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According to the IRS, Ben Franklin was clearly right: “In this world nothing can be said to be certain, except death and taxes.” Franklin wrote those words of wisdom to a friend. The IRS isn’t an agency known for their friendliness.

When someone dies, the duty paid to the IRS on their life is called the “death tax,” but that gets it all wrong. It doesn’t tax the dead; it taxes the assets being passed to the deceased person’s inheritors.

Earlier this month, the death by heart attack of Yankee owner, George Steinbrenner, brought to the forefront not only discussions of his legacy, leadership and lavishness, but also his inheritance. The Steinbrenner family just dodged $500 million that would’ve have been taxed on his $1.15 billion net worth if the heart of “The Boss” would’ve let up in 2011. This is because the 2010 inheritance tax stands (or is it lies?) at the amazingly low rate of zero percent. Next year, it’s 55 percent.

A prospective loss of $500 million has The Wall Street Journal betting that with a “death incentive,” more rich folk are going to die in 2010 than 2011.

Talk about money depressing your mood.

Beyond Mr. Steinbrenner, two other billionaires have died in 2010 and are thus exempt from huge estate taxes – they are real-estate developer Walter Shorenstein and energy tycoon Dan Duncan.

With all the money that the government could gain from the deaths of billionaires, those in favor of estate taxes are not usually the rich and greedy. They are those who heavily promote its social benefits, purporting that it gives aid to those with less economic opportunity.

But the people the estate tax will really affect are going to be regular people like you and me. The amount of each estate – which is the total value of the money and property of a person who has died – that will be exempt from taxes in 2011 is set at $1 million. Estates valued above this amount will be subject to the estate tax. That means that many families with homes that have appreciated in value over a long period of time may end up losing a boatload of what they’ve earned.

Estate taxes on homes in areas with high property value will hurt those who don’t have many cash assets outside of the home. All of it will go to the government. For instance, a home purchased in Washington D.C. for $30,000 in the 1960s is now worth $1 million, reported USA Today, making the owner subject to the estate tax

The estate tax is especially detrimental to farmers, particularly those with lots of land and not much income. It will also be a concern for family businesses. An estimated 2,630 family businesses would be subject to the tax if the exemption level were to stay at $1 million for 2011, according to the Tax Policy Center. Only 100 would have taxable estates if the level was set at $3.5 million, and only 40 would be affected at $5 million.

Congress has only a few months to figure out if they want to “fix” the estate tax before 2011, maybe even returning it to its 2009 level: a $3.5 million exemption and 45 percent rate. Still, there is no way the estate tax will be repealed altogether. The social benefits of taxes are too apparent to make 2010 more than just an abnormal year.

If you think that the estate tax may affect you and your inheritors, you should meet with a qualified estate attorney for assistance and advice.

For more ideas on how to improve your financial health, check out Quizzle.com, where you’ll learn how to achieve your credit potential and get home loan recommendations tailored to your unique situation.

More from the QuizzleWire:

• Tax Records to Keep and How Long to Keep Them
• Homeowner & Mortgage Tax Tips
• How to Improve Your Credit Score in 5 Simple Steps
• Ten Tax Laws That Could Save You Money

Tags: death duty, death tax, estate tax, estax tax reform, health insurance, life inurance, property