Understanding Estate Taxes
4. Determining your taxable estate
Now, remember that estate taxes are on the net value of your estate when you die. To determine the current net value of your estate, add your assets then subtract your debts. Include your home, business interests, bank accounts, investments, personal property, IRAs, retirement plans -- and death benefits from your life insurance policies. You must include policies for which you have any "incidents of ownership." These include policies you can borrow against, assign or cancel, or for which you can revoke an assignment, or can name or change the beneficiary.
If the net value of your estate is less than the exempt amount, you'll pay no estate taxes. But if it's more, every dollar over the exempt amount will be taxed.