(FORTUNE Magazine) – YOU HAVE ARRIVED in Heaven, the ultimate 19th hole, where there's ample time for post-mortems. A hard charger on earth, you have sought out your own kind, a group of angels in a cloudy corner who at the moment are hashing over how they passed on their wealth. Only then do you learn, to your eternal chagrin, how much more you could have left your loved ones. Whatever your destination in the afterlife, don't wait until it's too late to learn about giant tax breaks and other ways to keep your money in the family. Too young and healthy to bother, you say? Everyone in the managerial or professional ranks has enough wealth to require a bit of estate planning, even those who don't career around corners in sports cars. Measured against the long struggle to build wealth, the time it takes to safeguard chunks of it for your heirs is a comparative instant, with a payback too sensational to ignore. Passing on the maximum boils down to five key strategies. With help from lawyers who know the way around tax traps, you can score 5 for 5 as follows: -- SHRINK YOUR TAXABLE ESTATE. Striking a blow for tax simplification in the early Eighties, Congress created what amounts to a combined, lifetime $600,000 gift and estate tax exemption for every U.S. citizen. The lawmakers also introduced a powerful incentive for generosity on a smaller scale. Anyone can give up to $10,000 a year, free of gift tax, to each of an unlimited number of individuals without depleting the $600,000 lifetime exemption. A married couple can donate twice as much. Except for gifts to charity or a spouse, largess that breaches these limits faces federal gift or death taxes, ranging from 37% for the first dollar over $600,000 to 55% for amounts over $3 million. In addition, state death taxes can easily take 5% more, even when a credit against the federal tax is figured in. So if you are rich, or expect to be, it makes sense to shed whatever assets you can before the tax men bite. Particularly fast-appreciating assets. Say you have just developed a baitless electronic mousetrap that vaporizes its prey without polluting the air, and a place on FORTUNE's billionaire list is just a question of time. You could hand over some of your startup company's stock to your children before it skyrockets. This might deplete your entire $600,000 exemption, but many times that amount in future appreciation would sail past the IRS when you cross the bar. Except in such storybook cases, most folks are reluctant to use up the exemption while alive. Says Susan Brachtl, senior vice president at U.S. Trust Co.: ''Even if they can spare the money, few people are psychologically prepared to do this.'' Besides, adds William Constantine of the Scudder Stevens & Clark investment advisory firm, your first duty is to provide for your own needs in the declining years, in case ''all hell breaks loose and you need full-time nursing care.'' Giving too much too soon can create other problems, like ripping out the ignition wires of your children's ambition. You can spoon out the money in smaller dollops, taking advantage of the $10,000-a-year exemption. Philadelphia attorneys Charles Plotnick and Stephan Leimberg call it ''the little giant.'' In their book Keeping Your Money (John Wiley, $14.95), they show how modest gifts can mount over time. A married person of 40, with two children, three grandchildren, and 42 1/2 years of remaining life by the actuarial tables, could give away $4.25 million to those five without once filing a gift tax return. Fearful that even modest gifts could turn your progeny against honest toil? You can forestall this with a Crummey Trust, named for the man who in the Sixties successfully tested the idea in court. Call it preplanned Indian giving. Each year Dad turns over to Junior no more than $10,000, staying within the gift tax exclusion. Junior has, say, 30 days to take the money and go on a binge but has been told that if he does he can forget about future installments. So he waives the right, and the money is added to the trust. The money can stay off-limits as long as Dad wants -- ''for all of Junior's life and beyond,'' according to attorney Charles Groppe of Putney Twombly Hall & Hirson in New York. But in the eyes of the IRS, Dad has given it away -- and moved it out of his taxable estate -- because Junior had a brief opportunity to exercise what the lawyers call Crummey power. A standard way to shelter big chunks of an estate is to transfer Dad's life insurance, whose death benefit would otherwise swell the estate, to a trust. The beneficiaries can remain the same -- Mom and the kids. Life insurance trusts are also widely used for making sure funds will be available to pay estate taxes when the time comes. In some cases, the annual premiums are small enough that the parents can donate them to the trust without triggering a gift tax. Or Mom and Dad can avoid the legal fees for creating an insurance trust by simply handing the kids the money to pay premiums on a policy they own from the start. -- ESCAPE CAPITAL GAINS TAXES. Congress doesn't appreciate appreciation. Take the IBM stock you bought decades ago and sat on, or your house, worth six times what you paid for it in the early Seventies. Cash in the stock while you are alive, and you might well cede about 30% of your winnings to Uncle Sam, plus whatever your state exacts. The federal tax treatment of your primary residence is somewhat less cruel. If you sell your $600,000 colonial and buy a cheaper retirement condo, you will be taxed on the lesser of the gain realized or the money you didn't reinvest in the new home. Once in a lifetime, those over 55 are excused from paying taxes on $125,000 of the gain. Thus, if you spend all but $125,000 of the net proceeds from the former home on that abode overlooking the fairway, you're scot-free. But pocketing the proceeds and moving into rental housing could entail a big tax bath. As if to soften its heartless treatment of capital gains, Congress left a great loophole in the sky. When you ascend from this life, so does the cost basis of all your assets. If IBM closes at $120 a share on the day you close your eyes for good, that becomes the cost on which your heirs compute capital gains, not the $3 you paid when the elder Tom Watson was still in charge. Joint ownership delays the full revaluation. Only half the original cost is stepped up when, say, a husband dies. If the wife then sells, she's taxed on the appreciation of her half from the date of purchase. The IRS is kinder in nine states, among them California and Texas, whose community property laws operate differently. When the first spouse dies, assets get a 100% step-up. The general rule in any state when both spouses are alive and aged: Hang on to sound but steeply appreciated assets. In a pinch, borrow against stocks and rent out the house rather than sell. -- PROVIDE FOR YOUR SPOUSE. Those with modest means, particularly young couples, should at least protect themselves with wills. Otherwise, warns Boston attorney Alexander Bove Jr., author of The Complete Book of Wills and Estates (Henry Holt, $10.95 in paperback), your assets will be distributed under your state's ''laws of intestacy.'' Typically your spouse will get half and any children will share the rest. If the children are minors, the probate court will have to go through the procedure of appointing a guardian even if it turns out to be the surviving parent. All of which can mean delay and legal fees. - Most spouses prefer to leave everything to each other. Well-off couples have a different reason to be mutually generous. Before 1982, only half of what one spouse left to the other was exempt from estate tax. Now the so-called marital deduction is unlimited, and old wills that fail to take advantage should be updated. You're living blissfully with a spouse equivalent? Sorry, Congress recognizes only wedlock. -- PROVIDE FOR YOUR CHILDREN. With a little paperwork, you may be able to spare the next generation nearly a quarter-million dollars in taxes, so pay attention. If a couple has significantly more than $600,000 in net worth, it is a mistake to leave every dime to the surviving spouse. Reason: The same IRS that winks at wealth transfers between husband and wife starts collecting with a vengeance after the second spouse dies. Each citizen, remember, has a $600,000 lifetime gift-and-estate tax exemption, good for $238,000 in tax savings. A couple has $1.2 million in exemptions. Assume that Sam and Susie Jones have both left the exemption untouched. If Sam dies and leaves everything to Susie, after her death there is only one estate to use the exemption. Sam's will have been thrown away. The outcome is quite different if Sam leaves Susie everything but $600,000, which is carved out of his estate when he dies and placed in a newly created ''bypass'' trust as directed by his will. Susie's ''mirror will'' calls for the same thing if she dies first. The bypass trust is eligible for the $600,000 exemption. Susie collects income from the trust, typically with access to principal for such emergency needs as nursing home care. But after her demise, everything in the trust -- even if greatly swollen in a bull market -- can go to heirs free of estate tax. And $600,000 of her own wealth, of course, will also be spared the levy. A cardinal rule: Don't keep everything in joint names. Under joint tenancy with right of survivorship, as it's properly called, Susie automatically becomes the sole owner on Sam's death, leaving nothing to create a bypass trust. Except with community property, where the problem does not arise, the watchword should be, Divide and conquer. The object is to shift ownership -- tax-free between spouses -- so that each partner will die with enough to take at least partial advantage of the $600,000 exemption. The maneuver is not for all couples. If one mate or the other has footloose tendencies, turning over $600,000 may be unwise. Says David Gerson, a tax partner at the Ernst & Young accounting firm in New York: ''Go tell that to a client who's on his third wife or married to somebody who's been divorced three times.'' Bypass trusts require, well, trust. In dream marriages, on the other hand, finding enough wealth to shuffle can present another problem. Paul Westbrook, president of Westbrook Financial Advisers in Watchung, New Jersey, devises estate plans for many executives who are rich on paper. A typical client of 55, earning $150,000 a year, might be worth $2 million, not counting company-paid term life insurance. But nearly all the couple's wealth consists of equity in their house and money tied up in a 401(k) account and other retirement plans. A mere $200,000 is in securities and money market accounts. If those assets are in the husband's name, it still may pay to shift some to the wife. Ownership of securities held in a broker's name can be changed with a simple letter. It can be done within an eight-hour workday even if you hold stock certificates and correspond with transfer agents yourself. If you have $600,000 available, in one exhilarating episode your tax savings will create wealth for the family at a tempo -- $30,000 an hour -- that even a Henry Kravis could respect. -- AVOID PROBATE. Some Americans, especially if they have waited two years for a departed one's money and seen lawyers take as much as 10%, pronounce the word ''probate'' the way a Soviet citizen would pronounce ''KGB.'' You can airlift the bulk of your assets past this archaic procedure by setting up a living trust that incorporates most of the strategies already described. Strictly speaking, ''probate'' means proving the validity of a will to a court. The process includes a host of other duties taken on by an executor named in the document, most often a spouse or other relative. Among the duties: making a list of the departed one's assets, notifying creditors, paying bills and taxes, and distributing what's left to heirs. How bad is it, anyway? Not quite as bad as in the Sixties, when the first edition of Norman Dacey's How to Avoid Probate! (Collier Books, $24.95) topped best-seller lists. Law firms in many parts of the country now charge hourly rates for services rendered, rather than percentage fees. An executor should get a written estimate for the total bill beforehand. In her book Probate (Random House, $8.95), lawyer Kay Ostberg, deputy director of a consumer advocacy group called HALT, tells of a Maryland man who did nearly everything himself as executor of his mother's $112,000 estate, turning to a law firm only for advice at $75 per hour. The usual legal fee in that area could have been almost $6,000. His bill: a mere $210. But in states that set statutory fees, like California, Iowa, and Montana, the lawyers still have you where they want you. In theory the fees are maximums. In practice they sometimes become minimums, because the court allows charges for extras such as estate tax preparation. The sliding-scale fee in California is around 2% on an estate of $1 million. To circumvent such charges, many Californians have embraced the living trust. The Bezaire Law Offices firm in San Marino, California, draws up more than 250 living trusts a month. Not far away is a firm called The Estate Plan, headed by Henry W. Abts III, whose book, The Living Trust (Contemporary Books, $19.95), is required reading on the subject. The Estate Plan prepares nearly 300 trusts a month for single people and couples -- including gay couples. The living trust has also caught on in Florida, Michigan, and Illinois. Henry Grannan, a Chicago attorney and CPA, reveals that ''95% to 98% of our clients do this.'' But not all personal finance experts have boarded the bandwagon. ''Some attorneys are peddling these things as a panacea,'' says Ross Nager, national director of family wealth planning at the Arthur Andersen accounting firm. Says lawyer Joseph Imbriaco of Young Rose Imbriaco & Burke in Parsippany, New Jersey: ''Living trusts are being overused and misused by people who don't need them. They think it's a way to outmaneuver the vultures out there.'' Living trusts do not reduce estate taxes. People with modest wealth, all of it in joint property and company benefit plans, gain little because these assets avoid probate anyway, at least when the first spouse dies. Living trusts can introduce arcane headaches for people with real estate tax losses and stock in S-corporations. But Imbriaco, who says his clients increasingly want living trusts, concedes that when circumstances are right, ''they're marvelous.'' A living trust accomplishes the same purpose as probate, which is to dispose of your assets once clear title has been established. Instead of waiting for someone else to do this after you've died, you set up a revocable or inter vivos trust. Revocable means you can abolish or change it as long as you live; the provisions -- such as those specifying who gets what -- become irrevocable on death. In virtually every state you can be the trust's ''grantor'' or creator, trustee, and beneficiary while you are alive. You can transfer property to the trust, relinquishing legal ownership but retaining control. Indeed, says Boston attorney Bove, you must fund it with property so it can serve its purpose. Otherwise, he says, ''you have built a swimming pool but didn't fill it with water.'' Assets left outside the trust still must go through probate when you die. Stock transferred to the trust is no longer held for Henry Brown the individual but for, say, ''Henry Brown, trustee of Brown Family Trust dated February 25, 1991.'' The trustee can trade just as actively as before, and reports trust income on his form 1040. Typically, Mrs. Brown is co-trustee and the children back her up as successors. When Mr. Brown dies, her control is instantaneous. Says attorney Joe Cox of Cummings & Lockwood in Naples, Florida: ''The king is dead. Long live the king!'' Mrs. Brown is free to move fast. Suppose she believes the trust's Procter & Gamble stock is about to dive. The minute Mr. Brown stops breathing, she can phone the broker and put in a sell order. If the shares were tied up in probate, weeks or months might go by before she could act. Later, when she dies, the assets are distributed to heirs as spelled out in the trust document. Or the trust may continue into the next generation, holding the assets and paying out income to beneficiaries. Do living trusts perform as advertised? Ask Beth Currie of Tarzana, California, whose husband Neil died in January 1990 with a living trust drawn up by The Estate Plan. The ease with which she was able to wind up his affairs has been ''absolutely spectacular,'' she says. Her net worth of about $1.4 million includes some assets of Neil's that were never put in the trust. Because they totaled less than $60,000, the minimum for probate in California, Beth was able to avoid that ordeal completely. (In other states, the minimum ranges down to zero.) Her trust chores, which she happily attends to herself, include getting assets retitled to formalize her takeover. ''The living trust is the only way to go,'' says Bove client Michael Gatta, an attorney in Woburn, Massachusetts. His father, an Italian immigrant who did well in real estate, died in July 1989 with more than $1 million of properties in a living trust. Under probate, Gatta says, ''they could have been kept in limbo for at least a year. Instead, we had quick succession.'' Gatta has a living trust of his own. SO HAS Linda MacDuffie of Naples, Florida, who was impressed by the smooth way things went when her mother died. She subsequently had Cummings & Lockwood set up a living trust for her father and reaped one of the biggest advantages cited by proponents. The trust contains language permitting a co-trustee to take over immediately if the grantor becomes incapacitated. Her father's health has declined, Linda says, ''but the trust has enabled me to manage things with ease and flexibility.'' Michael Provine, president of Boston Safe Deposit & Trust Co. of New York, a unit of American Express, urges older clients to set up living trusts as insurance against Alzheimer's and other calamities. Failure to do so can be costly, for a family member may otherwise need to seek a court appointment as conservator or guardian, after which he must file reports for the rest of the disabled person's life. Earlier in his career, Provine served as a court clerk during guardianship proceedings, which are public. Sometimes the ailing person had to appear. Says Provine: ''It's gut-wrenching.'' To find out how avoiding probate cuts fees, ask the lawyers. Living trusts have higher front-end costs than wills, and upon death lawyers must perform many of the same jobs if estate taxes must be paid and the heirs don't want to be bothered with paperwork. Cox's firm charges a couple about $1,000 for wills with bypass provisions, plus some other fairly standard items. These include a durable power of attorney that allows a family member to take over if a client becomes incapacitated -- not as good as a funded living trust but better than nothing -- and a ''living will'' making clear that he doesn't want doctors to keep him alive indefinitely in a vegetative state. Closing a probated estate of $1 million, Cox says, would typically cost about $25,000. Drawing up living trusts for the same couple, on the other hand, might cost $2,500. To the package Cox would add simple ''pour over'' wills that at death automatically transfer to the trusts any of each spouse's assets left out. Settling the estate would cost only $15,000 or so. Sometimes the contrast is far more dramatic. Bove recently charged only $10,000 to close an estate with $17 million in a living trust. Had the same estate gone through probate, and had he charged 2%, which is not out of line, he could have billed the client $340,000. Says Bove: ''I could have retired!'' Most people have only two pitfalls to worry about with living trusts. They should think twice about naming a bank as trustee in the document. Unless you want the bank's professional money management in your lifetime or your spouse's, or need an impartial institution to disburse income to the next generation, this can needlessly lock you in. ANOTHER PROBLEM is finding an attorney with experience in living trusts. Abts says that only 1% of American lawyers know how to draw them properly. Laypersons can get a clue to a lawyer's talents by turning to the Martindale- Hubbell directory of law firms, which is in many public libraries. Frederick Keydel of the Detroit law firm Joslyn Keydel Wallace & Carney says a good bet is an attorney who belongs to a professional organization called the American College of Trust and Estate Counsel. Not long ago -- sign of the times -- it changed its name from the American College of Probate Counsel. Still not ready to take the plunge with a living trust? Ponder your situation and heed lawyer Plotnick, who is fairly neutral on the issue: ''If you're on top of your assets and like to do things yourself, and you like the idea of saving money and avoiding probate, then why not?'' Living trusts, adds Provine, ''provide a comforting note that you've taken care of loose ends.'' The same goes for all estate planning, which is not a morbid exercise but a duty owed to loved ones. The time to attend to it, says Linda MacDuffie, a divorced mother in her 50s, ''is when I'm healthy and vibrant.'' Once that's out of the way, you're free to concentrate on living the perfect life.