Will my heirs owe taxes on my estate?
If you intend to leave all of your assets to your spouse, estate taxes aren't an issue: You can leave an unlimited amount of money to your spouse tax-free. Otherwise, your estate will owe taxes only if its value - including real estate, life insurance proceeds, retirement accounts and investments - exceeds a certain threshold, known as the estate tax exemption.
The federal estate tax exemption is $2 million in 2008, and it will rise to $3.5 million in 2009. The estate tax is scheduled to phase out completely in 2010, but then it's slated to return with an exemption of just $1 million in 2011.
If your estate is large enough to trigger the estate tax, only the amount that exceeds the exemption will be taxed. For example, in 2009 an estate worth $4 million would owe taxes on $500,000 - the amount by which it exceeded the $3.5 million exemption.
It's a good idea to consult a financial adviser if there's any chance your estate will be large enough to trigger taxes. 
