uick - think of one good thing about not being a millionaire.

How about you don't have to worry about creating a well-crafted estate plan? Wrong!

You could end up costing your heirs thousands - even hundreds of thousands of dollars - in unnecessary taxes by taking the estate potato strategy. Keep in mind that if you're like most people, you're probably worth more dead than alive. It sounds morbid, but it's true.

Take the time to assess what you're worth upon death and how it will affect your family. Every unnecessary dollar that goes to estate taxes, probate fees, administrative and legal costs, debts and other expenses is one less dollar for your beneficiaries. You may think that a will, durable power of attorney, living will or health care proxy isn't worth the time and expense to draw up. If that is your state of mind, think again.

Every adult needs a will, a durable power of attorney, a living will and a health care proxy. If you own property with anyone else, you need to figure out what happens to your share of that property when you die. For example, your will may state that $400,000 is to be given to your children with the rest going to your wife. However, if your entire estate is valued at only $600,000, and most of it is made up of your $400,000 house that you own jointly with your wife (with right of survivorship), your children will only get $200,000.

Sketch out what will happen to your assets when you die, so that you see who gets what. This includes checking the beneficiaries on your retirement plans and insurance policies as well, because your will does not apply to these or most other jointly held assets unless you have named your estate as the beneficiary.

The first step is to figure out how much you are worth at death, which is different than how much you're worth right now. That's because it includes any life insurance that you own, death benefits from your retirement plans (you may have a $40,000 balance in your retirement plan but there may be insurance of $250,000), or mortgage insurance that pays off the balance of your loan upon death.

If you are married or own property with someone else, you also need to figure out who owns what and how it's owned. Increasing real estate values and retirement portfolios, coupled with death benefits may make your estate worth much more than you think. You may be getting into the "danger zone."

What is the danger zone? For federal estate tax purposes, the danger zone is $625,000. That amount rises incrementally over the next several years thanks to the 1997 Taxpayer Relief Act. In 1998, however, each person can give away $625,000 during his or her lifetime or at death before Uncle Sam takes any out for himself ($650,000 in 1999). If you are single, it doesn't matter whether you are a millionaire or not; it matters whether your taxable estate (after debts, administrative expenses and other costs) is more than $625,000. If it is, the federal estate tax bite starts at 18 percent and caps off at 55 percent for the very wealthiest estates.

This $625,000 exemption is the downfall of many married couples' estate planning as well because they naturally think, "If each of us gets $625,000, then if there are two of us we don't have to start worrying until our assets hit $1.25 million."

This misleading calculation is compounded by the fact that the press commonly says that taxes for married people are applied to estates of $1.25 million or more. But you have to look at each person's estate separately, because even if you are married you may be hit with big estate taxes on joint estates of only, say, $800,000 or $900,000. The problems start because of what's called the unlimited marital deduction, which allows a spouse to leave everything to the surviving spouse with no federal estate tax due at that time. But if you leave it all to your spouse, you have just given away your $625,000 exemption. Your estate will be taxed in her estate, and all she gets to use is her own $625,000 exemption.

An example can make this complicated concept easier to follow. Let's say that you are married with individual assets worth $800,000 and your spouse's assets amount to $300,000. You die and leave everything to your spouse, who now has $1.1 million in her name. Let's further assume that she dies a year later and her taxable estate is $1.1 million. She takes her $625,000 exemption, and the other $475,000 gets hit with a federal estate tax whammy of $147,300. This means that money that could have gone to your beneficiaries will instead be paid to Uncle Sam. The figure is based on the graduated estate tax scale.

This marital deduction mistake is avoidable with the use of trusts, because you can leave the $625,000 in a trust for your children or other future beneficiaries. The rest would go to your spouse, thus allowing you to use your $625,000 exemption. In our example, your trustees can give your spouse all the income and as much principal as they deem necessary, but because it is not in her name it does not get taxed. When she dies, her estate is only worth $475,000, so no taxes are due. Your estate has just saved $147,300.

Another big problem, whether you are married or single, is due to the increasing use of living trusts, which have become wildly popular as a way to avoid estate taxes. The problem is many people think that if they put their assets in a living trust, their assets are not included in their estates at all. In fact, you may have been to a living trust seminar where that was implied, but it is just not true.

For estate planning purposes, all that living trusts do is keep those assets out of the probate process so you save administrative costs and maintain privacy (because all probate assets are part of the public record). For married people, living trusts can pose a similar problem because the trust can be set up so that living trust proceeds go to the surviving spouse. But you have the same problem as before because, once again, all those assets get dumped in his or her estate.

Even if your estate is small, there will be expenses at your death. There are administrative costs, court costs, legal fees, probate expenses and sometimes state inheritance or estate taxes even if your estate is worth only $50,000. This all depends on your state of residence. All these costs mean that your estate will have to come up with the cash to pay them, and for many non-millionaires the bulk of their estates are their homes. If your executor does not have enough cash in your estate to pay taxes, he or she is going to be forced to sell your house, business or other non-liquid asset in order to raise the money. It doesn't matter if your relatives live there, the real estate market has tanked or that it would normally take a year or two to find a buyer for your business. All that matters is that those costs are usually due and payable within nine months of your death.

The final problem to consider is gifts that you may have given to anyone, especially your children. Any financial gifts you have given other people over the years are counted against the bottom line. So if you've given away $100,000 in assets, your unified credit amount is only $525,000. It gets especially murky when you have loaned or given money to your children to help them, say, make a down payment on a house. This needs to be documented or your child may have to pay the estate back the entire amount immediately, or your estate may get socked with unreported gift taxes.

Finally, be sure to take into consideration what changes may be occurring in your life in the future that may change how you want your money to be distributed after you die. Virtually all of us would like to be millionaires, but most (so far) aren't. That doesn't mean we can't have a millionaire's financial issues. Even though money complicates your life, you don't want to make the lives of your loved ones even more complicated by executing a poorly planned estate.