Uniform Transfer Tax

Uniform transfer tax is a term that refers to the combination of federal estate taxes and federal gift taxes.

Uniform transfer tax is a tax that taxes the transfer of assets from the death of one individual to their chosen beneficiary. It is important to note that the Internal Revenue Service imposes estate tax on assets left to heirs, but the law does not apply to the transfer of assets to a surviving spouse. The term uniform transfer tax also refers to when assets are transferred from one individual to another without receiving anything or receiving less than market value in return. It is the combination of both these taxes that creates the uniform transfer tax. The uniform transfer tax is a kind of transfer tax, which means it is a kind of tax levied on the transfer of ownership or title to property from one entity to another. The Internal Revenue Service oversees the regulations of the uniform transfer tax. Transfer taxes are usually nondeductible.

The uniform transfer tax combines elements of the federal gift tax and the federal estate tax. The federal gift tax applies to transfers made while a person is living and is 40 percent of any amount gifted over $15,000 in a given year. It applies to the giver of the gift, not the individual receiving it. For an asset or amount to be considered a gift the receiving party cannot pay the giver full value for the gift. The gift tax excludes gifts to one's spouse, gifts to a political organization for use by the political organization, gifts that are valued at less than the annual gift tax exclusion for a given year and medical and educational expenses. The tax law that oversees gift taxes is notoriously complicated, but was raised to $15,000 in 2018.

The other half of the uniform transfer tax is the estate tax, which is a tax levied on an heir's inherited portion of an estate. This estate tax only applies if the value of the estate exceeds the exclusion limit set by law. That act is referred to as an unlimited marital deduction.  For beneficiaries, the limit is quite high, however. As of 2018, the Internal Revenue Service requires estates exceeding $11.18 million to file a federal estate tax return and pay estate taxes. This means that an estate of $11 million does not need to file an estate tax return. This is a significantly higher limit from previous years. In 2017, taxes were owed if the estate exceeded $5.49 million.