Inheritance tax is a tax that is levied on the property that is received by an individual from a deceased person. There can be both a Federal and state tax that is assessed. Typically, the surviving spouse and children are exempt from the inheritance tax. There are many variables involved in determining the inheritance tax, mainly the value of the property being inherited. Estate planning can help avoid leaving a tax burden on family members by setting up trusts, explaining and helping distribute gifts during life rather than waiting to pass them on after death and by making charitable donations that help to reduce the size of the estate. The most common tool used to avoid inheritance taxes is the annual gift that is exempt from taxes, currently $13,000 per person or $26,000 per married couple per gift.