Starting a nonprofit organization can be a great way to give back to your community, while working for a cause you are passionate about. That said, if you are starting a nonprofit simply to avoid some of the more unsavory aspects of running a business, you should seriously reconsider.

As the founder of a nonprofit, you will still be “in business,” and you’ll have to deal with many of the same things for-profit business owners face when running their companies. The main difference is, when running a nonprofit, you’ll be working in service to your mission, rather than in service to yourself or to the other owners of your business—and that’s because there are no “owners” of nonprofits!

Ownership is just one of many unique aspects involved with starting a nonprofit, and there are several other important factors you should consider before launching your own organization. Last week, in part one of this series, we outlined a few of the most critical things you should know about nonprofit startups, and here we’ll finish our discussion.

501(c)(3) Tax-Exempt Organizations

Of all nonprofit organizations, 501(c)(3)s are by far the most common. In fact, whether you know it or not, you’ve likely done business with one or more of these organizations, which include the American Red Cross, the United Way, the Humane Society, and the Salvation Army. 

To be tax-exempt under section 501(c)(3), an organization must be organized and operated exclusively for certain exempt purposes. These purposes include charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.

Fulfilling Your Mission
Once you’ve clarified your mission, you’ll then need to determine the type of activities and services you would want your nonprofit to provide. Are you intending to be a fundraising organization that raises money to distribute funds to other operating nonprofits? Or are you going to operate and provide services? If you are going to operate and provide services, what and who will those services benefit?

If you are going to be raising money, will the money you raise be primarily from one or a few donors, or are you going to raise money from the public? If you are going to raise money from just one or a few donors, then you will likely be a private foundation rather than a public charity, which offers different tax benefits to your donors. If you are not sure about these tax implications and whether they matter to you, discuss that with an experienced business lawyer like us.

If you are going to provide services, you’ll need to decide what purpose your services will be designed for. For example, will your activities be for religious, scientific, charitable, educational, literary, public safety, or cruelty-prevention purposes? 

When operating a nonprofit organization, you will need to create a business entity for your nonprofit, which could take the form of a corporation, trust, or even an unincorporated association. That said, the unincorporated association form is not ideal if you want any liability protection at all. The corporate form provides the most liability protection for the directors of a nonprofit. Using a trust structure is also possible, but it could provide less liability protection for the trustees than a corporation would provide for the directors of the corporation. 

Trustees of a trust have a fiduciary duty to the trust beneficiaries, which is a higher standard of care than the board of directors has to the corporation. In addition, corporations can have perpetual life, whereas trusts, in most states, cannot survive indefinitely, due to a rule called the Rule Against Perpetuities. However, 20 states have now repealed this rule, so if you are going to use a trust structure for your nonprofit, make sure the state you are governed by allows for perpetual trusts.

Meet with us, as your Family Business Lawyer™, for support in choosing the entity that’s best suited for your nonprofit’s particular mission and services.

Filing Form 1023
Once you have formed your entity, you will file Form 1023 electronically with the IRS to establish your tax-exempt status as a 501(c)(3). One exception to this requirement is a church. A bona-fide church (including synagogues, temples, and mosques) that meets 501(c)(3) requirements is automatically considered tax-exempt without having to file Form 1023 for tax exemption. 

Depending on your situation, you may be eligible to file a streamlined version of this form, Form 1023-EZ. Instructions for both forms can be found on the About Form 1023 page on the IRS website.

You can file Form 1023 on your own, without the help of a lawyer, but it will be much easier for you if you work with a lawyer, particularly one who has experience with nonprofits. Call us to find out if we can help before you get started. 

The Business of the Nonprofit Business 

Again, you don’t want to launch a nonprofit just to avoid the “business” aspects of running a business. You should form a nonprofit because you are passionate about its mission and want to benefit your community through your organization.

That said, if your nonprofit is going to succeed, you’ll still need a head for business, and access to the proper legal, insurance, financial, and tax (LIFT) systems, which form the foundation of any successful company. As your Family Business Lawyer™, we can not only help you get your nonprofit off the ground, but we can also ensure you have the proper LIFT systems in place, so your nonprofit can do the most good for the most people, and you can have a business you truly love. 

This article is a service of Liz Smith, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule your appointment at 907-312-5436, or find a time for us to call you

Signed into law on March 11th, President Biden’s $1.9 trillion American Rescue Plan Act of 2021 (ARP) is the largest direct-to-taxpayer stimulus legislation ever passed, and it came just in time to save millions of Americans whose unemployment benefits were about to expire. In addition to extending unemployment relief, the ARP provides individual taxpayers and small business owners with a number of other vital financial benefits aimed at helping the country rebound from last year’s economic downturn.

Of these benefits, you’ve likely already seen one of the ARP’s leading elements—the $1,400 direct stimulus payments, which went to taxpayers, children, and nonchild dependents with incomes of less than $75,000 for individuals and $150,000 for joint filers. But beyond the stimulus, the ARP comes with numerous other provisions that can seriously boost your family’s finances for 2021.

To highlight the ways the ARP can impact your family’s wallet, here we’ll break down six of the legislation’s key elements. To learn about all the full array of benefits provided by the ARP, meet with us, as your Personal Family Lawyer®

1. Child Tax Credit

If you have minor children, the ARP enhances the Child Tax Credit (CTC) in some major ways. Not only does it significantly increase the amount of the credit, but it also changes the way you can receive the money.

Under the current CTC, parents can receive a maximum tax credit of $2,000 for each qualifying child under age 17, with $1,400 of that credit being refundable. The ARP increases that credit to $3,000 a year for each child aged 6 to 17 and $3,600 for each child under 6—and both amounts are fully refundable.

Parents who qualify for the full amount of $3,000 or $3,600 per child include single filers earning less than $75,000, and joint filers earning less than $150,000 annually. After this, the credit begins to phase out. However, parents who file singly and earn less than $200,000 ($400,000 for joint filers) could still claim the original $2,000 credit.

 In addition to increasing the credit, the ARP also changes the way parents can access the money. Instead of applying the full amount of the credit to your income taxes at the end of the year and possibly getting a refund, you can now opt to receive the credit up front in monthly payments of $250 per qualifying child or $300 for children under age 6.  

This means you can get half of the credit in the form of monthly cash payments and claim the other half when you file your 2021 taxes in April 2022. If you opt for the monthly payments, the IRS expects to send those out starting in July 2021 and lasting through December 2021. The ARP directs the Treasury Department to create an online portal that allows parents to opt out of advance payments and report any changes in income, marital status, or number of eligible children. 

Note that these increases are only in effect for 2021 and will revert back to the original amounts in 2022. However, there’s currently support in both Congress and the White House for making them permanent. Check our weekly blog and IRS.gov for updates to the legislation.

2. Child and Dependent Care Tax Credit

In order to provide financial assistance to those families who pay for child care or care of an adult dependent, such as an elderly parent, the ARP increases the Child and Dependent Care Tax Credit for 2021—and for the first time, it makes the credit refundable.

For 2021, the ARP provides a tax credit for the expenses associated with the care of qualifying dependents (kids 12 or younger or a disabled adult) for a total of up to $4,000 for one dependent and $8,000 for two or more dependents. This is an increase from the max credit amounts for 2020, which are $3,000 for a single dependent and $6,000 for multiple dependents. 

The IRS allows you to claim a fairly wide range of qualified expenses for such care, including the following:

  • Daycare
  • Babysitters, as well as housekeepers, cooks, and maids who take care of the child
  • Day camps and summer camps (overnight camps are not eligible)
  • Before and after-school programs
  • Nursery school or preschool
  • Nurses and aides who provide care for a disabled dependent 


The ARP also makes more people eligible for the credit by raising the income limit for the full credit from $15,000 to $125,000 per year. Those making between $125,000 and $400,000 are eligible for a partial credit.

As an added bonus, the credit is fully refundable for 2021, so you could get a refund for the credit even if your tax bill is zero. However, as with the changes to the Child Tax Credit, these updates are only available in 2021, unless additional legislation is passed.

There are special rules for divorced couples looking to claim the Child and Dependent Care Tax Credit, so if that’s you, meet with us or a financial advisor for support.

3. Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable tax credit for low- and middle-income workers that’s frequently overlooked—and the ARP makes the credit more valuable for many taxpayers in 2021 than ever before. The amount you can claim for the EITC depends on your annual income and the number of kids you have, but people without kids can qualify, too.

For 2021, the ARP revises a number of EITC rules, and makes an increased credit available to more childless taxpayers. While in past years, childless filers could only qualify for a relatively small credit, for 2021 the ARP boosts the maximum EITC for those without children from around $540 to just over $1,500.

The legislation also reduces the minimum age for a childless taxpayer to qualify, from 25 to 19, and it also eliminates the maximum age of 65 for the credit, so seniors of any age can qualify, as long as they meet the income requirements. The above changes from the ARP are only for 2021, but the law makes some permanent changes to the EITC as well.

In prior years, you couldn’t qualify for the EITC if you had more than $3,650 in investment income for the year. But thanks to the ARP, starting in 2021, you can have up to $10,000 of such “disqualified” income without losing the EITC, and for 2022 and beyond, this limit will remain and be adjusted for inflation. 

Below are the maximum EITC amounts for 2021, along with the maximum income you can earn before losing the credit altogether.

2021 Earned Income Tax Credit

Number of kidsMaximum earned income tax creditMax earnings, single or head of household filersMax earnings, joint filers
0$1,502$15,980$21,920
1$3,618$42,158$48,108
2$5,980$47,915$53,865
3 or more$6,728$51,464$57,414

Additionally, just for 2021, you can calculate your EITC using either your 2019 earned income or your 2021 earned income and use whichever number gets you the bigger credit. And don’t worry—if you go with the 2019 number, it has no effect on any of your other 2021 tax calculations. For example, if some or all of your income is from self-employment, using your 2019 income to calculate your 2021 EITC won’t increase your 2021 self-employment tax.

Finally, no matter the year, the EITC is fully refundable. This means you can collect the money even if you don’t owe any federal income tax. That said, calculating the credit can be quite complicated, so if you need a referral to a CPA to support you, please feel free to contact us for our favorite referrals.

Next week, in part two of this series, we’ll cover the remaining three ways the American Rescue Plan can boost your family’s finances in 2021.

This article is a service of Liz Smith, Personal Family Lawyer® in Juneau, Alaska. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Life & Legacy Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 907-312-5436 to schedule a Life & Legacy Planning Session and mention this article to find out how to get this $750 session at no charge; or book a time for our team to call you at a time you choose.

Starting a nonprofit organization can be a great way to give back to your community, while working for a cause you are passionate about. That said, if you are starting a nonprofit simply to avoid some of the more unsavory aspects of running a business, you should seriously reconsider.

As the founder of a nonprofit, you will still be “in business,” and you’ll have to deal with many of the same things for-profit business owners face when running their companies. The main difference is, when running a nonprofit, you’ll be working in service to your mission, rather than in service to yourself or to the other owners of your business—and that’s because there are no “owners” of nonprofits!

Ownership is just one of many unique aspects involved with starting a nonprofit, and there are several other important factors you should consider before launching your own organization. Here we’ve outlined some of the most critical things you should know about nonprofit startups.

What is a nonprofit?

The term “nonprofit” typically refers to an organization that works to serve a public purpose, as opposed to serving for the financial benefit of a particular person, entity, or corporation. As such, traditional nonprofits are organized around a shared mission, social cause, or community need, and they work to provide some sort of public good.

Note that a nonprofit organization is distinct from a “not-for-profit organization” or NFPO. In contrast, a NFPO does not need to provide for the public good and can be organized solely to benefit its members or a community. Here we’re going to solely focus on nonprofit organizations, but look for a future post on NFPOs.

You can think of your nonprofit as a business that has no owners or shareholders. And a nonprofit does not pay taxes like a regular business would, either. However, a nonprofit is still a business in the sense that it needs to bring in money, it has expenses, and the money that it brings in has to be sufficient to cover the expenses.

This is where the term “nonprofit” can be confusing. Despite the term, nonprofits can and do earn a profit—they wouldn’t be able to survive otherwise. However, unlike for-profit businesses, nonprofits don’t distribute their profits to their members as personal income. Instead, a nonprofit’s excess revenue goes toward furthering the organization’s mission, whether that’s growing the organization, paying employees, supporting fundraising, or supporting other nonprofits with a similar mission.

What’s more, as long as you don’t violate any rules against self-dealing by overpaying yourself or by commingling your personal assets with those of the nonprofit, one of your organization’s expenses can include paying yourself a salary to run the nonprofit. So even though your nonprofit’s purpose is to further your chosen mission, rather than benefiting yourself personally, that doesn’t mean you can’t pay yourself a reasonable salary.

Clarifying Your Mission
The starting point for all nonprofit organizations is to clarify your mission. Clarifying your mission is about defining and quantifying the cause, problem, or issue your organization wants  to address. Similar to a for-profit business, this involves researching whether there is a sufficient demand for the services your nonprofit would provide. And if there is sufficient demand, you must determine what kind of market already exists for those services. As with any business, there is serious competition in many nonprofit sectors for a limited amount of funding.

If your nonprofit is going to succeed, you’ll need to ensure that your organization is properly positioned and well equipped to fulfill this demand. As you are doing your research, survey the field to find out whether anyone or any organization is already doing what you want to do. If you find an already established organization that shares your mission, then your time, energy, attention, and money might be put to better use by joining or collaborating with them, rather than duplicating their efforts.

Setting up a nonprofit

In the U.S., the IRS recognizes 29 different types of nonprofit organizations, the most common type being a 501(c)(3), which we’ll cover in detail below. Outside of 501(c)(3)s, there are 501(c)(5)s, which include labor unions, and 501(c)(4)s, which include social welfare organizations, and 501(c)(7)s, which include social and recreational clubs. In all cases, the organization begins with a business entity, which can be set up in a few different ways (more on that below) depending on state law.

As mentioned earlier, the “ownership” of a nonprofit can be somewhat confusing. No person or group of persons can own a nonprofit. Instead, once incorporated, the newly created nonprofit organization is a separate legal entity from its incorporators, directors, officers, and employees. A nonprofit corporation owns all assets of the business. And because there are no owners, nonprofits are typically managed by a board of directors or by its members.

The tax status of your nonprofit is determined by a filing to the IRS, which happens with IRS  Form 1023, which we’ll discuss in-depth in next week’s article. As with all business entities, the entity is formed under state law, while the tax status is determined at the federal level.

Similar to other businesses, incorporating a nonprofit follows a few general steps:

  1. Choose the name of your nonprofit.
  2. Incorporate your entity through your state.
  3. Apply for your IRS tax exemption.
  4. Apply for your state tax exemption, if applicable.
  5. Prepare bylaws.
  6. Appoint directors.
  7. Hold a meeting of the board.
  8. Obtain necessary licenses and permits.

Next week, in part two of this series, we’ll complete our discussion of what you should consider when starting a nonprofit organization. 

This article is a service of Liz Smith, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule your appointment at 907-312-5436, or find a time for us to call you

2020 was a nightmarish year for many families. But thanks to recent legislation, you could see a silver lining in the form of major tax breaks when filing your income taxes this spring. First up, although it’s technically not a tax break, the IRS recently announced that the deadline for filing your 2020 federal income taxes has been pushed back from April 15 to May 17, 2021, which gives you an extra month to get your tax return handled. 


The postponement applies to individual taxpayers, including those who pay self-employment taxes. But the extension does not apply to first-quarter 2021 estimated tax payments that many small business owners file. So if you file quarterly taxes, contact your tax advisor now, if you haven’t already done so.

Additionally, the CARES Act passed in March 2020 provides individual taxpayers with several hefty tax-saving opportunities, many of which are only available this year. What’s more, President Biden’s new relief package, known as the American Rescue Plan (ARP), which went into effect in March 2021, not only offers additional stimulus payments to most Americans, but it also includes significant tax relief for those taxpayers who lost their job and had to rely on unemployment benefits in 2020.

While there are dozens of potential tax breaks available for 2020, last week in part one of this series, we highlighted the first three of seven ways you can save big money on your 2020 tax return. Here in part two, we’ll discuss the remaining four ways you can save.

4. New Rules for Early Withdrawals From Retirement Accounts

If your finances were seriously impacted by last year’s economic turmoil, you may have needed to withdraw funds from your retirement accounts to cover your expenses. And thanks to new rules under the CARES Act, you have more flexibility to make an emergency withdrawal from tax-deferred retirement accounts in 2020, without incurring the normal penalties.

Typically, permanent withdrawals from traditional IRAs or 401(k) accounts are taxed at ordinary income rates in the year the funds were taken out. And pulling out money before age 59 1/2 would also typically cost you a 10% penalty.

But thanks to the CARES Act, you can avoid the 10% penalty (if under 59 1/2) on up to $100,000 in pandemic-related distributions from your retirement account in 2020. You are also allowed to spread such distributions over three years to reduce the tax impact. Or better yet, you can opt to put this money back into your retirement account—also within three years—and avoid paying taxes on the money all together.

However, because early withdrawals can negatively impact your retirement savings down the road, if you are looking to take advantage of this provision, you should consult with us, as your Personal Family Lawyer®, and your financial advisor first. Also, note that employers are not required to participate in this provision of the CARES Act, so you’ll also need to check with your plan administrator to see if it’s available at your workplace.

5. Medical Deductions 

If you had hefty medical bills in 2020, you might be able to get some tax relief using increased deductions. Under the CARES Act, you can deduct any medical expenses above 7.5% of your adjusted gross income (AGI). Your AGI is your total income minus any other deductions you’ve already taken.

For example, if your AGI was $100,000, you can deduct qualified unreimbursed medical expenses that exceeded $7,500 in 2020. However, you have to itemize your deductions in order to write off these expenses, so meet with us to determine if this would make sense for your situation.

6. Earned Income Tax Credit

The Earned Income Tax Credit (EIC) is a refundable tax credit for low- and middle-income taxpayers that’s often overlooked. The amount of credit you can claim depends on your annual income and the number of kids you have—but people without kids can qualify, too. 

Below are the maximum EIC amounts for 2020, along with the maximum income you can earn before losing the credit altogether. Note: You can’t claim the EIC if you are a married individual filing separately.

Number of childrenMaximum earned income tax creditMax earnings,single or head of household filersMax earnings,joint filers
0$538$15,820$21,710
1$3,584$41,756$47,646
2$5,920$47,440$53,330
3 or more$6,660$50,954$56,844

Additionally, for the 2020 tax year, there are special rules for the EIC due to the pandemic: You can use either your 2019 income or your 2020 income to calculate your EIC and use whichever number gets you the bigger credit. This doesn’t happen automatically, though, so be sure to ask your tax professional to run the numbers both ways and choose the option that offers the most savings.

7. Child Tax Credit

If you have minor children aged 16 or younger, the Child Tax Credit is one of the most effective ways to reduce your federal income tax bill—and there are special rules for 2020 that can save you even more.

For your 2020 taxes, you can claim up to $2,000 per qualified child as a tax credit, and under rules due to the pandemic, you can use either your 2019 income or your 2020 income to calculate your credit—whichever year offers the most savings. The credit begins to phase out when your AGI reaches $75,000 for single filers, $150,000 for joint filers, and $112,500 for head of household filers.

What’s more, with the passage of Biden’s new ARP this March, the child tax credit is set to get even bigger in 2021. When you file your taxes next year, the per child credit will go up to $3,000 or $3,600, depending on your child’s age. Look for a future blog post detailing all of the new tax saving opportunities available under the ARP for 2021 and beyond.

Maximize Your Tax Savings for 2020

These are just a few of the numerous tax breaks available for 2020. Indeed, there are plenty of other deductions and credits that might be up for grabs depending on your situation. Meet with us, as your Personal Family Lawyer®, to make sure you don’t miss out on a single one. Contact us today to schedule your visit.

This article is a service of Liz Smith, Personal Family Lawyer® in Juneau, Alaska. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Life & Legacy Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 907-312-5436 to schedule a Life & Legacy Planning Session and mention this article to find out how to get this $750 session at no charge; or book a time for our team to call you at a time you choose.

With the government shutdowns and economic fallout from the pandemic, 2020 was a rough year for many businesses. But thanks to recent legislation aimed at helping business owners recover, you could see a silver lining in the form of significant tax-saving opportunities when you file your annual tax return this spring. First up, although it’s technically not a tax break, the IRS announced this week that the deadline for filing federal income taxes has been pushed back from April 15 to May 17, 2021, which should give you some extra time to get your personal tax returns handled.

The tax filing postponement applies to individual taxpayers, including those who pay self-employment taxes. However, the extension does not apply to first-quarter 2021 estimated tax payments, which many small business owners file. This means your Q1 2021 estimated tax payments are still due April 15, 2021. 

Next, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed last March, and in addition to emergency loans like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL), it also included several tax breaks to help struggling businesses, most notably, the Employee Retention Credit (ERC). From there, the Consolidated Appropriations Act 2021 passed in December 2020, expanded and extended the ERC program to address the lingering effects of the pandemic.

Finally, in addition to the pandemic-related legislation, multiple provisions of the 2017 Tax Cuts and Jobs Act (TCJA) continue to provide potentially hefty reductions to your tax bill. Last week, in part one of this series, we outlined the first two big tax breaks you should be aware of when filing your 2020 return, and here we’ve highlighted the remaining three.

3. Increase Your Business Interest Deduction
Under the CARES Act, the allowable business interest expense deduction for 2019 and 2020 was increased from 30% to 50% of your adjusted taxable income (ATI). Any business interest expense that isn’t allowed as a deduction for this year is carried forward to the following year.

In addition, for 2020 you can apply the 50% deduction limit based on your 2019 ATI.  This change should increase the interest expense deduction for your business, since the vast majority of companies will have more taxable income in 2019 than 2020 due to COVID-19.

4. Carry Back Recent Losses For Up To Five Years

The economic turmoil caused by the pandemic will cause many small businesses to incur net operating losses (NOLs) for 2020. However, due to a provision in the CARES Act, you may be able to apply a NOL generated in 2020 to income from the past five years for a potential immediate tax refund. 

Under the Cares Act, if your business had an NOL in 2018, 2019, or 2020, you can now carry back the NOL for up to five years in order to recover taxes paid in those earlier years. For example, if you have an NOL in 2020, that loss can be carried back to 2015.

Such NOL carrybacks allow you to claim refunds for taxes paid in the carryback years. And because tax rates were significantly higher before the TCJA went into effect in 2018, NOLs carried back to those years can result in big refunds. If you have available NOLs, you can obtain your refund immediately by filing amended returns for the applicable years.

5. PPP Loans and Business Expense Deductions

Previously, the IRS had ruled that you could not deduct your wages and other qualifying business expenses that you used your PPP funds on if your PPP loan was forgiven—which effectively created a tax on the loan. But the Consolidated Appropriations Act 2021 clarified that forgiven PPP loans will not be taxable to business owners.

This applies to all existing PPP loans under the original rounds of funding as well as the new second-draw PPP loans. This means you can have your PPP loan forgiven and still be able to deduct your payroll and other qualifying business expenses paid with your PPP money. 

SBA is currently offering PPP loans until March 31, 2021. However, just this week the House of Representatives voted to extend the PPP program for two additional months. This would extend the program’s deadline to May 31st 2021, instead of March 31, and give the Small Business Administration (SBA) an additional 30 days to process loans. The bill goes to the Senate next, where it’s expected to be approved with bipartisan support.

For eligibility information on both the original and new PPP loans, read our previous post, New COVID Stimulus Funding Available For Business Owners in 2021. Additional information on the PPP program can also be found on the SBA’s PPP website.

Maximize Your Tax Savings For 2020

In addition to the tax breaks highlighted here, there are numerous other potential tax-saving opportunities available under the pandemic-related legislation and TCJA. So even if you don’t qualify for any of these, it’s likely that there are others you can benefit from. Meet with us, as your Family Business Lawyer™, to make sure you don’t miss a single one. Schedule your appointment today.

This article is a service of Liz Smith, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule your appointment at 907-312-5436, or find a time for us to call you

2020 was a nightmarish year for many families. But thanks to recent legislation, you could see a silver lining in the form of major tax breaks when filing your income taxes this spring. First up, although it’s technically not a tax break, the IRS announced this week that the deadline for filing your 2020 federal income taxes has been pushed back from April 15 to May 17, 2021, which gives you an extra month to get your tax return handled. 


The postponement applies to individual taxpayers, including those who pay self-employment taxes. But the extension does not apply to first-quarter 2021 estimated tax payments that many small business owners file. So if you file quarterly taxes, contact your tax advisor now if you haven’t already done so.

Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 provides individual taxpayers with several hefty tax-saving opportunities, many of which are only available this year. What’s more, President Biden’s new relief package, known as the American Rescue Plan (ARP), which went into effect in March 2021, not only offers additional stimulus payments to most Americans, but it also includes significant tax relief for those taxpayers who lost their job and had to rely on unemployment benefits in 2020.

While there are dozens of potential tax breaks available for 2020, here are 7 of the leading ways you can save big money on your 2020 tax return. 

1. Stimulus Payments

As part of the CARES Act, millions of Americans received stimulus checks in 2020, and those payments were an advance refundable tax credit on your 2020 taxes. This means that no matter how much you owe (or get back) on your 2020 taxes, you get to keep all of the stimulus money and won’t have to pay any taxes on it.

Because the IRS didn’t have everyone’s 2020 tax returns when they issued the stimulus checks, they based the stimulus payments on your 2018 or 2019 returns, whichever one you had most recently filed. Using data from those years, the stimulus payments from 2020 phased out at an adjusted gross income (AGI) of $75,000 to $99,000 for singles and at $150,000 to $198,000 for married couples filing jointly.

Given that the stimulus payments were based on your AGI for 2018 or 2019 but technically apply to your 2020 AGI, you may find that your payment was either too much or too little. But there’s good news—even if your financial situation has improved since 2018 or 2019 and you received too much stimulus money based on your 2020 income, you get to keep the overage.

By the same token, if you received too little or only partial payment on your 2020 stimulus, you can claim what you missed in the form of a recovery rebate credit when you file your 2020 taxes. Not sure how this would work? Here are three scenarios where you may be entitled to additional stimulus money.

  • If your AGI for 2018/19 is higher than your AGI in 2020, you can claim the additional amount owed when you file your 2020 taxes this April.
  • If you had a child in 2020, but didn’t get the $500 credit for dependent children in your stimulus payment, you can claim the child when you file in 2021.
  • If someone else claimed the child based on 2018/19 returns, but you can legitimately claim that child on your 2020 return, you can get the $500 tax credit when you file in 2021, and the person who got it based on 2018/19 returns will not have to pay it back.

2. Unemployment Benefits

When the pandemic stalled out the economy, many Americans lost their jobs and were forced to rely on unemployment insurance to pay the bills. That said, unemployment benefits are generally taxable, so if you took them, without having taxes automatically deducted, you were looking at having to pay income taxes on that money when you file your 2020 return.

However, taxpayers who received unemployment benefits in 2020 were provided with significant relief with the passage of President Biden’s American Rescue Plan (ARP). Under the ARP, the first $10,200 of your 2020 unemployment benefits are tax-free if your annual household income is less than $150,000. The ARP doesn’t provide a different threshold for single and joint filers, so both spouses are entitled to the $10,200 tax break, for a potential total of $20,400, if both spouses received the benefits.

Note that if your unemployment benefits exceed $10,200 in 2020, you’ll need to report the excess as taxable income and pay taxes on the amount over the limit. And if your household income is over $150,000, you’ll need to pay taxes on all of your unemployment benefits just like you would before the passage of the ARP.


If you already filed your 2020 return and paid taxes on your unemployment benefits before the passage of the ARP made those benefits tax free, the IRS plans to automatically process your refund. This means you won’t have to tax any extra steps, such as filing an amended return, to secure the refund. The IRS will release further details on this issue in the coming weeks.

3. Waived RMDs

You are typically required to take an annual required minimum distribution (RMD) from your IRA, 401(k), or other tax-deferred retirement account starting in the year when you turn 72, but the CARES Act temporarily waived the RMD requirement for 2020. The waiver also applies if you reached age 70½ in 2019, but waited to take your first RMD until 2020, as allowed under the SECURE Act.

RMDs generally count as taxable income, so taking this waiver means that you may have lower taxable income in 2020 and therefore owe less income taxes for 2020.

However, there are a number of factors to consider, including the state of the market and your living expenses, when deciding whether or not to waive your RMDs. Given this, consult with us, as your Personal Family Lawyer®, or your tax professional before making your final decision.

Next week, in part two of this series, we’ll cover the remaining four ways you can save big money on your 2020 tax bill. 

This article is a service of Liz Smith, Personal Family Lawyer® in Juneau, Alaska. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Life & Legacy Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 907-312-5436 to schedule a Life & Legacy Planning Session and mention this article to find out how to get this $750 session at no charge; or book a time for our team to call you at a time you choose.

With the government shutdowns and economic fallout from the pandemic, 2020 was a rough year for many businesses. But thanks to recent legislation aimed at helping business owners recover from the pandemic, you could see a silver lining in the form of significant tax-saving opportunities when you file your annual tax return this April. 

First off, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed last March, and in addition to emergency loans like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL), it also included several tax breaks to help struggling businesses, most notably, the Employee Retention Credit (ERC). From there, the Consolidated Appropriations Act 2021 passed in December 2020, expanded and extended the ERC program to address the lingering effects of the pandemic.

Finally, in addition to the pandemic-related legislation, multiple provisions of the 2017 Tax Cuts and Jobs Act (TCJA) continue to provide potentially hefty reductions to your tax bill. On that note, here we’ve highlighted five key tax-saving opportunities you should keep top of mind when you file your 2020 return.

1. Expansion and Extension of the ERC
Under the original version of the ERC, any business that was fully or partially suspended as a result of government-mandated COVID-19 shutdown orders or whose gross receipts fell by more than 50% in a quarter in 2020 compared to the same quarter in 2019 may be eligible for the tax credit. The tax credit is worth 50% of qualifying wages, with payments of up to $10,000 per employee for wages paid from March 13, 2020 through January 1, 2021. Initially, the ERC was not available to those employers who took a PPP loan, but this rule was changed for 2021.

Based on changes enacted under the Consolidated Appropriations Act 2021, the ERC is now available to business owners who took a PPP loan, including borrowers from the initial round of PPP, who originally were ineligible to claim the tax credit. However, the credit can only be taken on wages that are not forgiven or expected to be forgiven under PPP. Eligible employers now have until June 30, 2021 to claim the tax credit.

On March 1, 2021, the IRS issued Notice 2021-20 that offers guidance for employers claiming ERC for wages paid through the end of 2020. The notice explains how employers who received a PPP loan can retroactively claim the employee retention tax credit. In order to claim the credit for past quarters, employers must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, for the applicable quarter(s) in which the qualified wages were paid.

For business owners who qualify in 2021, including PPP recipients, the new law expands the credit and allows them to claim a credit against 70% of qualified wages paid. Additionally, the amount of wages that qualifies for the credit is now $10,000 per employee, per quarter for the first two quarters of 2021. This means you could potentially claim $7,000 per quarter, per employee (or $14,000) for 2021.

The IRS plans to release additional guidance addressing the changes for 2021 in a future notice.  Given the changing and complex nature of the ERC, consult with us, as your Family Business Lawyer™, or your CPA to ensure you get the most benefit from the tax credit in 2020 and 2021.

2. Take a 20% QBI Deduction For Pass-Through Income
One of the biggest tax breaks offered by the TCJA was the Qualified Business Income (QBI) Deduction, and it’s still available for 2020. Starting in 2018 and running through 2025, this provision allows qualifying business owners to take a straight 20% deduction on their net business income for the year. And this deduction is in addition to any ordinary business-expense deductions you might have.

To qualify, your business must be set up as a “pass-through” entity, meaning your company’s taxes pass through and are paid at your personal income tax rate. This business structure includes sole proprietorships, partnerships, limited liability companies (LLC), and S corporations—basically all businesses except C corporations and LLCs taxed as corporations.

The deduction does have some restrictions, including for specific types of service businesses like law practices and accounting firms, and it begins to phase out at higher income levels. For 2020, the deduction begins to phase out once your taxable income surpasses $163,300 if single and $326,600 if married and filing jointly. Given these restrictions, meet with us, as your Family Business Lawyer™ or your CPA to see if your company qualifies.

Next week, in part two of this series, we’ll cover the remaining three ways you can save big on your 2020 tax bill. 

This article is a service of Liz Smith, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule your appointment at 907-312-5436, or find a time for us to call you

Even though there are now vaccines for the pandemic and the number of new cases is on the decline, becoming infected is still a very real possibility. And for parents who suffer from any debilitating illness, it can be a colossal challenge to navigate your typical parenting responsibilities, while trying to recover.

This is especially true for single parents who are the sole caregiver, with limited outside child-care options. That said, plenty of single parents have faced the same challenge and successfully recovered, while raising their young children. Fortunately, you can learn from their experiences,  ask for support, and take steps to prepare for and manage your illness and your role as a parent.

Last week, in part one, we discussed some key legal issues that parents of minor children should address in order to deal with the risks of the coronavirus or any other serious medical condition that can leave you totally incapacitated or worse. Specifically, we talked about the need for naming legal guardians to care for your kids in the event you become unable to look after them. If you have not already legally documented who you would want to look after your children should you become unable to do so yourself—even for a short period of time—go to this free website right now get it done.

In addition to naming legal guardians for your kids, we also talked about the need to create a medical power of attorney and living will. These legal documents are advance directives that describe your wishes for medical treatment and end-of-life care in the event you become incapacitated and unable to express your own wishes. 

Here, in part two of this series, we are going to discuss proactive measures that single parents debilitated by the coronavirus or another illness can take to improve your chances for a smooth recovery and better manage your parenting duties at the same time. Additionally, we are going to discuss additional estate planning steps for you to consider now.

Practical Tips For Recovering From The Coronavirus

If you develop symptoms that aren’t serious enough to warrant hospitalization, your main priority is recovering from your illness, but unless you can find an alternate caregiver, you’ll still need to look after your kids. As with any other challenge, planning ahead for this situation will greatly improve your chances of having a smooth recovery.

The more you prepare yourself, your home, and your children for your illness before you start feeling sick, the easier it will be to manage things when your symptoms reach their worst. The coronavirus affects people in a variety of different ways, so until you know exactly how your body will react, it’s best to prepare for a broad range of symptoms.

Identify Support. As a single parent, having backup support to care for your kids, in case you become ill or in the event of your death, is critical. While we discussed naming legal guardians for your children in our previous article, on a practical level, now is the time to consider who in your life would you be able to call on for immediate support if you need help.

As you make this list of potential immediate supporters for you and your kids, have a proactive conversation with those people now, letting them know you hope to not have to call on them, but if you do, you want to know if they would be open to being available to support you and/or your children.

If they say yes, create legal documentation giving them authority to stay with your kids and make medical decisions for your kids, in the event that you cannot make those decisions for any reason at all. This way, if something does happen, and you are too sick to care for your children, the authorities would have your written authority to leave your children in the care of the people you’ve identified, and they wouldn’t have to take your children into the care of strangers or “the system” while they figure out what to do.

In the even that you do become seriously ill, you should take the following steps to help prepare yourself and your family: 

Plan to get lots of rest. Constant fatigue is one of the most common symptoms of the virus, and this can seriously affect your ability to care for your kids. Given this, you should do everything you can to keep your kids safe and occupied, so you can rest. This might mean gathering games, videos, books, music, toys, and snacks to keep them entertained. And if you have small children and are worried about them wandering off, consider using a playpen or play gates to keep them in the same room as you while you rest.

Stock up on food. You should stock up on food for both you and your kids. Your best bet are easy-to-prepare meals, such as canned soup, microwave meals, energy bars, meal-replacement shakes, and frozen pizzas. While you should be able to stock up on at least a couple of weeks worth of food beforehand, you may find that you need additional food or other essential supplies once you get sick. To prepare for this, reach out to family and friends to see if they can drop off groceries, and if that’s not an option, look into delivery services such as TaskRabbit or Instacart.

Get homework help. If your kids are attending school remotely, it might be a good idea to coordinate with a friend or tutor to be available via FaceTime or Zoom to help you kids with their schoolwork should you be laid low by your symptoms.  

Preparing for the Worst-Case Scenario .While most adults don’t experience severe complications from the coronavirus, there’s always the chance that you could be among those who do. Should the absolute worst happen and you end up passing away from the illness, it’s critical that your estate plan be completely up-to-date with the latest documents, beneficiaries, and administrators. Here we’ll outline some of the most important aspects of your estate plan that you should have covered to ensure your kids are properly cared for following your death.

Ensure your will distributes your assets properly: As a single parent of minor kids, you’ll likely want most, if not all, of your assets to pass to your children in the event of your death, and for this reason, you may have named them as beneficiaries in your will. However, as minors, they wouldn’t be able to access those assets until they reach the age of majority. Until they come of age, the court would appoint a guardian, which could be someone other than the person you’ve chosen, to manage their inheritance.

To avoid this, if you only have a will, you should ensure that your will establishes a testamentary trust for the benefit of your kids, with a financial guardian named by you to care for the assets, until your children reach the age you choose for them to receive their inheritance. 

But for a variety of reasons we’ll cover below, using a will alone is not the ideal option for protecting and transferring your assets to your kids. Instead, you should seriously consider creating a trust to ensure your children’s inheritance passes to them in the most advantageous way possible.

Use a trust to protect and control the distribution of your children’s inheritance: Using a revocable living trust to pass your children’s inheritance to them offers a number of important advantages over a will. For one, assets included in a will must first pass through the court process known as probate before they can be transferred to the intended beneficiaries. This means that the guardian you’ve named to care for your kids would have to first go through the probate process before they could get access to any of your assets for your children’s care.

Probate can not only take months or longer to complete, but it can also be expensive and confusing. In contrast, if your assets are held in a properly drafted trust,  the person you name as financial guardian could work with your lawyer for ease of management of your assets, and the people you name to care for your children could access those assets much more easily and directly as needed.

The trustee you name could be the person you’ve named as your kids’ legal guardian, or it could be a different individual, who could oversee the management of your children’s inheritance, freeing the guardian from the responsibility of caring for your kids and worrying about managing their money at the same time. Alternatively, you could make the guardian and another individual co-trustees, so there would be two individuals overseeing the assets for increased accountability.

Another advantage a trust has over a will is the level of control they offer you when it comes to distributing assets to your kids. By using a trust, you can specify when and how your kids will receive your assets once they come of age. For example, you could stipulate in the trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or purchase of a home. Or you might spread out distribution of assets over their lifetime, releasing a percentage of the assets at different ages or life stages. 

In this way, you can help prevent your kids from blowing through their inheritance all at once, and offer incentives for them to demonstrate responsible behavior. Plus, as long as the assets are held in trust, they’re protected from the beneficiaries’ creditors, lawsuits, and divorce, which is something else wills don’t provide. 

Furthermore, a will does not cover assets that pass directly to a beneficiary by contract, such as life insurance and retirement accounts. Given this, make sure your insurance policies and retirement accounts are directed to your trust, instead of listing your children as designated beneficiaries. Naming minors or even young adults as the beneficiaries of insurance and retirement accounts is a sure-fire way to ensure they unnecessarily get stuck in a court process, with a judge deciding how your assets are managed for your children, which you can easily avoid by designating your trust as the beneficiary of your life insurance and retirement accounts.

That said, if an asset hasn’t been properly funded to your trust, it won’t be covered, so it’s critical to work with us, as your Personal Family Lawyer®, to ensure the trust is properly funded. We have systems in place to ensure that transferring assets to your trust and making sure they are properly owned at the time of your incapacity or death happens with ease and convenience.

Finally,  in addition to the above documents, it’s essential that your estate plan also include a comprehensive inventory of your assets.

Create a Personal Resource Map: Maintaining a regularly updated inventory of all your assets is one of the most vital parts of keeping your plan current. By creating such an inventory, those named in your will and/or trust will know what you have and how to find everything should something happen to you, so none of your assets end up in our state’s Department of Unclaimed Property. This task is so important we’ve created a free online tool called a Personal Resource Map to help you get your asset inventory process started right now, by yourself, without the need for a lawyer. 

After getting your inventory started there, meet with us, as your Personal Family Lawyer®, to incorporate your inventory into a comprehensive set of planning strategies that we will develop with you to keep your plan updated throughout your lifetime.

Minimize Your Risk With Planning

While the pandemic has been an extremely trying time, it seems we’re finally rounding the corner in containing the virus and getting our lives back to normal. Although it’s impossible to totally prevent you or your loved ones from getting seriously ill, by putting the type of proactive planning measures described here in place, you can significantly minimize the level of stress, suffering, and conflict that can result if you do become sick.

Whether you have yet to create these documents or need yours updated, meet with us, as your Personal Family Lawyer®, right away to ensure your family and your assets are as well-protected as possible. Contact us today to schedule your appointment.

This article is a service of Liz Smith, Personal Family Lawyer® in Juneau, Alaska. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Life & Legacy Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 907-312-5436 to schedule a Life & Legacy Planning Session and mention this article to find out how to get this $750 session at no charge; or book a time for our team to call you at a time you choose.

With the government-mandated shutdowns and loss of business due to the pandemic, you may be thinking about filing for bankruptcy to deal with your company’s debt. However, even though bankruptcy is a valid option that can give you a chance to get a fresh start, bankruptcy isn’t always the best solution for managing out-of-control debt in your business.

Indeed, there are a number of things you should consider before you pull the trigger and declare bankruptcy. While you should always consult with an experienced business lawyer like us before filing bankruptcy, here are a few facts you should know about the bankruptcy process.

1. It Can Impact Your Personal Credit

The main difference between you and a big corporation filing bankruptcy is that if you use personal bankruptcy (either Chapter 7 or Chapter 13) to discharge or restructure your debt, it will impact your personal credit. In contrast, filing for Chapter 11 bankruptcy, which has mostly been used by large corporations, doesn’t hurt the credit of corporate officers or shareholders.

In the past, only large corporations could afford the time and expense associated with Chapter 11 bankruptcy, but recent legislation enacted under the CARES Act has made Chapter 11 more accessible to certain small business owners. Specifically, the Small Business Reorganization Act of 2019, which created Chapter 11, Subdivision V., makes the proceedings more like a Chapter 13 bankruptcy.

Note that business owners filing for Chapter 11, Subdivision V must be represented by legal counsel, so taking this route is still going to require significant expense. Consult with us, as your Family Business Lawyer™, to find out if filing Chapter 11 might be a smart move for your business.

Even with the new rules for Chapter 11, most small business owners will choose to file for personal bankruptcy under either a Chapter 7 or Chapter 13. A Chapter 7 bankruptcy (a liquidation bankruptcy designed to cancel general unsecured debts like credit cards and medical bills, when you have little or no disposable income) stays on your personal credit report for 10 years. A Chapter 13 (a reorganization bankruptcy where you earn a regular income and can pay back at least a portion of your debt through a repayment plan) stays on your credit report for seven years.

For more details on Chapter 7 vs. Chapter 13 bankruptcy, read our previous post, Can Bankruptcy Save Your Business?

2. Bankruptcy Doesn’t Cancel All Of Your Debt

While bankruptcy can cancel much of your debt, you’ll still have to pay back certain creditors. Debt that bankruptcy doesn’t clear include the following: 

  • Student loans
  • Government debts, such as back taxes, fines, or penalties
  • Child support and alimony

Remember, every bankruptcy case is unique, and you won’t know what debts will be cleared until a bankruptcy court rules on your case.

3. It Will Cost You

Filing for bankruptcy comes with its own costs. According to the latest data, the filing fees for new petitions for Chapter 7 bankruptcy are currently $335, and the filing fees for a Chapter 13 are $310. 

In addition to the filing fee, you’ll also be required to take a credit counseling and a personal financial-management course, both of which you have to pay for. And if you decide to hire a bankruptcy lawyer, which you absolutely should do if you go the bankruptcy route, you are looking at shelling out anywhere from $800 to $6,000, depending on the type of bankruptcy you file and the details of your case.

Consider Alternatives to Bankruptcy

Before turning to bankruptcy, you should speak with us to see if we can help you restructure your business model and your debt or find potential investors to support you in getting the fresh start you need to keep going. By working with a trusted advisor who can help you retool your business model and put in place sound financial systems, you can find ways to increase your cash flow and plug areas of your business where you are leaking cash. 

We often see business owners who have a great product or service and a strong customer base, but they simply haven’t learned how to properly manage their financial resources and don’t have the right financial systems in place. If this sounds like you, bankruptcy may not be your best option, so reach out to us for recommendations. Meanwhile, review our previous post discussing five ways struggling startups can get a handle on cash-flow management.

Additionally, you should look for ways to restructure your debt and your overall expenses. You can start by contacting each of your creditors to inform them that you may need to stretch out payments or even consolidate your debt load. But don’t do this alone. Instead, seek our counsel, so you can have these conversations coming from a place of confidence and strength.

Don’t Go It Alone
The economic fallout from the pandemic has crippled countless businesses, but before you make any final decision about bankruptcy, you should meet with us, as your Family Business Lawyer. We can assess your situation, analyze your finances, and determine your best course of action from an unbiased perspective. 

And if it turns out that bankruptcy is your best option, we can recommend bankruptcy lawyers we trust to assist you with the process. Ultimately, the best way to manage debt is to seek financial guidance before things reach the breaking point, but if you find yourself drowning in debt, contact us to determine the best way to keep your operation from going under.

This article is a service of Liz Smith, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

Even though there are now vaccines for COVID-19 and the number of new cases is on the decline, becoming infected with the virus is still a very real possibility. And for parents who become infected, it can be a colossal challenge to navigate your typical parenting responsibilities, while trying to recover from the illness.

This is especially true for single parents who are the sole caregiver, with limited outside child-care options. That said, plenty of single parents have faced the same challenge and successfully recovered from COVID-19, while raising their young children. Fortunately, you can learn from their experiences, ask for support, and take steps to improve your chances for recovery. With this in mind, here in this series, we’ll outline ways single parents can prepare for and manage your illness and your role as a parent.

Stay Calm

Getting diagnosed with COVID-19 can be terrifying for anyone, but even more so for single parents with young children. But do your best not to freak out. Remember, most people who contract COVID-19 don’t experience serious complications, and many never even develop any symptoms at all. 

Not to mention, children who do contract the virus typically fare even better than adults. And for those kids who do become sick, the symptoms are often fairly minor, with many kids just experiencing a sore throat and some diarrhea. So while it may be extremely scary to test positive, letting yourself become overly stressed is only going to make you feel worse and frighten your kids. 

If you do contract COVID-19 and develop symptoms that leave you ill, preparing for the illness beforehand can not only give peace of mind, but greatly improve your chances for recovery, as well as enable you to be a more effective parent. Before we get to the preparation for reducing contagion, dealing with symptoms, and other practical issues related to the virus, we’ll first address some of the legal planning you should have in place as a single parent.  

Legal Issues For Parents Dealing With COVID-19

As a parent of minor children, your number-one planning priority is to name legal guardians to care for your children should anything happen to you. And with the ongoing pandemic, this responsibility is even more vital and urgent. 


Name legal guardians for your kids: Go to this free website right now to name guardians for your children in a legal document, and then have your legal document reviewed by us, as your local Personal Family Lawyer®. When we review your legal document (or your will if you already have one), we will look for six common mistakes parents make when naming legal guardians to ensure you haven’t made any of these errors and can easily fix any mistakes you may have made.

And if you are having a difficult time deciding who to name as legal guardians for your children, we can help you make the right decision.

Officially answering the question of who will care for your kids if you can’t—even for a short time—is one of the best things you can do right now to prepare for COVID-19 or any potential illness. Taking this simple action is a real, concrete step you can take to protect your kids during this frightening time. Plus, knowing that your kids will be cared for by the people you would want looking after them in the event you require hospitalization, need to be intubated, or pass away from the virus will be a huge relief, allowing you to focus 100% on your recovery.

Create advance healthcare directives: The second-most urgent planning priority for all adults is to create the proper legal documents to assist medical providers in better coordinating your care should you become hospitalized and/or incapacitated by the virus—or any other medical condition. The planning documents for this purpose are a medical power of attorney and a living will.

A medical power of attorney and living will are both advance healthcare directives that work together to help describe your wishes for medical treatment and end-of-life care in the event you become incapacitated and unable to express your own wishes. What’s more, in light of COVID-19, even those who have already created these documents should revisit them to ensure they are up-to-date and address specific scenarios related to the coronavirus.

While all adults over age 18 should put these documents in place as soon as possible, if you are over age 60 or have a chronic underlying health condition, the need is particularly urgent. Contact us right away if you or anyone in your family needs these documents created.

For an in-depth explanation of what advance directives are, how they work, and the specific details that you need to address in these documents for COVID-19, read our previous blog post, COVID-19 Highlights Critical Need for Advance Healthcare Directives.

Next week, in part two of this series, we’ll discuss measures that single parents diagnosed with COVID-19 can take to reduce passing the virus on to your children as well as outlining steps for enhancing your ability to recover from the illness.

This article is a service of Liz Smith, Personal Family Lawyer® in Juneau, Alaska. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Life & Legacy Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 907-312-5436 to schedule a Life & Legacy Planning Session and mention this article to find out how to get this $750 session at no charge; or book a time for Liz to call you at a time you choose.