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Are you putting off estate planning because you’re young, healthy and busy, or just find the topic depressing? You’re not alone. Approximately 37 percent of those with assets exceeding $10 million don’t even have a valid will, according to the Journal of Financial Service Professionals.

Add up what you’ve accumulated: Appreciation on property, pension plans,401(k) accounts and stock options may have pushed the value of your estate higher than you realize. While you may not completely avoid paying federal or state estate taxes, you can minimize your tax bite with sound planning.

Why you need an estate plan
One key purpose of an estate plan is to minimize estate and income taxes for your heirs. Only a third of people aged 45 or older use an estate plan to shelter their wealth from taxes, according to a Money survey. Fewer than half know how much taxes could drain their estate.

Undercurrent law, the maximum exemption from federal estate taxes is $2 million. The exemption level increases to $3.5 million in 2009, is unlimited in 2010 (one-year estate tax repeal) and drops back to $1 million in 2011. The highest estate tax rate, 46 percent, will drop to 45 percent in 2007 but is scheduled to jump to 55 percent in 2011.

In addition to the federal government, many states levy estate taxes,depending on where you live and own property. Eighteen states recently increased estate taxes, according to Kiplinger’s Personal Finance.These states are Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, plus the District of Columbia. The combined federal and state taxes could exceed 50 percent of an estate.

Although minimizing taxes is an important goal of estate planning, much more is involved.

According to the Journal of Financial Service Professionals, the goals of establishing a sound estate plan include:

• Designating the recipients of your wealth.
• Appointing the fiduciaries of your choice.
• Assembling a coordinated and comprehensive plan.
• Providing financially for a surviving spouse or dependents.
• Ensuring business continuity and value maximization.

An estate plan also allows you to name guardians for your minor children.

Additionally, it permits a measure of control, or the ability to manage your assets after you’re gone. For example, experts recommend distributing funds in stages. Doing so eases the recipient or recipients into the money-handling responsibility and cushions the potential hit of a youthful business or investment mistake. Generation-skipping trusts and matching contributions based on motivational factors are options to consider.

Estate strategies help you achieve your financial goals
Many estate-planning strategies involve trusts. When you’re considering establishing a trust, key considerations include the type of assets to transfer, whether you want to retain any benefit during your lifetime, your degree of control over when and how your heirs use the assets, and whether to leave something to charity. Experts also recommend considering your age and health, because some trusts return assets to your estate if you don’t outlive the period of the trust.

Some of the more common estate-planning strategies include:

Revocable or "living" trust. Use of a living trust generally avoids probate and allows the heirs privacy as they settle the estate. Under a living trust, your will transfers anything not already in the living trust to the trust at your death. From that point forward, the probate court need not be involved.

The probate court charges a fee equal to a percentage of assets subject to probate. However, by placing your assets in your living trust while you are alive, you can avoid these fees.

The other benefit of holding your assets in a living trust is that, in the event you are incapacitated, the trustee you name can manage your assets.

Grantor retained annuity trusts (GRATs). GRATs are useful for transferring assets that generate substantial income or you expect to significantly increase in value. When you choose a GRAT, you place specific assets in a trust for a predetermined number of years and receive annuity payments for those years. At the end of the retained annuity term, the assets in the trust transfer to your named beneficiaries or are held in a trust for their benefit.

If you die before your retained annuity interest ends, all of the assets are subject to estate taxes, which would be true even if you’d never set up the GRAT. You have little to lose and much to gain.

Qualified personal residence trusts (QPRTs). A QPRT is a trust that holds your principal residence or vacation home. After you transfer the home to the QPRT, you retain use for a specified period of years. Similar to a GRAT, the measure of the transfer for gift-tax purposes is the value of the property discounted for the value of your retained use.

At the end of the term, the home passes to your heirs and out of your estate, regardless of the property’s value and appreciation. You can remain in the home after the trust ends but must pay fair-market rent to your heirs. If you die before the trust ends, the property goes back into your estate and is valued at fair-market value for estate taxes.

Experts say a QPRT is a good option if you want to give a non cash gift while you’re living. It’s a particularly effective trust when property is appreciating quickly.

Charitable remainder trusts (CRTs). If you have charitable intent and appreciated stock, a CRT may be the answer. When you give a gift to a CRT, you retain a specified annuity interest. The annual annuity can be a fixed dollar amount (charitable remainder annuity trust, or CRAT) or a fixed percentage of the trust’s value (charitable remainder unitrust, or CRUT). The value of the property transferred to the trust, minus the present value of your retained annuity, is a charitable contribution that you can deduct on your income-tax return. A CRT is generally a tax-exempt entity, which means the trust can sell the stock without paying taxes and reinvest the proceeds in a diversified portfolio. You pay tax on the income you receive from the CRT. At your death, what’s left goes to the charity you name in your trust.

Family loans. You can use a family loan as an estate-planning device when borrowers invest the money in a way that earns enough to repay the loan and leave a profit. Children can benefit from this method to buy a business from a parent, even if they’re the party issuing the loan. Relatives can lend money to family members at a rate the IRS sets monthly, which is generally below the commercial loan rate.

Gifts of cash and life insurance. A common estate-planning device is the annual gift-tax exclusion. You can give each of your heirs $12,000 a year tax-free. By consistently making annual gifts in the maximum amount, you can reduce the size of your estate and the associated estate-tax liability.

If you’re concerned about how your heirs will pay estate tax and income tax on the amount of their inheritance not sheltered from estate taxes, you can cover it by purchasing life insurance. To avoid estate tax on the death benefit, you can use a life insurance trust or have your heirs own the policy. The key is to not retain any rights for the policy yourself. You can pay the annual premiums as part of your annual gift-tax exclusions.

Before setting up an estate plan, experts recommend getting a clear understanding of your assets and how you own them (in trust, singly or jointly) so you can select the appropriate tools. You’ll need a lawyer to create the legal documents, but alsoconsider a financial professional who can work with you to analyze your assets and objectives and plan a structure to maximize your tax benefits. Fortune recommends annually reviewing your estateplan on your own and consulting a professional every two years — and with any major life change or changes to estate tax laws.