This is not a substitute for legal advice.  An attorney must be consulted.

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Generally, a taxable estate of $600,000 or more will incur federal estate tax. The taxable estate includes an add-back for taxable gifts (those exceeding the $10,000 annual exclusion) made during life. The gift and estate tax structure are combined into one progressive tax rate structure affecting transfers both while living and at death. In other words, during one's lifetime a person can gift away up to $600,000 without paying any federal gift tax, and whatever portion of the unified credit has not been used during life is available at death. As an example, suppose Mother gave a $50,000 one time gift to each of her four children while she was living. She was required to file a gift tax return and report the $200,000 in gifts, even though no tax was currently due. Upon her death, $400,000 of the unified credit equivalent is available to offset her taxable estate.

There are several deductions from the gross estate in arriving at the taxable estate.  The most important is the marital deduction, which is explained in a separate question.  Other deductions are allowed for transfer to a charity, debts, allowable claims against the estate, and expenses of estate administration. IRC Sec. 2053. See question on Gross Estate for explanation of what is contained within the gross estate.

The unified credit offsets estate and gift tax liability of $192,800, which exempts $600,000 of taxable estate value from estate tax. IRC Sec.2010. This is oftentimes referred to as the $600,000 exemption, although it actually is a credit against tax for $192,800, which equates to a $600,000 exemption equivalent.