For the new break on gift and estate taxes, many must revise wills

One of the more radical changes Congress made this year in the tax code was a dramatic reduction in gift and estate taxes. But it doesn't necessarily take place automatically.

Before, only half of your estate could be left to your spouse free of gift or estate tax. Now, you can leave it all.

But if you already have a will, don't think you can just keep it in the safe-deposit box and let changes like this take effect on their own. To get the benefit of the new estate tax provisions, millions of people will have to revise their wills.

Many wills -- particularly for people in upper income brackets -- state that a surviving spouse is to receive the maximum possible estate that can be passed on free of tax.

Since the new provisions take effect in the new year, these wills should be amended immediately to give the spouse the entire estate tax-free. Otherwise, the old rule will apply. So if a will was executed before Sept. 12, 1981 (a date set by Congress), or not amended after that date to refer to the unlimited marital deduction, your spouse won't get to use it.

If a pre-Sept. 12 will has not been modified, the part providing for maximum marital deduction will be interpreted to mean the maximum in effect when the will was written.

Part of the reason Congress changed the tax rules was to redress the effects of inflation. It accepted the view that many family farms and businesses had to be sold simply to pay estate taxes.

But a large estate could still be a problem for some families, when the surviving spouse dies, because while the first transfer can be made tax-free the ''second transfer'' cannot.

However, taxes on this transfer can be legally avoided with some foresight, says Fred Van Liew, executive vice-president in the trust and investments department at Hospital Trust Company in Providence, R.I. If there are children, this means setting up a trust to provide for the needs of the spouse and leaving the rest of the estate to the kids and anyone else you want to remember in your will.

Some of the other changes in the estate tax laws will be phased in gradually and won't become fully effective until 1987. And with inflation continuing to push up the value of an estate - particularly real estate - tax breaks and exclusions that appear attractive in 1982 may be out of date in 1987.

If there are beneficiaries other than the spouse, the amount that can be transferred to them tax-free goes up gradually until it reaches $600,000 in 1987 . Also, the ''unified credit'' that can be applied to these transfers of wealth increases during the same period to $192,800. Year Unified creditTax-free transfers 1982 $62,800$225,000 1983 $79,300$275,000 1984 $96,300$325,000 1985 $121,800$400,000 1986 $155,800$500,000 1987 $192,800$600,000

(Before 1977, a gift tax was imposed on transfers made during a person's life; an estate tax was levied on transfers at death. Both had separate rate schedules and exemptions. After 1977, the estate and gift tax rates were unified , as was the credit for both.)

Another major change in the tax law makes a sharp increase in the amount of money that can be given as a tax-free gift. Before, the limit was $3,000 a year. Now, gifts can be made up to $10,000 a year to each of your relatives or others. A married couple can give $20,000. Not only does this permit people to be more generous, it also provides a significant opportunity to transfer assets to a variety of people and organizations free of any gift or estate taxes.

For example, if Grandma and Grandpa want to leave a substantial sum to their four grandchildren, they could conceivably give them a total of up to $80,000 a year, tax-free.

There is one glitch in this development, however, Mr. Van Liew points out. Most states have not yet raised the state $3,000 limit. And considering the revenue that could be lost by doing so, many are expected to keep the lower limits. Different state laws also apply to inheritance taxes and should be taken into account when you revise the will.

Many adults, of course, don't have a will at all. The fact that they should have one is not just an idea cooked up by lawyers trying to make a quick buck by writing them. If you are married and have a family, you need a will. If you are single, you would probably prefer to make your own decisions about who gets your posessions and money when you pass on, instead of having some judge make the choice for you.

Even a young, unmarried working person might like to leave some of his savings or property to a brother or sister, friend, or favorite charity, assuming his parents didn't need it. Art prints for investment

I read a recent Monitor article about an investor who built a portfolio of art prints through his Keogh fund. Would it be feasible to invest after-tax dollars in something like art prints? Or would taxes on profits or lack of knowledge of artworks make this impractical? I think it would make a fascinating hobby. Where could I learn how to do this correctly?

--C. C.

Art prints are one form of a general investment category referred to as collectibles. Whether tax-sheltered cash or after-tax dollars are used makes little difference in the end. What does matter is how you might participate. The only way you can benefit from investing in collectibles is to buy something for a low price and sell it for a higher price. You get no financial income from holding collectibles. However, many collectors of art prints, cut crystal, jewelry, or many other fine things gain personal enjoyment from having such items around. Most successful collectors are usually experts. To become expert, begin by reading everything you can find. Follow this with investigative research. If art prints interest you, visit galleries, attend auctions, question other collectors, and understand in your own mind the differences between art prints and why some attract higher prices than others. One facet of collectibles is the big difference between bid and asked prices - often as much as 50 percent.

Readers are invited to send questions to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass., 02115. Only a selection of general-interest questions can be answered here, and no question can be individually acknowledged. References to investments in this column should not be considered an endorsement or recommendation by the Monitor.