Inheritance tax is a tax imposed on the transfer of assets from a deceased person to their beneficiaries. The tax is based on the value of the assets inherited and is paid by the beneficiaries.

Gift tax is a tax imposed on the transfer of assets from one living person to another without receiving fair compensation in return. The tax is based on the value of the gift given and is paid by the person making the gift.

Inheritance tax and gift tax are related because both taxes are imposed on the transfer of assets. However, they are separate taxes with different rules and exemptions. Gifts made during a person’s lifetime may be subject to gift tax, while assets inherited after a person’s death may be subject to inheritance tax.

Both inheritance tax and gift tax can reduce the value of your estate by imposing taxes on the transfer of assets. Proper estate planning can help minimize the impact of these taxes by utilizing exemptions, deductions, and other strategies to reduce the tax liability for your beneficiaries.