Starting in 2009, you can leave $3.5 million to your heirs before the federal estate tax kicks in – up from $2 million previously. And in 2010, the estate tax is slated to be repealed altogether.

But contrary to what some people think, that doesn’t mean you don’t need to worry about estate planning!

This is true for three reasons:

Reason #1: Unless Congress changes the rules, the estate tax will return with a vengeance for anyone who dies in 2011 or beyond.

At that point, the amount people can leave to their heirs tax-free will be reduced back to $1 million in most cases (the same as it was in 2001). Even worse, the maximum estate tax rate will increase at the same time from the current 45% to 55%.

That means careful planning is more important than ever, because the consequences of not planning carefully will be magnified greatly in 2011. And you don’t want to wait until then to start, because many successful estate planning techniques take time to implement.

Reason #2: While the estate tax is scheduled to disappear in 2010, the “step-up in basis” will disappear at the same time. So even if someone dies in 2010 and there’s no estate tax, the person’s heirs could still face a huge capital gains tax that could be reduced with some thoughtful planning.

Here’s why: Suppose Fred bought shares of stock many years ago for $100,000. Today they’re worth $600,000. He wants to leave those shares to his daughter Jane. If Fred died today, the value of those shares would be included in his estate, and the estate might be subject to the estate tax. However, when Jane receives the stock, her “basis” in the stock will be “stepped up” to the current value of $600,000.

Now suppose Fred dies in 2010. There’s no estate tax – hooray! However, Jane inherits the stock with a basis of only $100,000. That means that if she sells the shares, she’ll have a capital gain of $500,000, on which she’ll have to pay capital gains tax.

In other words, in many cases the repeal of the estate tax could result in more taxes, not less. In fact, a House Ways and Means Committee report suggested that in 90% of cases, the net tax burden on a family will increase rather than decrease in 2010.

Of course, Congress might change the law before this happens. There have been many estate-tax proposals circulating in the House and Senate. But we don’t know for sure what Congress will do.

In case Congress doesn’t act, there are steps you can take to deal with the capital gains problem. For one thing, under the current law a stepped-up basis can be assigned to $1.3 million of assets (plus an additional $3 million of assets going to a surviving spouse). If you’re leaving more than $1.3 million to heirs other than your spouse, you might want to consider carefully how to allocate this $1.3 million step-up. Ideally, you’ll want to apply it to assets that have appreciated the most in value and that your heirs are most likely to want to sell.

(This gets even more complicated because certain types of assets, including property given to you within three years of death by someone other than your spouse, are not eligible for the step-up. And since you don’t know exactly when you’ll die, it may be hard to know whether an asset was given to you within three years of death.)

You might want to create different provisions in your will regarding who gets what assets if you happen to pass away in 2010, because in that one year an asset with a high basis is worth more than an asset with a low basis. You might also want to reconsider which assets you plan to donate to charity.

Reason #3: Estate planning is about a lot more than saving taxes. It’s about protecting yourself as you grow older with a health care proxy or power of attorney. It’s about protecting your heirs against financial mistakes and creditors. It’s about making sure your assets are distributed the way you want them to be, and reducing headaches and conflicts for your loved ones.

Ultimately, it’s all about peace of mind for you and your family.