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The estate tax exemption amount is actually $650,000 (not $625,000) for 1999, and will continue to rise to $1,000,000 over the next 5 or 6 years. The way it works is as follows:

-take all of your assets (in trust or not)
-subtract deductions (the biggies are for unpaid debts, funeral expenses, gifts in your will or trust to charity or to your husband or wife)
-figure tax on whatever is left (usually known as the "residue")
-subtract "credit amount" (which is actually the tax on the above $650,000, or $211,300)
-what's left is the tax; what you get is the residue minus the tax

The estate tax rate is 55% on estates worth $3,000,000 and over.

I'll try to answer your IRA question tomorrow, but the short answer is: your IRA is subject to income tax (because it's never been taxed) and to estate tax (because you own it) but (1) these taxes can be deferred if you give your IRA to your spouse and (2) even if you have to pay income tax on the IRA, you get a partial credit for prior estate tax paid.
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