in the United States, even though it is only levied on very large estates.

Most estates are not subject to the death tax. If you bequeath your estate to your spouse or a charity, it is usually exempt from the death tax. Filing an estate tax return is only required if your estate is worth more than the applicable exclusion amount--known as the unified credit--that is in effect for the year of your death. The amount of unified credit that is available for reducing or eliminating your death tax is reduced by the total amount of unified credit you used to reduce your gift taxes during your lifetime.

Your taxable estate is your gross estate less your allowable deductions. Your gross estate is all of the money and property that you owned at the time of your death, including:

• Life insurance proceeds payable to your estate or heirs
• Certain annuities payable to your estate or heirs
• Certain property that you transferred within the three years preceding your death

Some of the allowable deductions used to determine your taxable estate include:

• Funeral expenses paid out of your estate
• Debts outstanding at the time of your death
• The marital deduction--the value of property that passes from your estate to your surviving spouse
• The charitable deduction--the value of property that passes from your estate to a governmental entity within the United States or to a qualifying charity
• The state tax deduction--taxes paid to any state or the District of Columbia as a consequence of your death

You can learn more about the death tax at MSN Money or in IRS Publication 950.