Which term denotes the credit against gift and estate taxes due?

• A. Credit Shelter Trust
• B. Taxable Estate
• C. Portable
• D. Unified Credit

Answer: (D)

The main idea is that there is a single tax credit that offsets what you owe in gift and estate taxes. This is the unified credit. It provides a lifetime exemption from transfer taxes and reduces the tax due, dollar for dollar, up to that exemption amount. In practice, the unified credit lets a person pass a substantial amount without paying gift or estate tax.

Portable is a related concept about allowing a surviving spouse to use any unused portion of a deceased spouse’s exemption, but it’s not the name of the credit itself. A credit shelter trust is a planning tool used to utilize the exemption, not the credit’s name. The taxable estate refers to the value of the estate subject to tax after exemptions, not the tax credit. So the term that denotes the credit against gift and estate taxes is the unified credit.