Estate taxes are not just a worry for a relative handful of well-heeled people who are going to die with piles of money. That’s because federal estate taxes are assessed on estates worth more than $675,000 - an amount that in this day and age is surpassed with more and more frequency. That’s based on net assets, or the value of all your possessions minus your debt, says attorney Douglas P. Barnes, an estate planning attorney located in San Jose, CA.

The amount of money you can leave to your heirs without facing estate taxes is gradually rising. By 2006, you will be able to leave up to $1 million in assets to your heirs without them facing any federal estate taxes.

Then too, estate taxes become an issue only after the death of both spouses. If one spouse dies, the surviving spouse gets a 100% estate tax exclusion. In other words, no federal estate taxes are due at the death of the first spouse, no matter the size of the assets.

If you are married and have a large estate, you’d be wise to plan for estate taxes while both you and your spouse are alive. Careful planning can double the amount of assets - $675,000 per spouse - that can be bequeathed free of tax to the next generation of heirs, which can save them hundreds of thousands of dollars.

The first step in your planning when you have more than $675,000 in net assets should be to create an A-B trust, or so-called bypass trust. An A-B trust can be appended to a will or to a living trust.

Either way, it does one simple thing: It breaks off a set amount of a couple’s joint assets on the death of the first spouse. The investment earnings from those assets go to the surviving spouse, but the principal of those assets also can be used by the surviving spouse if need be. However, at the death of the surviving spouse, the principal in that account goes to the heirs - children, grandchildren and friends. By breaking off those assets at the death of the first spouse, the spouse’s $675,000 estate tax exemption is preserved, saving the heirs as much as $277,000.

Though creating a bypass trust does cost money, it’s not prohibitively expensive, experts note. Because the language to set up these trusts is fairly standard, it generally adds just a few hundred dollars to the cost of creating a will or living trust.

What if you have considerably more than $1.35 million in assets? Get generous, Barnes suggests.

Every American has the right to give away $10,000 per recipient per year, without being subject to estate or gift taxes. That gives you the ability to significantly reduce the value of your estate, and you get the added benefit of watching your heirs enjoy their inheritance while you are alive.

Consider a hypothetical married couple, John and Jane Jones, who have three children and seven grandchildren to whom they wish to leave all their money. They have $3 million in net assets.

The Jones’ prepare an A-B trust, which ensures they’ll be able to bequeath $1.35 million without paying estate taxes. But they have $1.65 million in remaining assets. What do they do? John gives $10,000 to each of his children and grandchildren. Jane does the same.

In a single year, that moves $200,000 out of the elder Jones’ estate into the hands of their eventual heirs. The size of the Jones’ taxable estate drops to $1.45 million.

If they keep this up for a few years, they will eliminate their estate tax problem, enrich their children and grandchildren and still have plenty left to live on.

If the Jones’ had fewer heirs, they still would have many ways to lower the value of their estate. Let’s say they have just one child and two college-bound grandchildren who desperately want to go to Stanford and Yale, two of the most expensive universities in the nation.

As long as the Jones’ pay the money directly to the college rather than to the kids, they can finance all the tuition-regardless of the amount-without worrying about estate or gift taxes, Barnes says. In fact, you can pay tuition or medical expenses for anyone, he says.

In the event that all these techniques still haven’t wiped away your estate tax problems, you can write a simple declarative sentence in your will or living trust that eliminates the need to pay estate taxes on the remaining assets: “I leave the rest of my estate to charities X, Y and Z.” (It’s smart to give assets to charity before you die, however, because you get current-year income tax deductions.)

People who have large estates or who hesitate to give away money before they die may have to resort to more complicated and costly techniques, such as creating charitable remainder trusts, family limited partnerships and qualified personal residence trusts.

For advice about the best types of trusts it is recommended that you seek help from a professional tax advisor.