One option for wealthy couples (married or not) to avoid or reduce estate taxes is to leave property to each other in a bypass or life estate trust (commonly called an AB trust), rather than leaving it outright to each other, For details, see the article Tax-Saving AB Trusts on this site.
If you or your partner has children from prior marriages or relationships, special issues may emerge when it comes to estate planning. You may feel conflicted about how to leave your property in a way that's fair to all your loved ones. On one hand, if you die first, your surviving partner may need additional income or the use of your property to live comfortably. On the other hand, you probably want to leave something to your children from a former relationship. Things get even more complicated if the children themselves feel entitled to inherit your property and become resentful if they believe they will lose it to your partner. If your current partner and your children don't get along, the situation gets even dicier.
Fortunately, there is an estate planning solution to deal (at least partially) with the problem of possible conflicts over property: a property control trust. This lets the surviving partner use all or just some of the trust property, such as a house (or income from that property) for the rest of his or her life. When the survivor dies, the property goes to the children. A property control trust restricts the rights of the surviving partner to use the property placed in the trust. The surviving partner is usually called the "life beneficiary" of the trust. His or her rights to use trust property, receive trust income, or spend trust principal are as limited as the person who establishes the trust (the grantor) determines they should be. Restricting the surviving partner's rights protects the trust property, so that much of it remains when the surviving partner dies. Then, the trust property goes outright to the grantor's children from a prior marriage or to other beneficiaries the grantor named.
You'll need a lawyer to draw up a property control trust. Check Nolo's Lawyer Directory to find an experienced local estate planning attorney to help you draw up a property control trust and handle other special estate planning needs.
Federal and state estate tax rules have been in great flux, especially in recent years. Still, the vast majority of estates don't pay either state or federal estate tax, and that's not likely to change.
For detailed and up-to-date information on federal and state estate taxes, including state inheritance taxes, gift taxes, and more, see the Estate and Inheritance Taxes articles in the Wills and Estate Planning section of the Nolo site. If you have a large estate, consult an estate planning expert.