Unfortunately, it doesn’t look like things will change dramatically anytime soon. Although the federal estate tax is scheduled to be repealed in 2010, it will be revived just a year later—in 2011—unless subsequent legislation is enacted. However, there is some possible estate-tax relief for a small-business interest.

Assuming the estate qualifies, an election can be made to pay no tax on the business interest for five years. What’s more, subsequent payments can be stretched out over a period of ten years. Result: The family can take up to 15 years to pay the tax. (Actually, it is a 14-year period, since the due date for the last installment of interest coincides with the first installment of tax.)

But there is one catch. Interest must be paid each year on the unpaid portion of the tax. However, the estate pays only 2% interest on the amount attributable to the first $1 million (adjusted for inflation) of the business interest’s taxable value. For 2007, the adjusted figure is $1.25 million. The interest rate for amounts in excess of the $1.25 million threshold is equal to 45% of the rate the IRS charges on tax underpayments.

When does an estate qualify for the estate-tax deferral? Generally speaking, the business must comprise more than 35% of the adjusted gross estate. Your adjusted gross estate is the gross estate minus any expenses, debts and losses.

In addition, you must have operated the business as one of the following: (1) a sole proprietor; (2) a partner with an interest of 20% or more in the partnership, or with an interest in a partnership that has no more than 45 partners; or (3) a corporate stockholder owning 20% or more of the voting stock, or owning stock in a corporation with no more than 45 shareholders. Finally, a proper notice of election must be attached to a timely estate-tax return.

Be aware that estate-tax benefits may be forfeited if all the technical rules are not observed. Coordinate this tax break with other aspects of your estate plan.