The federal estate tax is paid by your estate when property is transferred after your death. The gift tax is paid when you give a gift during your lifetime. Both during your lifetime and after your death, you are allowed to transfer a certain amount of property without owing taxes. There is a unified lifetime exclusion that applies to gifts and estate taxes combined. The unified lifetime exclusion is valued at $12,920,000 in 2023. You are allowed to transfer this much property during your life or after your death without being taxed. Surviving spouses are typically entitled to a marital deduction, which means assets aren’t typically subject to estate taxes as long as they’re U.S. citizens. If you give a gift during your lifetime that exceeds the annual exclusion, you could choose to count the excess toward your lifetime gift tax exemption amount. That enables you to avoid taxes when the gift is given but reduces the amount you can pass tax free later on during your life or after your death.