The death tax will wipe out my family's estate
The Web sites of anti-tax advocacy groups offer up a range of stories about families who have lost farms, businesses and generations-old family estates because of the high burden of estate taxes [sources: Policy and Taxation Group, American Family Business Institute]. If a family member transfers your family business through a gift or inheritance without proper planning, the resulting taxes could make it difficult for your family to keep the business intact.
Part of the problem can arise when a person's estate, especially business or land holdings, isn't properly valued before death. For example, a family farm in an area where suburban development has swallowed other farms may maintain a lower taxable value than its surroundings while the farmer is alive and working the land. But when the farmer dies, the land could be reappraised at a much higher taxable value, since the land around it has been converted into housing tracts. The farm, in the eyes of the tax appraisers, is now very valuable land that's not being put to its best use. In this situation, the heirs to the farm may not be able to afford the increased tax burden.
Avoiding this type of situation requires early and thorough planning. If you have an estate you wish to give to heirs, and if that estate exceeds the IRS's exemption limit, you should consult an experienced tax attorney, accountant or financial planner.