Denver Post headline for same article: "Estate tax can hit ordinary people."
Who are those ordinary people?
Folks receiving inheritances from estates of $3.5 million or more ($7 million or more in the case of married couples with a simple trust arrangement). Serious planning can considerable increase the amount the passes tax free and can reduce the effective estate tax rate. Small business almost never have to be sold to pay estate taxes.
Needless to say, the AP headline provides a more accurate description. The Denver Post headline creates unjustified fear.
Estate tax issues aren't that common (certainly not ordinary) for people who are merely relatively affluent members of the middle class (perhaps because they are retirees), but could be a particular problem in a divorce of a same same couple with unequally owned assets, of only modest wealth, or large gifts to a spouse who is same sex or not a U.S. citizen.
A gay spouse or non-citizen spouse receiving a spousal gift during life in excess of $1,013,000 (gay spouse) or $1,133,000 (non-citizen spouse), or in excess of $3,500,000 (for either) from a spouse via inheritance or bequest (in either case reduced by certain large gifts made during life to people who are not charities) could be subject to the gift or estate taxation, but even this is an uncommon upper middle class issue that can be resolved with tax planning (one solution is a type of trust called a QDOT).
Colorado has the cheapest, easiest probate system in the nation, which provides a fairly high degree of privacy, so that is rarely the worry it is made out to be either.
The far more ordinary money issues at death are (1) taxes due on never taxed traditional IRA and 401(k) assets, and (2) the Medicaid estate recovery system's application to people who needed publicly assisted nursing home care in the final days.
The key point made in the article, however, is that:
In 2010, the federal tax as it currently stands will expire; if Congress does not change the law, there will be no estate tax next year. In 2011, the old exclusion of $1 million returns, and the top rate for holdings above that amount would jump back to 55 percent, where it was in 2001.
Several bills have been proposed in Congress to address the issue, but none has passed yet.
Conventional wisdom is that the final deal for 2010 and thereafter will be a $3.5 million exclusion and a 45% rate on the balance, just as under current law, with a few tweaks that make estate planning less important and close some loopholes in the way minority interests in closely held businesses are valued (basically, President Obama's proposal). But, a proposal to do this narrowly failed in the U.S. Senate where some Senators would prefer a larger exclusion and/or lower tax rate.