Where there's a will

Black Enterprise, Oct, 1998 by Donald Jay Korn

RELATED ARTICLE: TAXING MATTERS

You can't take it with you, but you'll be able to leave more of it to your heirs. If you know anything about estate taxes, you know their bite can be hefty: they kick in at 37% of what assets you pass on, and peak at 55%.

Relief, however, has come in the form of the 1997 tax law. The bill expanded the "unified credit," which covers lifetime gifts as well as bequests. In 1998, we can each transfer up to $625,000 worth of assets, free of estate or gift taxes. This allowance will increase in stages until it reaches $1 million in 2006. (Owners of small companies may get some additional relief.)

With careful planning, you and your spouse can use this credit in tandem. That means that married couples can pass on up to $2 million, tax-free, assuming they both live until at least 2006.

If you don't have $1 million or $2 million in the bank, can you forget about the estate tax? Not really. Estate tax is assessed on all your assets: cash, stocks, bonds, mutual funds, retirement plans, real estate, home furnishings, life insurance policies, artwork, collectibles and so on. If you're not a millionaire now, by that measure, you may well be when all things are added up.

Our recommendation: If you want to keep as much as possible in the family and cut the IRS out of your estate, it will pay to find a savvy tax pro.