What is the purpose of an estate tax?

The primary purpose of an estate tax is to impose a tax on the assets that are transferred to heirs upon an individual's death. This tax is levied on the total value of an individual's estate, which encompasses all assets, properties, and monetary holdings at the time of death. When an estate is valued above a certain threshold established by law, the estate tax applies to the amount exceeding that threshold.

This mechanism serves to generate revenue for the government while also addressing wealth distribution, as it targets larger estates that are passed down to beneficiaries. The estate tax ultimately impacts the net value that heirs receive, as the tax is deducted from the overall estate before distribution.

In contrast, other aspects such as taxing income earned during a person's lifetime relate to personal income tax rather than estate tax. Regulation of estate distributions to charities focuses on the philanthropic aspect of estate planning and is not a direct purpose of the estate tax itself. Similarly, while estates are indeed taxed based on their size, this is a characteristic of the estate tax rather than its fundamental purpose. Thus, the correct answer accurately reflects the tax's intention to tax the assets left to heirs in a will.