An area of the United States tax law that receives little, if any, attention from individuals under the age of 55 is estate planning. Working under the assumption that this event will not happen to them until they are old, which will never occur, most individuals do not plan for the inevitability of death.

Planning Do I need a professional tax consultant to assist me? Yes. The consultant has the dual advantage of having worked on numerous other clients, thus bringing a wide variety of experience and expertise to bear on your particular facts and circumstances, and, as importantly, they do not have an emotional tie to what could be difficult decisions.

If I do not want to invest in a professional consultant, is there something I can do myself? Yes. There are some positive steps you can take, which follow.

Will If you do not have one, have one drawn for you immediately. Why? If you die without a will, your assets will be turned over to the courts to decide to whom they should be distributed. If you do not have a domicile in the United States, or it is uncertain which state is your domicile, the courts will spend a lot of time figuring it out, taking huge fees in the process. A most prized political plum is to obtain work from the probate court. Don't contribute to the largesse, draw up a will.

Don't leave everything to your wife. Mistake number one. Not because you don't love her, but because by doing so you are throwing away a potential $343,000 tax break. Under the state and gift tax law, each individual is entitled to a $625,000 estate tax credit (which will gradually increase to $1 million in the year 2006). Let's say that you have a joint estate of $1,250,000. If you leave everything to your spouse, it passes to her (the men always die first) free of estate tax. But, you also have forfeited your $625,000 tax credit. When your wife dies, she has an estate of $1,300,000,a personal $625,000 tax credit, and the estate must pay tax of about $250,000.

A simple means of avoiding the estate tax would be to leave your spouse $625,000 (which passes to her free of gift tax), and to leave the remaining $625,000 to a trust, from which she can obtain the income, with the principal passing to your heirs on her demise. This simple planning has enabled you to pass an additional $250,000 to your heirs (now you know the value of obtaining professional advice).

Life Insurance Most individuals turn to life insurance to pay the potential estate tax. Most individuals who are employees also are provided with term life insurance policies by their employer. Mistake Number Two is usually made when an individual does not read the dozens of pages of fine print in the contract.

You should know who the owner of the policy is, and who the beneficiary is.

Insurance death proceeds are exempt from tax by law. However, a common presumption exists that they are also not subject to estate tax. Wrong. If the beneficiary of the policy is your estate, or if you retain ownership of the policy, the insurance death proceeds are going to be included in your taxable estate.

A simple way of avoiding having the company provided policy from being included in your estate (if you read the fine print, you will in all likelihood discover that you are the owner of the policy) is to change the ownership of the policy to your spouse.

An even better idea is to make your spouse the owner and to have the beneficiary of the policy be a life insurance trust. This trust can also be the owner and beneficiary of a separate life insurance policy you buy to pay the expected estate taxes. The trust will receive the insurance death proceeds free of income tax, pay the appropriate estate taxes, and distribute the remainder of the principal to your heirs.

What If I Have No Heirs? Your choice may come down to leaving your money to the Internal Revenue Service or to a Charity. Unless you have a fondness for the US government, we would recommend a worthwhile charity, or you can consider setting up your own charity. If you choose a charity, you can either leave them all your assets in your will, or start to give them your excess assets during your lifetime (where you can be recognised for your good deed) through the use of a Charitable Remainder Trust. Under this arrangement, your assets or a part of them are left to charity through a trust, and you receive a fixed or variable income from the trust, with the assets passing at death.

What Else Can I Do? Plenty, but not by yourself. There are at least ten different types of insurance policies and you need guidance as to which fits your particular situation. You may be able to transfer your stock options to a trust. There are several different types of charitable trusts from which to choose. Which one is right for you. Should you set up a Family Partnership or, what about a Spendthrift Trust? For this, you need professional planning.

This article only briefly touches on the subject of estate planning. Even books have difficulty covering the subject fully.

The tax advice given by this column is, by necessity, general in nature. You should, of course, check with your own US tax consultant as to how specific transactions affect you since tax advice varies with individual circumstances.

James Paul Sabo, CPA, is the President of Expatriate Tax Services, PO Box 617, Bernardsville, NJ 0792 and is associated with GulfStream Financial Ltd. in Bermuda.