You and your spouse hold the title to a nice-sized home in a well-to-do L.A. suburb; maybe you even rent out a second, smaller house and have a couple of insurance policies, or you own some shares here and some bonds there. Bottom line, you live comfortably but you’re not part of the top one percent. Should your family worry about the federal estate tax? The answer may surprise you, but it is no. At this point less than two out of every 1,000 estates pay this so called “death tax.” Most of the others, i.e. more than 99 percent of all property owners, can claim exemptions that will get them off the hook.

There are a couple of rules that help Americans avoid the federal estate tax. The marital deduction is one of them, the personal estate tax exemption another. The marital deduction applies to almost all validly married couples: The IRS does not levy estate taxes for assets left to a surviving US citizen spouse, no matter how valuable they are. Since the Supreme Court’s DOMA ruling in June 2013 the marital deduction includes same-sex couples. But did you notice that the surviving spouse must be a US citizen? The regulation is based on the government’s assumption that a foreign-national wife or husband will leave the United States after her partner dies and thus make it impossible for the IRS to collect capital gains or income tax that might come due because of the inheritance later on.

The other mechanism, the personal estate tax exemption, allows for you to pass assets up to a certain limit to your heirs tax free. There are no restrictions on who inherits the property. It can be your child, your friend or your yoga instructor and he or she does not need to be a US citizen. After the turn of the millennium, Washington gradually increased the limit for the personal estate tax exemption. It went from $650,000 in 2001 to $2 million in 2006 and to $5 million in 2011. Since then the limit has gone up annually with the rate of inflation. For deaths in 2014 the individual exemption was set at $5.34 million, and we can expect it to rise again for 2015. The individual exemption comes with special rules for married couples: If the spouse who died first did not use up his or her limit the surviving partner can claim the remainder, too. (E.g. if Jane Doe leaves her husband, John, property worth $3 million tax free, then John can pass on his own $5.34 million plus the $2.34 million not claimed under Jane’s exemption tax free.)

Since the marital deduction and the personal estate tax exemption allow most Americans to avoid paying the federal estate tax altogether you may be wondering whether you still need an estate plan. My answer, regardless of your financial situation, is an emphatic yes. With an estate plan you can ensure that your assets are managed well even if you become incapacitated and you can keep most of your estate out of probate. Your heirs will thank you for it.

By Kevin J. Moore