Careful estate planning is as important today as it ever was. As the federal estate tax is greatly reduced over the next decade, watch for states to implement their own estate tax. This is because in most states, a portion of the federal tax currently goes to the state coffers. As this phases out, many states will be forced to implement their own tax or watch their funds dry up.

Also, most people are unaware of the fact that when (or if) the estate tax is eliminated in 2011, estate planning is likely to become more complex, not less. When the estate tax reaches zero, beneficiaries will no longer be entitled to a stepped-up basis in assets received. This means when they sell property, stock, or other appreciated assets, their taxable gain will be calculated using the decedent's basis. This could require extensive research and tracking. Furthermore, beneficiaries will be required to report assets inherited (including basis) on their personal tax returns.

Placing assets in a trust, family limited partnership, or other estate planning vehicle can have significant tax ramifications (good AND bad). Always be sure to consult with both an attorney and a tax advisor before implementing an estate plan.