This year, a deceased's estate is not subject to estate tax at the federal level  at all. That means no one has to worry about estate tax diminishing what they leave to their loved ones. But unless Congress acts, estate taxes will come roaring back.

Before you summarily dismiss the federal estate tax, be aware there are some types of property you may not consider part of your estate but the government does. A prime example is life insurance that you or your employer own on your life. Yes, that seems unfair because you will not live to receive the insurance proceeds ... but we are talking about the "value passing to others as a result of your death" concept.

Other sometimes-overlooked assets that can significantly increase an estate are pension and retirement plan funds and the value of sizable gifts you made over time.

Quirky rule change coming up

The value of property the government allows to pass free of estate tax is called the exclusion. Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (fondly called EGTRRA), this year the estate tax (but not the gift tax, which we discuss in a minute) completely disappears ... but just this year only.

Then in 2011 and beyond, the exclusion amount decreases to $1 million unless Congress changes that in the interim. Clearly, after 2010, many more estates will meet the threshold and be subject to estate tax.

Gift tax on generosity

Gifts are gratuitous transfers you make during your lifetime. The hitch with the gift tax, though, is that you are limited to making gifts with an aggregate value of "only" (ahem ... ) $1 million before transfer tax kicks in ... again at a 35 percent rate.

The annual gift tax exclusion, however, is a thick silver lining to the gift tax rules. In 2010 you can make as many gifts of $13,000 to as many recipients as you can afford without those gifts even being a blip on the gift tax screen. These are completely tax-free transfers. The amount is periodically adjusted for inflation.

If you "gift-split" with your spouse, $26,000 can pass to each child, grandchild or any other person you choose. The recipients don't have to be related to you. Some people have referred to an annual exclusion gifting program as "the poor man's estate plan" because it effectively reduces the value of your estate without any interference from Uncle Sam.

State death tax may apply

Not surprisingly, many states want a piece of the estate revenue action, too. So, though you may not be concerned about federal estate tax, your estate may have to chip in to state coffers. Some states allow exemptions for closely related beneficiaries; others tax dollar one.

Some states do not have a death tax and most, if not all, do not tax the value of assets left to a surviving spouse.

Estate planning is your personal opportunity to make decisions concerning your assets, finances and health care. Although some individuals narrowly view estate planning as a way to assign their assets to heirs, others see it as a way to perpetuate their legacies.

With an estate plan in place, you can sing (like Frank Sinatra), "I Did It My Way."

Constance J. Fontaine teaches estate planning to aspiring financial planners at the American College.