The recent death of 80-year-old George Steinbrenner has thrust the estate tax back into the spotlight.

While Forbes magazine has estimated Mr. Steinbrenner's estate at $1.1 billion, his heirs pay no federal estate tax because he died in 2010. If Mr. Steinbrenner had died in 2009 when the federal estate tax exemption was $3.5 million and the top tax was 45 percent, his estate would have paid taxes of about $500 million.

If he died next year, things could be even worse for his heirs.

The problem is no one has a clue what the law will be next year, and there's a chance it might also squeeze people who identify more closely with the middle class.

"We really are in a state of uncertainty now, and it's difficult to advise clients," said Don Linzer, a partner at the Schneider Downs wealth management firm, Downtown.

People who stand to inherit wealth owe no federal estate taxes on their windfall this year because Congress has not voted to replace the tax law that expired in 2009.

If Congress takes no action on passing a new estate tax law, the exemption will automatically fall to $1 million with a top tax rate of 55 percent on all assets above $1 million.

"If Congress extends the exemption for the first $3.5 million, it only hits the wealthiest 1 or 2 percent of Americans," said Dan Nigito, vice president of Merion Wealth Partners in Bethlehem. "If the exemption is only $1 million, if you own a home, a retirement account and some insurance and investments, you are suddenly taxed like the wealthiest Americans when you are only middle-class."

Mike Freker, a wealth manager at AXA Advisors in Carnegie, said that if the exemption falls back to $1 million, the estate tax will become more of a reality for a far greater percentage of the population.

"There's more people affected than you think," he said. "Small-business owners represent about 65 percent of all employers.

If the business you work for is affected by the tax, it could trickle down."

As part of the tax cuts approved by President George W. Bush in 2001, the federal estate tax exemption started at $1 million and over the course of nine years increased to $3.5 million in 2009. The law eliminated the federal estate tax in 2010.

However, the 2001 tax cut requires the estate tax to revert back to $1 million in 2011, so it is up to Congress to pass a law that would raise the exemption and extend the tax break. So far, the political bickering on Capitol Hill has stymied any efforts to pass a new law.

"The problem is you've got a bunch of people in Congress who can't agree on what day of the week it is, and now they are supposed to come together and decide how to handle the estate tax provisions of the sunsetting Bush tax cuts," Mr. Nigito said.

Jeff Condon, an estate tax attorney at Condon & Condon in Santa Monica, Calif., said that if Congress keeps spinning its wheels and we end up with only a $1 million exemption on the estate tax, it will result in more complex estate plans.

"As an attorney who takes pride in reducing the estate tax for my clients, that's a real backward slide," he said. "Now they have to pay me and lawyers like me more money to do fancy, sophisticated and hard-to-understand techniques that do the same thing as a high-exemption amount -- reduce their estate tax."

While there is no federal estate tax this year, states can set their own taxes on estates.

In Pennsylvania, the inheritance tax applies regardless of the size of the estate. It is technically a tax on the beneficiary's right to receive the dead person's property.

Spouses with rights of survivorship pay no inheritance taxes in Pennsylvania. Charities also are exempt from tax. However, children, grandchildren and stepchildren pay a tax of 4.5 percent, meaning if they inherit $100,000 they will pay $4,500 in taxes to the state.

Brothers and sisters pay a 12 percent tax, while nieces, nephews and all others pay a tax rate of 15 percent.

Life insurance proceeds, on the other hand, are exempt from Pennsylvania's inheritance tax.

Marvin Feldman, president and CEO of Life Foundation, an insurance education organization based in Arlington, Va., said life insurance could be an effective tool to use for paying the federal estate tax.

"The only thing we know for sure is there will be an estate tax," Mr. Feldman said. "We just don't know at what level it will start -- whether that's $1 million, $3.5 million or some other number chosen by Congress.

"Life insurance can be an excellent alternative to writing a check for the full amount of the inheritance tax."

He said it was important, however, to make sure the life insurance policy was not part of the dead person's estate to avoid being taxed by the federal government.

It should be owned outside the estate by either an irrevocable trust or by one of the insured's children.

"One of the most gruesome aspects of this inaction by Congress is: I would not want to be on life support in December 2010," said Albert Isacks, director of estate services at Malin Berquist CPAs in Erie.

"It's putting the family in the extremely awkward situation of wondering if you keep someone alive with the hope that they'll regain their faculties or allow them to die to avoid the estate tax," he said.

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