The estate tax is imposed on the value of an estate, on the day the benefactor dies. Although the value of the estate may increase of decrease before the inheritance is dispersed, the value of the estate on the day that the benefactor died is the value on which the tax is imposed. The estate tax is imposed on the federal level, as well as the state level in some tax justifications.
Although an inheritance tax is also imposed in most jurisdictions, it is imposed after the estate tax has been paid. For example, if one individual were to inherit an entire estate, that estate would be subjected to both the estate tax and the inheritance tax.
The federal estate taxes are imposed as percentage of the value of the estate. The percentage of tax increase as the value of the estate increase. In most cases, state inheritance taxes are imposed in the same manner.
For example, an estate that is valued at one hundred fifty thousand dollars, would be imposed a tax as a percentage of that value. However, any amount over the minimum within a threshold, is also taxed separately, thereby increasing the tax burden.
The tax burden on an estate decreases if the benefactor owed money to creditors. The value of the estate will decrease once those creditors have been paid, making the actual value of the estate lower than what it was before any creditors were paid.