Estate planning is not something that you can put off to a more convenient time. If you have been remiss, resolve to get your affairs in order now. What follows are some reminders to help you put your planning in perspective for this year and beyond.

Most people neglect to prepare their wills. Without one, your heirs could be burdened with unnecessary legal fees, administrative expenses and taxes during the settlement of your estate.

Even if you have a will, you should review it periodically and keep it up-to-date. Chances are that your will needs redoing if you have married, divorced or legally separated since you wrote it. Your property intentions normally change when you enter into or exit from a marriage. And remarriage also increases the complications, particularly when you and your mate each has children from previous marriages.

Perhaps you can benefit by making gifts of money and other income-producing assets to your children and grandchildren. Playing Santa provides two breaks: You divert income taxes on investment earnings from yourself to lower- bracket family members and decrease the amount of property subject to estate taxes at your death. Be aware, though, that the longer you wait to make gifts, the less you are able to give away during your lifetime without incurring taxes.

The Internal Revenue lays down some tricky rules for gifts. An example: To reduce your taxable estate, you plan to give away United States Series EE Savings Bonds that you paid for, which are owned in the names of yourself and your daughter. Unless you make sure to follow the proper procedures, those bonds will continue to count as a part of your estate.

Treasury Department regulations clearly spell out how co-owned bonds are supposed to be transferred, and there is only one way: Redeem them and have the Treasury reissue the new EEs in your daughter's name alone.

Note also that the law requires you to report the interest that built up on these bonds before you redeemed them. But any later interest is taxed to your daughter.

According to an IRS ruling, you can set up a living trust, or other kind of revocable trust, to hold your EEs without having to declare the accumulated interest when the bonds are put in the trust. Unlike the transfer of ownership to your daughter, you remain owner and are not in receipt of the benefit of the deferred interest at the time you move the EEs into the trust.

Contrary to what many people believe, money or other assets received as gifts or inheritances are generally undiminished by income taxes, although the IRS may exact separate gift or estate taxes on property transfers that exceed certain amounts. However, the usual rules kick in and entitle the IRS to collect income taxes on any interest, dividends, rentals or other earnings that are later derived from investing gifts or inheritances.

LAST WORD DEPARTMENT. A tax lawyer on his death left word that his obituary should contain the sentence: "The deceased requested that, to eliminate the middleman, memorials be sent directly to the Internal Revenue Service."

Published: November 1, 2004

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Julian Block is an attorney and author based in Larchmont, N.Y. He has been cited as "a leading tax professional" (New York Times), "an accomplished writer on taxes" (Wall Street Journal) and "an authority on tax planning" (Financial Planning Magazine). This article is excerpted from "The Home Seller’s Guide To Tax Savings." Law professor James Edward Maule of Villanova University praised the book as "An easy-to-read and well-organized explanation of the tax rules. Home sellers would be well advised to buy this book." To order it, go to julianblocktaxexpert.com.