What it is:
A transfer tax is a tax on the value of goods that one party gives to another.
How it works (Example):
Individuals and organizations frequently give and accept property with no exchange of monetary payment. Two prominent examples of this include gifting and inheritance.
Why it Matters:
Gifts and legacies donated for charitable purposes are not subject to transfer taxes. Click here to read our tutorial on how to Reduce Your Federal Estate Tax With These 4 Powerful Estate Planning Tools.