The estate tax will be fully repealed by 2010 but may come back in 2011.

The federal estate tax, a tax imposed on the assets left by the nation's wealthiest residents, is being phased out and is set to be fully repealed in 2010. However, in 2011, the estate tax will come back unless Congress votes to extend the repeal. In the meantime, estate tax rates will go down and exemptions will go up.

What's Next for the Estate Tax

Currently, the estate tax affects only people who die leaving a taxable estate of more than $2 million. The estate tax threshold will continue to rise until 2010, when the tax will be repealed. The exact dates and amounts of the changes are shown below.

If you're married, estate tax is most likely to be an issue when the second spouse dies. (When the first spouse dies, everything left to the survivor passes tax-free.) But if the second spouse owns all of the couple's property, and it's worth more than the estate tax exemption, estate tax will be due. So if you and your spouse together own more than $2 million (the current estate tax exemption), you may still want to think about using a tax-saving AB trust, making gifts of money or property during your lifetime, or using another tax-avoidance strategy.