ESTATE PLANNING UNDER NEW TAX LAWS

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

None of us can change the fact we won't live forever, but we can con~trol some things that happen beyond our time on earth. One way is with estate planning, which means deciding what will happen to your wealth after you die. You can draft a proper estate plan with help from your financial adviser, attorney and accountant.

Whether you already have an estate plan or are considering creating one, you should know last year's Taxpayer Relief Act contains more than 40 provisions directly affecting estates. Following are nine key areas the financial newsletter Bottom Line says you should cover with a specialist who's knowledgeable about the new law.

1. Your current will. An up-to-date will is even more important for larger estates, because the current $600,000 estate tax exemption begins rising each year until it reaches $1 million in 2006. Your will should express this amount in terms of a formula that will entitle your estate to the full tax-exempt limit in effect at the time of your death.

2. Other important documents. Insurance and insurance trusts are just two examples of legal documents that may need updating due to the new tax law.

3. Gifts to reduce estate size. If your portfolio is larger than you will need for your lifetime, you might consider giving assets to family members now to reduce the impact of estate taxes after your death.

4. Charitable remainder trusts. Because of new requirements, it's important for you to conduct a thorough review with an expert in this field before deciding if charitable remainder trusts are appropriate for your estate.

5. Life insurance. Once you consider how the new tax laws will affect your estate, you may decide you need more or less life insurance to cover estate taxes.

6. Regular IRA vs. Roth IRA. The Roth IRA offers some estate-planning advantages such as undisturbed assets that can be passed to heirs free of income tax if you don't need them in your lifetime. There are benefits and disadvantages to both types of IRAs, depending on your needs and situation. Completely understand your options and any penalties before you act.

7. Selling your residence. The new law offers a generous exemption from capital gains tax on the sale of a principal residence. This could make it more advantageous for you to sell your home now, rather than leaving it to heirs. If you'd like a smaller home or condo, look into this new tax provision.

8. Selling other appreciated assets. The new, more liberal 20 percent long-term capital gains tax for most taxpayers may make it more attractive for you to sell securities and other appreciated assets rather than holding onto them for heirs.

9. Change in business ownership. Some small or family-owned businesses could benefit from the new provisions. It may be worth discussing with your attorney.

Make a small investment of your time today to learn how these provisions could affect your estate. Chances are, changes in your estate plan are warranted, but these changes will benefit you and your heirs, and ensure that your wishes are carried out.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.