Final answer:
Taxes on inherited property are known as estate and gift taxes. The estate tax is levied on estates exceeding a certain value after death, while the gift tax applies to transfers of wealth during life. The fairness of these taxes is a topic of debate.
Step-by-step explanation:
Taxes on property that will be inherited from a deceased person are called estate and gift taxes. The estate tax applies to the transfer of property after a person's death and usually affects estates above a certain value threshold. Those who inherit property may be taxed if the estate exceeds the exemption amount set by law. On the other hand, the gift tax applies to transfers made during a person's life. These taxes were primarily instituted to prevent wealthy individuals from circumventing the taxation system by transferring their wealth before death.
However, there is a debate surrounding the fairness of these taxes. Some argue that individuals should have the right to pass on their hard-earned wealth to their descendants without the government imposing heavy taxes, while others believe that inherited wealth contributes to societal inequality.
If an individual dies without a will, known as dying intestate, state laws will determine the distribution of assets according to a predetermined order of heirs, such as spouse, children, parents, and siblings.