Inheritance taxes, also known as estate taxes, are levied by a government on the assets of an individual in the event of their death. A person's estate - being their combined assets of property, investments and other assets - is valued and at least part of the value is usually subject to tax.
Gifts made by the deceased in the years before their death can also attract taxes, as can recent capital gains. In law, there is a distinction between estate and inheritance taxes, although the language of tax law often confuses the two. But what we need to know is whether we, or rather our estate and beneficiaries, will be taxed on what we accrue after our death.
Not all countries levy inheritance tax on their citizens or residents - and in some cases the distinction can be crucial - with places such as Canada, Australia, Singapore, Russia and India having abolished this tax. Most of Europe has inheritance tax and the US can be particularly confusing because it varies from state to state.
The rates of tax vary, as does the proportion of the estate that is exempt from taxes. Not everyone's estate will be taxable even if inheritance tax generally applies and in many cases it is designed to be applied to those with significant assets.
For certain nationalities, their worldwide estate will be subject to inheritance tax in their home country, no matter there they are living or where their assets are held.
The rules vary widely and it is best to seek advice on how it applies to you and any action you can take to mitigate the taxes payable after death.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Write to her at email@example.com.