The Wisconsin State Supreme court has just ruled that estates, not heirs, are responsible for paying state and federal estate taxes. Channel 3000 offers I nice summary of the case.
Quite often I have clients who are surprised to learn that life insurance is included in a determination of whether the estate tax is owed. A common response is "my agent told me this money would be tax free". That is true, partially. Life insurance is not taxable from the income tax perspective of the beneficiary. However, IT IS included in the determination of whether an estate is subject to the federal estate tax.