As you may know, the federal government taxes you upon your death for the "privilege" of passing your wealth on to anyone other than your surviving spouse. This "estate tax" is based on the value of the assets transferred to your heirs upon your death.

According to Houston Financial Advisor Richard J. Alphonso , JD, CPA, M.S.T., and Tax Manager C. Randy Scott, the first $650,000 of an estate is exempt from estate tax (this amount increases to $1 million by 2006). Amounts more than $650,000 are taxed at a 37% rate. The rate increases to 55% for taxable estates of $3 million or more.

To make matters worse, the U.S. government won’t accept an undivided interest in your home or stock portfolio as payment. Uncle Sam wants cash — and he wants it within 9 months of the date of your death!