It is time for your 2006 estate planning resolutions - 12 of them, one for each month. These are the simple, basic, first steps. Even if you do not want to confront the challenge of planning the future without you for your family and business associates, there are still major and minor steps that should be taken each year to make certain your affairs are in order.

  1. Do you have a will and a trust and a nomination of guardians for your young children? Get one of each. See your lawyer or ask your CPA for a referral. It's painless.
  2. If you have a will and a trust, review your choice of fiduciaries. When you last prepared your will, you decided who would be executor of your will and who would be the trustee and the guardian for your children. Can you remember who they are? Chances are better than even that if you did your will more than 2 years ago, you have forgotten - or worse, you remember wrongly. Take a look at the binder of documents your lawyer gave you and make sure you are still comfortable with the decisions you made then, especially:
    1. The people who will be raising your children - the Guardians
    2. The people who will be managing your children's money - the Trustees. Remember that a trustee that does his or her job well should be paid for the work they do. You won't save any money by putting the wrong person in charge, even if they charge you nothing for the service. Consider professional fiduciaries (banks or trust companies - and there are a few individuals who take on these duties as well).
    3. The people who will be administering your estate - your Executors
  3. Have you thought about who will run your business after you? If you are the owner and you don't know, you are not doing your job. Establish a plan to train or hire the people needed to carry on after you. If family members will succeed you, take the time to see that they have the opportunity to get the training they will need - or buy a large life insurance policy for your family, because your business will be worthless without you.
  4. When did you last review your life insurance coverage? If your family loses your income, how will they replace it? For larger estates, the life insurance should be in an irrevocable trust for the benefit of your family so the proceeds are both income tax free and estate tax free. If you feel that your life insurance agent only tries to sell insurance products and does not try to counsel you, you may want to get a new agent. Or ask your lawyer or CPA -professionals with no vested interest in the advice - for their views on proper coverage.
  5. How about your disability coverage? During your working years, you are more likely to be disabled than you are to die. Check your company's policy and if it is not adequate, talk to your life agent about disability coverage.
  6. And while we are on disability, do you have a durable power of attorney that gives a trusted person the power as your agent to act on your behalf in the event you are not able to act for yourself? You should have a power of attorney, and you should remind yourself from time to time who your agent is. You should also tell the agent so he or she knows and to be certain that they will accept the responsibility if the need arises. At the same time, you should consider a power of attorney for health care so that someone you know has authority to make your health care decisions if you are not able to do so.
  7. If you have done a living trust, have you transferred title to your assets to the name of the trustees? You should deed any real estate into the trust and change the name on your bank and brokerage accounts to the name of the trust. If you have not done these things, you will lose the only benefit of the trust - avoiding probate. If you don't have the time or the knowledge to do these things, hire your attorney's paralegal to do it. And just as important, make up a folder with the necessary asset information so that another person can find your assets without your help.
  8. Are you making annual gifts to your children and grandchildren? Twelve thousand dollars a year can be given away by each person to any other person. That means a husband and wife can give $24,000 to each child, in-law, and grandchild. That adds up, and if estate reduction for tax purposes is part of your plan, annual gifts should be one of your tools.
  9. If you make gifts to charity, make the gifts with appreciated stock. That gives you a double benefit - a full tax deduction for the value of the stock and no capital gains tax on the appreciation.
  10. Protecting the assets you have. Lawsuits are something that must be considered in a plan to preserve wealth for your family. Check first to be certain that your general liability policy coverage is at least $2,000,000. So-called "umbrella coverage" above your auto and home owners limits is the easiest and first protection against lawsuits. Ask your homeowners insurance agent about it.
  11. Are your children getting married? Think about prenuptial agreements as a matter of family policy – not a case by case decision on the character to new in-law.
  12. An estate plan is not a once in a lifetime experience. It must be reviewed and modified as circumstances change. Births, deaths, divorces, increases in net worth, decreases in net worth - all these things and more too are relevant in evaluating your estate plan.

There is nothing mysterious on this list, but I know that many of you have not attended to them. Reviewing your estate and tax plan each year can provide you with peace of mind and preparedness for your family and business associates.

Fred Caspersen is a partner at Farella Braun + Martel LLP. He heads the firm’s St. Helena office and the Tax & Family Wealth Group.  His practice focuses on the development and implementation of succession strategies for families and closely held businesses.

Farella Braun + Martel was founded in 1962 and maintains offices in San Francisco and St. Helena, California. The firm represents clients throughout the United States and abroad in sophisticated business transactions and high-stakes commercial, civil and criminal litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.