Regardless of the industry you are in, the reality of being a business owner is that you open yourself up to a number of unique risks that most people don’t have to worry about—and the more successful your business is, the more risks you face. 

Unfortunately, most business owners aren’t fully aware of all the potential risks that can affect their company or the options they have available to protect their personal assets from the risks of doing business. This is where asset protection planning comes in.

Asset protection planning is designed to reduce or eliminate the risks of being in business by shielding your business and personal assets from lawsuits, creditors, and other potential threats to the fullest extent legally possible. And it’s absolutely crucial to have your asset protection strategies in place from the moment you open your doors, because once a claim or lawsuit is filed, it’s too late. 

In fact, if you take certain actions to protect your assets after a claim or lawsuit has been filed, you could be charged with fraud. With this in mind, the time to take action is now, while there is nothing to worry about and the full range of options to protect your assets are still available to you.

While the specific protections you require will largely depend on the specifics of your business and your personal assets, the following four vehicles form the foundation of most business owners’ asset-protection planning.

1. Business Entities

One of the most fundamental asset protection strategies is setting up the proper entity structure for your business from the start. Without the correct entity in place, your personal assets would be at risk if your business ever gets into debt that it cannot pay, or is hit with a lawsuit. 

For example, if your company is structured as a sole proprietorship or general partnership and you go out of business, creditors could come after your personal assets to pay off your business debts. Similarly, if your sole proprietorship or general partnership is hit with a lawsuit, your personal assets could be seized to satisfy a judgment.

By structuring your business as a limited liability company (LLC) or corporation, you can shield your personal assets from liabilities incurred by your business. These structures establish your company as a separate legal entity that’s distinct from you as an individual, which prevents you from being personally liable for the company’s debts or legal liabilities.

As long as you properly maintain your entity’s administrative formalities and keep your business and personal assets separate, both LLCs and corporations effectively create a barrier between you and the activities of your business. Creditors, clients, and other potentially litigious entities can go after your business assets, but not your personal assets. 

That said, you can be held personally liable in certain situations, such as if your entity isn’t maintained properly or you mistakenly commingle your personal and business finances. In that case, a court will hold you personally liable for the debts and liabilities of your business. When this happens, it’s known as “piercing the corporate veil.” 

This is exactly why it’s so important to work with a lawyer to set up and maintain your business entity, and not try to handle this on your own. The consequences of not maintaining your business entity are just too high, and by the time you are facing those consequences, it’s too late to do anything about it.

We offer you a number of legal and financial systems that make keeping up with your entity’s administrative and compliance formalities a snap. Meet with us, your Family Business Lawyer™ to find out what entity structure is best suited for your business and how we can ensure you have the maximum liability protection possible.

2. Business Insurance

While setting up a separate legal entity can safeguard your personal assets from your company’s liabilities, an entity will not protect the assets of your business—that’s what business insurance is designed to cover. And since a single catastrophic event or lawsuit can wipe out your company, it’s vital to have the proper insurance coverage in place from the very start of your business.

The type and amount of coverage your company needs will largely depend on your particular company and its assets. However, most businesses can benefit from the following forms of insurance: general liability insurance, professional liability insurance, property insurance, cyber insurance, and employment practices insurance. Additionally, you should also consider investing in umbrella insurance, which would cover you for any damages in excess of your other individual policies.

Finally, if you are considering letting insurance wait, or not making insurance a priority, remember this: anyone can sue anyone at any time for anything. You don’t even have to have done anything wrong to get sued. Yet whether you are in the wrong or in the right, if you do get sued, you’ll need to pay big money to hire a lawyer to defend you. With the right insurance in place, your insurance will cover paying that lawyer to defend you—and that could be the most important reason to get insurance.

Before you sit down with an insurance agent, meet with us, your Family Business Lawyer™. We’ll look at your business assets and underlying risks to identify the optimal levels of coverage you should have in place.

3. Legal Agreements

Legal agreements are very likely the most important part of your asset protection plan. Legal agreements protect your company’s most essential elements: your personal liability, personal and professional relationships, intellectual property, and trade secrets, to name just a few.

In addition, legal agreements govern the rights and responsibilities of every party you do business with, from clients and vendors to employees and contractors. Given the importance of such documents, you should never rely on generic legal forms you find online when creating your business agreements. Instead, reach out to us, your local Family Business Lawyer™ to support you in creating, reviewing, and updating your company’s legal documents to ensure you have the most robust legal protections in place at all times.

When creating legal agreements, remember this: the most important part of your legal agreements are the process by which you reach agreement as well as the clarity of the documented terms, so if there is a later dispute you’ve already established how you will handle and resolve conflict. Template form documents, or “cheap legal” in the form of a lawyer who really doesn’t understand the relational aspects of your business simply won’t cut it. You want to work with a relational lawyer who understands how to keep businesses out of court and conflict.

If you are going it alone with legal agreements, be sure that you enter into all agreements in the name of your business entity, not in your personal name. And whenever possible, be sure that your legal agreements include provisions requiring conflict resolution through mediation and arbitration before litigation, which should always be a last resort.

Furthermore, in certain cases, the terms of your business agreements can be designed to limit the level of liability and potential damages your business would face should a dispute arise. However, when it comes to limiting liability through legal agreements, state law varies widely, so your agreements should be prepared and reviewed by a business attorney licensed in our state like us, your Family Business Lawyer™.

4. Trusts

Business entities protect your personal assets from the activities of your business, but by using a specially designed irrevocable trust, you can protect your business from your personal activities. Such trusts are set up so your business is owned by the trust, not you, and since you can’t lose what you don’t own, your company and its assets can’t be reached by your creditors or any lawsuits against you due to your personal activities, such as a serious accident, bankruptcy, or divorce.

To be clear, asset protection trusts are not the same as living trusts designed to protect the inheritance you want to leave for your family and avoid the court process of probate in the event of your death or incapacity. Living trusts are revocable, meaning you still own the assets held by the trust while you’re alive, and as such, you can dissolve the trust or change its terms at any point during your lifetime. 

Since you retain ownership of assets held by revocable living trusts, a revocable living trust does not provide your business with any asset protection from creditors or lawsuits. Asset protection trusts, however, are irrevocable.

The most airtight asset protection is provided when you never own your business to begin with, and when the business is started by you as the trustee of an irrevocable trust set up for you by a parent, grandparent, or other relative. Additionally, if you anticipate growing the value of the business significantly, this kind of trust can also protect you from estate taxes. 

The one hitch with such trusts is that you have to have parents or grandparents who thought ahead and left you an inheritance inside an irrevocable trust at their death, or who are willing to set up an asset protection trust for you during their lifetime, so you can start your business with this level of protection.

On the other hand, if your business is already up and running and you want to protect it using asset-protection trusts, you can transfer your business into a creditor-shielded asset protection trust. However, in this case, there are many restrictions, and your protections will only begin after several years, depending on the state in which the trust is established. 

In either case, if an asset protection trust is something you’d like to consider for your business, contact us, your Family Business Lawyer™ to discuss your options.

Get Professional Support From a Family Business Lawyer

To make certain that your asset protection strategies are put in place and maintained properly, working with an experienced business lawyer like us is a must. Whatever you do, don’t try to handle your asset protection planning yourself by using online incorporation services, do-it-yourself online legal documents, or by purchasing a prepackaged asset-protection plan. These options are a recipe for disaster; asset protection requires complex planning and real legal experience, and you could lose both your business and personal assets if you get things wrong.

Rather than trying to go it alone, get professional support by having us develop your asset protection plan. As your Family Business Lawyer™, we will support you to create, implement, and enforce a full array of asset protection strategies at every stage of your company’s evolution. Call today to schedule an analysis of your business’ current risk exposure, so we can ensure your company’s legal foundation is strong enough to withstand whatever threats you might face both now and in the future.

his 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

As we are about to wrap up another Pride Month, the LGBTQ+ community faces an increasingly uncertain legal landscape. In the wake of the Supreme Court overturning Roe v. Wade, ending the recognition of a constitutional right to abortion, many are worried that other rights, especially those enjoyed by same-gender couples, might also be under threat. 

In fact, with Roe overturned, legal experts warn that the Supreme Court’s new Republican majority may come for landmark LGBTQ-rights decisions next, including marriage equality established by Obergefell v. Hodges. In light of this potential challenge, it’s critical that same-gender couples ensure their estate plans are carefully reviewed and updated by an estate planning lawyer who understands the special needs of LGBTQ+ planning to address any such developments.  

Although we will have to wait and see whether the Supreme Court ultimately decides to rule on marriage equality, same gender couples can act right now to put in place a number of proactive estate planning measures to ensure their relationships have the maximum legal protections. 

While you should meet with us, your Personal Family Lawyer® to address your specific circumstances, here are answers to some frequently asked questions related to LGBTQ+ estate planning.

Q: My partner and I are in a registered domestic partnership in our state, but we are not married. Do we qualify for the same rights and benefits available to married couples?

A: No, domestic partnerships, civil unions, and other alternative legal relationships to marriage only offer rights and protections in the states that recognize them. Marriage is the only relationship that is recognized by the federal government. 

Moreover, the rights and protections offered by domestic partnerships and civil unions can vary widely from state to state. In some states, for example, domestic partnerships and civil unions do not affect property rights between the two partners, while in other states they do. 

If you want all of the rights and protections that come with having your relationship recognized by the federal government, marriage is your only option.

However, you can replicate almost all of the benefits of marriage through a comprehensive estate plan—what we call a Life & Legacy Plan—so give us a call and let’s discuss how we can support you in getting the right legal documents and plan in place for you and your partner.

Q: My partner and I have been living together for 10 years, but we are not married and have no desire to get married. I’ve created a will, but my partner has no estate plan at all. What would happen to me in the event my partner dies or becomes incapacitated?

A: If you are unmarried and your partner dies without any estate plan, your partner’s assets will be distributed to his or her surviving family members according to our state’s intestate succession laws. Those laws only apply to relatives in the eyes of the law, so you would have no right to inherit any of your partner’s assets.

If not remedied immediately, this could have catastrophic effects for you. For example, if your partner dies, and you are not named on the deed to a home you live in together, you could even be left homeless should the family member who inherits the house decide to kick you out.

Similarly, in the event of your partner’s incapacity, you would have no automatic right to make medical decisions on their behalf, nor would you be able to access any financial accounts that are solely in their name. Your partner’s family could even prevent you from visiting your partner in the hospital.

In light of these facts, if you are in an unmarried relationship and you want your partner to inherit any of your assets upon your death or have any say in how your healthcare and/or finances are managed in the event of your incapacity, it’s absolutely crucial that each of you create a Life & Legacy Plan that addresses both death and incapacity.

Q: What kind of estate planning tools typically make up an effective incapacity plan for LGBTQ+ or any unmarried couple?

A: Estate planning isn’t just about planning for your eventual death; it’s also about planning for your potential incapacity due to serious injury or illness. Creating an effective incapacity plan allows you to name the person (or persons) you would want to make your healthcare, legal, and financial decisions for you if you are incapacitated and unable to make such decisions yourself.

If you haven’t planned for incapacity, the choice is left up to the court to appoint a legal guardian to make these decisions on your behalf. If you are unmarried and the court appoints one of your relatives as your guardian, your family could leave your partner totally out of the medical decision-making process and even deny him or her the right to visit you in the hospital. And even if you are married, it’s not guaranteed that your spouse would have the ultimate legal authority to make such decisions.

Though the court typically gives spouses priority as guardians, this isn’t always the case, especially if unsupportive family members challenge the issue in court. To ensure your partner/spouse has the ability to make these decisions for you, you must grant him or her the legal authority to do so using medical power of attorney and durable financial power of attorney.

A medical power of attorney gives your partner/spouse the authority to make healthcare decisions for you if you’re incapacitated and unable to do so yourself. Similarly, a durable financial power of attorney gives your partner/spouse the authority to manage your financial, legal, and business affairs, including paying your bills and taxes, running your business, selling your home, as well as managing your banking and investment accounts.

Additionally, you should also create a living will, so that your partner/spouse will know exactly how you want your medical care managed in the event of your incapacity, particularly at the end of life. Finally, don’t forget to provide your partner/spouse with HIPAA authorization within the medical power of attorney, so they will have access to your medical records to make educated decisions about your medical treatment.

As your Personal Family Lawyer®, we will support you in putting in place a robust estate plan that will ensure that your partner/spouse has the maximum rights possible if you are ever struck by a debilitating accident or illness.

Q: My partner and I are married, and we both have a will. Is this a sufficient level of planning?

A: Although a will is a foundational part of nearly every adult’s estate plan, we recommend that couples who have assets—even those who are married—create both a will and a trust, if you want to ensure your loved ones stay out of court upon your incapacity or death.

A will does not work in the event of your incapacity, which could happen at any time before your death. Should you become incapacitated with only a will in place, your spouse may not have access to needed funds to pay bills, or they might even be forced to leave your home by a family member appointed as your guardian during your incapacity.

Furthermore, upon your death, a will is required to go through the often long, costly, and potentially conflict-ridden court process known as probate. In contrast, assets that are properly titled in the name of your trust would pass directly to your spouse upon your death, without the need for probate or any court intervention.

If your relationship is not supported by one or both families, avoiding court is especially important. If a family member doesn’t support your relationship, they are more likely to contest your will during probate. If your will is successfully contested, this could prevent your spouse from receiving assets you left in your will. Not only that, but the process of contesting a will is extremely time-consuming, costly, and emotionally draining for your surviving spouse.

Finally, when an attorney drafts your will, it is typically not set up to protect your assets after they are passed to your spouse from creditors or lawsuits. However, leaving your assets in a trust that your spouse can control would ensure the assets are protected from creditors, future relationships, and/or unexpected lawsuits.

Q: How can I ensure that my unmarried partner is able to carry out my wishes for my funeral arrangements?

A: To make certain that your partner has the legal authority to control your funeral arrangements, you should create a funeral directive, also known as a disposition of remains directive. This directive, which describes how you want your funeral or cremation arrangements carried out, can be included as part of your will, or it can be a separate stand-alone document.

Absent any estate planning, state law dictates who has the right to dispose of your remains and control your funeral, and if you are unmarried, this authority is typically given to your surviving family members. However, a properly drafted funeral directive allows LGTBQ+ couples to opt out of this default and designate the person you want to control your final arrangements.

Q: How can the non-biological parent in an LGTBQ+ relationship gain parental rights and avoid custody battles in the event of the biological parent’s death?

A: To ensure the full rights of a non-biological parent, many legal experts advise same-gender couples to undergo second-parent adoption. But in many states, it can be extremely difficult for same-gender couples to adopt. Some states even permit employees of state-licensed adoption agencies to refuse to grant an adoption if doing so violates their religious beliefs. And given the Supreme Court’s new conservative majority, such legal discrimation is likely to continue.

However, using a variety of estate planning strategies, as your local  Personal Family Lawyer® we can provide non-biological, same-gender parents with some protection of their parental rights. Starting with our Kids Protection Plan®, LGBTQ couples can name the non-biological parent as the child’s legal guardian, both for the short-term and the long-term, while confidentially excluding anyone the biological parent thinks may challenge their wishes.

By doing so, if the biological parent becomes incapacitated or dies, his or her wishes are clearly stated, so the court can do what the parent would have wanted and keep the child in the non-biological parent’s care.

Beyond that, there are several other estate planning vehicles—living trusts, power of attorney, and advance healthcare directives—we can use to grant the non-biological parent additional rights. We can also create “co-parenting agreements,” which are legal agreements that stipulate exactly how the child will be raised, what responsibility each partner has toward the child, and what kind of rights would exist if the couple splits or gets divorced.

An Advocate For LGTBQ+ Rights

Given these uncertain times, it’s more important than ever for LGBTQ+ couples, especially those with children, to have a carefully prepared estate plan that’s been created by a lawyer with experience dealing with these issues, and avoid using online document services at all costs. As your Personal Family Lawyer®, you can trust us to create an estate plan that’s specifically designed to prevent court challenges by family members who disagree with your relationship, and provide your partner/spouse with the maximum legal and financial benefits possible.

Using our Life & Legacy Planning Process, us, your Personal Family Lawyer® can ensure that no matter what happens to you, your beloved will be protected and provided for in the exact manner you wish, rather than being stuck in a financial and legal nightmare. Furthermore, we can help ensure that non-biological parents in same-gender partnerships have as many parental rights as possible, without resorting to second-parent adoption. Contact us, your Personal Family Lawyer® today to learn more and get your plan started.

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.

Outside of personal liability protection, one of the primary advantages of setting your business up as a Limited Liability Company (LLC) is flexibility in how your company is taxed. And many business owners elect to have their LLC taxed as an S Corporation (S-Corp) to save money on payroll taxes. 

By choosing to be taxed as an S Corporation, you only pay payroll taxes on your salary, not on your profit distributions from the company, so you would save roughly 15% in payroll taxes on distributions taken as profits. Conversely, if your LLC is taxed as a sole proprietorship or partnership, all profits are subject to payroll taxes. 

However, before you decide to have your LLC taxed as an S Corporation, you should understand the different requirements for such an election. One requirement is you must pay all owners of the company“reasonable compensation,” according to the IRS’s standards. Before we discuss what constitutes reasonable compensation, let’s first look at what it means to become an S Corporation. 

What Is An S Corporation?

An S Corporation is not a business entity in and of itself. Rather, the S Corporation designation is simply a special tax election made by a corporation or an LLC. Unless you elect for your LLC to be taxed as an S Corporation, single-member LLCs are automatically taxed as sole proprietorships, while multiple-member LLCs are taxed as partnerships. 

C Corporations also have the option to elect to be taxed as an S Corporation or as a C corporation. If you are set up as a C corporation and don’t elect to be taxed as an S Corporation, the corporation pays taxes at the new flat corporate tax rate of 21% established by the Tax Cuts and Jobs Act. Then, after-tax profits are distributed to the shareholders, and those profits are taxed at the personal rate of each of the shareholders. 

This system of “double taxation” means the corporation first pays tax at its rate, and then the shareholders pay tax at their own individual tax rates. To avoid this, some C Corporations elect to be taxed as an S Corporation. However, due to the expense and complexity of creating and maintaining a traditional corporation, very few small or mid-sized businesses are set up as C corporations. 

If your LLC is taxed as a sole proprietorship or partnership, you will pay payroll taxes (FICA) and income taxes (both state and federal) on all income earned by the business, less deductions. That means all income earned by you via a 1099 or paid to your LLC is reported on Schedule C of your personal tax return. After expenses are deducted, all of the remaining income is subject to payroll taxes (FICA taxes are 15.3%) as well as federal and state income taxes.

This is why many business owners who have LLCs and don’t elect to be taxed as S-Corp often find themselves surprised by a big tax bill that doesn’t seem to make sense, given their total earnings.

After you elect to be taxed as an S-Corporation, you will file Form 1120-S with the IRS on behalf of the corporation, reporting all income and expenses on that return. But the entity will not pay taxes. Instead, the business will issue you a K-1, indicating the net profit of the business, which will be reported and taxed as ordinary income on your personal return at your personal income tax rate. [FBL: INSERT HYPERLINK BEHIND HIGHLIGHTED TEXT TO,to%20be%20an%20S%20corporation.]

And you will only pay the 15.3% FICA taxes on the amount paid to you as a salary via payroll, but you will not have to pay the 15.3% on the rest of the money you take out of the business in the form of profit distributions. In addition, the audit risk for S Corporations that file their own returns is typically less than the audit risk for companies taxed as sole proprietorships, where income and expenses are reported on your personal Schedule C.

Qualifications for S Corp Election

Not all LLCs can elect S Corp status. In order to file for the S Corp tax election, your business must meet the following requirements:

  • Must be filed as a U.S. corporation
  • Can maintain only one class of stock
  • Limited to 100 shareholders or less
  • Shareholders must be individuals, estates, or certain qualified trusts
  • Each shareholder must be a US Citizen or permanent resident alien with a valid Social Security Number
  • All shareholders must consent in writing to the S Corporation election

Note: In addition to these requirements, for an S Corporation election to make sense financially, you’ll want to have at least $60,000 or so of net income per year.  

Reasonable Compensation

To prevent business owners from avoiding payroll taxes by taking disproportionately large profit distributions, the IRS requires S-Corp owners to pay themselves “reasonable compensation” in exchange for their services. What constitutes reasonable compensation, however, is a highly subjective matter that has created an intense debate among business owners and tax authorities.  

Indeed, the CPA Journal contends that, “The contested subject of reasonableness of compensation is one of the most frequently debated issues between business taxpayers and the IRS.”

If the IRS were to determine that an owner’s compensation was unreasonable, it could reclassify S corporation distribution payments as wage payments subject to employment taxes, which could leave you on the hook for a massive back tax bill. On top of that, you could face tax penalties of up to 100%, plus negligence penalties.

What Is Reasonable?

Although you should consult with us, your Family Business Lawyer™ and your tax advisor to ensure you’re paying yourself an appropriate amount, here are a few basic guidelines to follow.

The IRS defines reasonable compensation as “the value that would ordinarily be paid for like services by like enterprises under like circumstances.” Obviously, that definition doesn’t provide much guidance and is extremely vague. Basically the IRS is saying that your company’s owners should be paid what other businesses in your industry pay for similar services. 

In determining reasonableness, the IRS looks at the company’s gross receipts and at the tasks the owner performed to help generate the company’s gross income. Additionally, the IRS takes the following factors into consideration to determine reasonable compensation:

  • The duties performed
  • The volume of business handled
  • The character of the job and amount of responsibility
  • Complexities of your business
  • Time required to do the job
  • Cost of living in the area
  • The use of a formula for determining compensation
  • Ability and achievements of the individual performing the service
  • Amounts paid out as salary compared with the amount distributed as profits
  • Your policy regarding wages for all employees
  • The history of salaries for each employee

One helpful resource is the U.S. Department of Labor’s Bureau of Labor Statistics, which provides detailed wage data for more than 800 occupations with comparable wages by state, region, and city. You can also check out employer-review sites, like Salary, Glassdoor, and PayScale, which crowdsource compensation information by company, position, industry, and location. [FBL: INSERT HYPERLINK BEHIND HIGHLIGHTED TEXT TO]

We Can Help
Determining reasonable compensation can be a tricky proposition. Contact us for support, and we’ll help you to determine and document your compensation, so if you are audited, we can prove that you engaged in an analysis to choose the right number for your salary. With proper planning, guidance, and documentation from us, your Family Business Lawyer™, even if you are audited, you don’t have to worry because you’ll have done the work upfront to prepare for it. 

Whether you need assistance determining how much to pay yourself, help filing your S Corporation election, or you need support keeping up with your LLC’s administrative formalities, we’re here for you. As your Family Business Lawyer™, we offer you trusted guidance and support to ensure your LLC is properly set up and maintained, with all of the necessary legal agreements and other resources in place. We can also provide you with a variety of business systems, which will not only make your operation more efficient, but also establish a clear separation between your business and personal finances, which is a vital part of maintaining your entity’s liability protection.

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

These days, more and more young people are delaying—if not totally foregoing—a life that involves marriage and parenting. The lack of jobs, crushing student debt, multiple recessions, and the pandemic have pushed many young people into a life path that leaves little room for settling down with a partner and getting married—and even less room for having children.

Yet, for other young adults, staying single and childless is simply a matter of choice. Regardless of the reason, as more young adults opt for non-traditional lifestyles, the number of single childless households is likely to steadily increase in the coming years.

While most adults don’t take estate planning as seriously as they should, if you are single with no children, you might think that there’s really no need for you to worry about creating an estate plan. But this is a huge mistake. In fact, it can be even MORE important to have an estate plan if you are single and childless.

If you are single without kids, you face several potential estate planning complications that aren’t an issue for those who are married with children. And this is true whether you’re wealthy or have very limited assets. Indeed, without proper estate planning, you’re not only jeopardizing your wealth and assets, but you’re putting your life at risk, too. And that’s not even mentioning the potential conflict, mess, and expense you’re leaving for your surviving family and friends to deal with when something unexpected happens to you. 

With this in mind, if you’re single and childless, consider these three inconvenient truths before you decide to forego estate planning.

1. Someone Will Have to Handle Your Stuff

Whether you’re rich, poor, or somewhere in between, in the event of your death, everything you own will need to be located, managed, and passed on to someone, which can be a massive undertaking in itself—one that few families are properly prepared for. 

In fact, following a loved one’s death, American families spend an average of 500 hours and $12,700 over the course of 13 months (20 month if probate is required) to finalize the person’s affairs and settle their estate, according to the first annual Cost Of Dying report released this March by tech startup Empathy in partnership with Goldman Sachs. Look for additional articles in the coming weeks covering the Cost Of Dying and the new role Empathy is playing in the end-of-life industry.  

On top of the logistical complications involved with finalizing your affairs, without a clear estate plan, including a will or trust, your assets will go through the court process of probate, where a judge and state law will decide who gets everything you own. In the event no family steps forward, your assets will become property of the state.

Why give the state everything you worked to build? And even if you have little financial wealth, you undoubtedly own a few sentimental items, maybe even including pets, that you’d like to pass to a close friend or favorite charity.

However, it’s rare for someone to die without any family members stepping forward. It’s far more likely that some relative you haven’t spoken with in years will come out of the woodwork to stake a claim. Without a will or trust, state intestacy laws establish which family member has the priority inheritance. If you’re unmarried with no children, this hierarchy typically puts parents first, then siblings, then more distant relatives like nieces, nephews, uncles, aunts, and cousins.

Depending on your family, this could have a potentially troubling—and even deadly—outcome. For instance, what if your closest living relative is your estranged brother with serious addiction issues? Or what if your assets are passed on to a niece with poor money-management skills, who is likely to squander her inheritance?

And if your estate does contain significant wealth and assets, this could lead to a costly and contentious court battle, with all of your relatives hiring expensive lawyers to fight over your estate. In the end, this could tear your family apart, while making their lawyers rich—all because you didn’t think you needed an estate plan.

As your Personal Family Lawyer®, we will work with you to create an estate plan that ensures that your assets will pass to the proper people, while avoiding both unnecessary court proceedings and family conflict.

2. Someone Will Have Power Over Your Healthcare

Estate planning isn’t just about passing on your assets when you die. In fact, some of the most critical aspects of estate planning have nothing to do with your money at all, but are aimed at protecting you while you’re still very much alive.

Proactive planning allows you to name the person you want to make healthcare decisions for you in the event you are incapacitated and unable to make such decisions yourself. This is done using an estate planning tool known as a medical power of attorney.

For example, if you’re incapacitated due to a serious accident or illness and unable to give doctors permission to perform a potentially risky medical treatment, it would be left up to a judge to decide who gets to make that decision on your behalf.

If you have a romantic partner but aren’t married and haven’t granted him or her medical power of attorney, the court will likely have a family member, not your partner, make those decisions. Depending on your family, that person may make decisions contrary to what you or your partner would want.

And if you don’t want your estranged brother to inherit your assets, you probably don’t want him to have the power to make life-and-death decisions about your medical care, either. But that’s exactly what could happen if you don’t put a plan in place.

Furthermore, your family members who have priority to make decisions for you could keep your dearest friends away from your bedside in the event of your hospitalization. Or family members who don’t share your values about the type of food you eat, or the types of medical care you receive, could be the one’s making decisions about how you’ll be cared for.

To address these issues, you need to implement an estate planning tool that provides specific guidelines detailing exactly how you want your medical care to be managed during your incapacity, including critical end-of-life decisions. This is done using an estate planning vehicle known as a living will.

Bottom line: If you are single with no kids, you need to create an estate plan in order to name healthcare decisions-makers for yourself and provide instructions on how you want those decisions made should you ever become incapacitated and unable to make those decisions yourself.

3. Someone Will Get Power Over Your Finances

As with healthcare decisions, if you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. The way to avoid this is by granting someone you trust durable financial power of attorney.

A durable financial power of attorney is an estate planning vehicle that gives the person you choose the immediate authority to manage your financial, legal, and business affairs if you’re incapacitated. This agent will have a broad range of powers to handle things like paying your bills and taxes, running your business, collecting your Social Security benefits, selling your home, as well as managing your banking and investment accounts.

Without a signed durable financial power of attorney, your family and friends will have to go to court to get access to your finances, which not only takes time, but it could lead to the mismanagement—and even the loss—of your assets should the court grant this authority to the wrong person.

What’s more, the person you name doesn’t have to be a lawyer or financial professional; it can be anybody you choose, including both family and friends. The most important aspect of your choice is selecting someone who’s imminently trustworthy, since they will have nearly complete control over your finances while you remain incapacitated. And besides, with us as your Personal Family Lawyer®, your agent will have access to our team as their trusted counsel should they need guidance or help.

Don’t Leave So Much At Risk
Given these potential risks and costs for yourself and  those you care about, it would be foolhardy if you are single without kids to ignore or put off these basic estate planning strategies. Identifying the right estate planning tools is easy to do, and it begins with a Family Wealth Planning Session. During this session, us,  your local Personal Family Lawyer® will consider everything you own and everyone you love, and guide you to make informed, educated, and empowered choices for yourself and your loved ones.

In the end, it will likely take just a few hours of your time to make certain that your assets, healthcare, and finances will be managed in the most effective and affordable manner possible in the event of your death or incapacity. Don’t leave your life and assets at risk or leave a mess for the people you love; contact us, your Personal Family Lawyer® to get your estate planning handled today.

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.

If you are thinking of starting a business, you’ll find all sorts of advice about how to go about getting your new venture off the ground. Indeed, there are entire websites devoted to the topic. Yet, with so much information out there, it’s hard to know what you should heed and what you can ignore.

To make things simple, we’ve compiled a list of six essential strategies for getting your new business up and running with the least amount of hassle and risk. 

1. Solve A Problem
One of the best ways to come up with a winning business idea is to design your product or service to solve a specific problem. By fixing a problem, you’ll have a solid customer base right out of the gate, who won’t need much selling, provided your solution actually works.

If possible, create your business around a problem you’ve faced yourself, so you thoroughly understand and trust the value your company offers. If your business truly helps improve people’s lives, your success is virtually guaranteed.

2. Stop Waiting & Start Doing
While it may seem counterintuitive, it’s often better to launch your business before you feel like your product is 100% perfect. Delaying your start is often an unconscious way of procrastinating, and besides, you’ll probably never feel like your business concept is totally perfect.

Best to launch fast before anyone else beats you to the market—or before you second-guess yourself out of launching at all. From there, you can adapt and perfect your solution with a small group of paying customers, to whom you should give special attention in order to guarantee their happiness and loyalty. The most effective way to learn is to get your product into people’s hands or your service into people’s lives and see how they like it.

Just keep in mind, you should be prepared to fail, learn from your mistakes, and keep iterating until you get things right.

3. Keep It Simple
When you come up with a great business idea, it’s tempting to imagine all of the possibilities of where it might go, and try to add all of those things into your launch. But you should narrow your focus and costs by making your solution as effective as possible, without getting too elaborate or complicated.

Consider the minimum viable product, or MVP, often talked about in the tech sector. What’s the minimum you can offer and get the results you envision for the people you serve? Offer that first, and build upon it from there.

Once your company is up and running and you’ve got some income and customers, it will be much easier and affordable to add additional features.

4. Be Passionate But Self-Aware
The most successful business ideas are ones that are near and dear to your heart. Focusing on something you’re passionate about will help keep you motivated to do whatever it takes to succeed.

That said, just being passionate won’t guarantee success. It takes a certain mindset to endure the rigors of entrepreneurship, so unless you’re comfortable taking risks, learning from failure, and working harder than you ever have before, you might want to rethink things.

When things get challenging—and they definitely will—this mix of passion and fortitude will allow you to stay the course.

5. Cover Your Assets
Although a sole proprietorship is the quickest, easiest, and least expensive way to structure your business, these entities provide zero protection for your personal assets. If your business is set up as a sole proprietorship and your company goes into serious debt or gets hit with a costly lawsuit, your home and life savings could be at risk.

Rather than taking the easy route, invest the time and money to set your business up as a limited liability company (LLC) or corporation. Both entities not only offer you liability protection for your personal assets, but they also come with significant tax-savings benefits as well.

6. Establish A Solid Foundation
Starting a business involves establishing the proper legal, insurance, financial, and tax foundation to support your vision and goals. At the very minimum, you need a legal entity (in the right state and of the right type), some basic legal agreements, and intellectual property protections like copyrights and trademarks. You also need basic insurance coverage, financial tracking and reporting systems, and tax planning.

You may be able to do some of this yourself, but to ensure you get things 100% correct, consult with us, your Family Business Lawyer™.  We offer exactly this kind of support with our LIFT Start-Up Session. Whether you’ve yet to open your doors, have started a company but haven’t set up your LIFT systems yet, or have some systems in place but you aren’t sure they’ve been set up correctly, contact us to schedule your session. 

Your Very Own In-House Legal Counsel
Most small business owners don’t think they need to hire a lawyer, and perhaps this is why roughly half of all businesses fail within the first five years. On the other hand, the most successful companies wouldn’t dream of not having a lawyer on their team.

These companies typically employ one or more in-house lawyers, who proactively identify missed opportunities for the company, spot potential risks, create plans to mitigate risks and build on opportunities. Even if you don’t run a big company, your business still deserves—and frankly requires—this kind of relationship in order to reach its full potential. And by working with us, your local Family Business Lawyer™, you will have your very own in-house legal counsel to offer you this kind of trusted guidance.

Startups can be risky ventures, but with the proper planning and support, you can beat the odds. Contact us, your Family Business Lawyer™ today to get your new venture started off on the right track.

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

If a family member or friend has asked you to serve as trustee for their trust either during their life, or upon their death, it’s a big honor—this means they consider you among the most honest, reliable, and responsible people they know.

That said, serving as a trustee is not only a great honor, it’s also a major responsibility, and the role is definitely not for everyone. Serving as a trustee entails a broad array of duties, and you are both ethically and legally required to properly execute those duties or you could face liability for not doing so.

In the end, your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the trust you would be managing before making your decision to serve.

Remember, you don’t have to take the job. That said, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might actually enjoy the opportunity to serve, so long as you understand what’s expected of you.

With this in mind, here we’ll give you a brief overview of what serving as a trustee typically entails. For help in making your decision, contact us, your Personal Family Lawyer®, so we can detail exactly what your specific trust would require of you. And as we’ll discuss more below, if you do accept, we can also help you carry out your responsibilities, so rest assured, you won’t have to handle things all by yourself.

A Trustee’s Primary Duties
Although every trust is different, serving as trustee comes with a few core requirements. These duties primarily involve accounting for, managing, and distributing the trust’s assets to its named beneficiaries as a fiduciary.

As a fiduciary, you have the power to act on behalf of the trust’s creator and beneficiaries, always putting their interests above your own. In fact, you have a legal obligation to act in a trustworthy and honest manner, while providing the highest standard of care in executing your duties.

This means that you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. And if you fail to abide by your duties as a fiduciary, you could face legal liability. For this reason, you should consult with us for a more in-depth explanation of the duties and responsibilities a specific trust will require of you before agreeing to serve.

But regardless of the trust or the assets it holds, some of your key responsibilities as trustee include:

  • Identifying and protecting the trust assets
  • Determining what the trust’s terms require in terms of management and distribution of the assets
  • Hiring and overseeing an accounting firm to file income and estate taxes for the trust
  • Communicating regularly with beneficiaries
  • Bringing in the right investment management team to manage the trust assets
  • Being scrupulously honest, highly organized, and keeping detailed records of all transactions
  • Closing the trust and distributing the assets when the trust terms specify

Experience NOT Required
It’s important to point out that being a trustee does NOT require you to be an expert in law, finance, taxes, or any other field related to trust administration. In fact, trustees are not only allowed to seek outside support from professionals in these areas, they’re highly encouraged to do so, and the trust estate will pay for you to hire the support you need.

So even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. And you are also able to be paid to serve as trustee of a trust should you choose to accept the role. 

That said, many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses, if that’s possible. The way  you are compensated as a trustee will depend on your personal circumstances, your relationship with the trust creator and beneficiaries, as well as the nature of the assets in the trust.

We’re Here To Help
Because serving as a trustee involves such serious responsibility, you should meet with us, your Personal Family Lawyer® for help deciding whether or not to accept the role. We will offer you a clear, unbiased assessment of what’s required of you based on the specific trust’s terms, assets, and beneficiaries.

And if you do choose to serve, it’s even more important that you have someone who can assist you with the trust’s administration. As your Personal Family Lawyer®, we will guide you step-by-step throughout the entire process, ensuring you properly fulfill all of the trust creator’s wishes without exposing the beneficiaries—or yourself—to any unnecessary risks. Contact us today to learn more.

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.

Do you feel obligated to check work emails, texts, and voicemails at all hours?

Do you often work evenings, weekends, and holidays, even after you promised yourself you wouldn’t?

Do you feel pressured to say yes to pushy clients because it’s easier than saying no?

Do you feel resentful of clients for placing unreasonable demands on your time?

If you answered yes to any of these questions, you need to check your boundaries. Establishing and enforcing healthy professional boundaries with your clients is critical for all business owners, and especially if you own your own business and work from home, where the lines between work and home life are easily blurred.

Unless you set and enforce healthy boundaries, rather than you controlling your business, your business will control you, which can quickly lead to overwhelm and burnout. At the same time, creating healthy boundaries allows you to take charge of your day, your business, and your life.

If you are ready to establish healthy boundaries with your clients, here are five strategies to help you get the process started. 

1. Clearly define your boundaries: When it comes to setting boundaries with clients, you first need to decide how you want your relationship structured, and how that relationship relates to the delivery of your core product or service. Once you’ve established those parameters, you’ll want to prepare clear legal agreements that outline and clarify the expectations of both parties in writing.

Although the boundaries you set will be determined by your specific business and your personal preferences for how you want to interact with clients, some common things all business owners need to consider include the following:

  • When you are available to clients
  • How clients can contact you
  • What your response time will be
  • Exactly what is—and what is not—included in your deliverables
  • What your payment terms are
  • How, when, and where disputes will be handled

Above all, set the hours during which you will respond to emails, calls, and messages, and stick to that schedule religiously. You can establish these boundaries by including them in your agreements. As we’ll detail more below, clear communication is the key, and when you communicate your boundaries to clients upfront, you’ll find that most people are more than happy to respect them.

2. Incorporate your boundaries in your legal agreements: To ensure your clients are aware of your boundaries—and the consequences for breaching them—incorporate your boundaries in the terms of your legal agreements. Then, make your client agreement part of your sales process. Finally, make sure every client or customer signs an agreement, even if they are a close friend or family member.

For example, in your client-service agreement or product-purchase agreement, you should specifically detail the scope of your work, what’s expected of the client, and what happens if the agreement is not followed or the scope of work changes. You should similarly outline your payment terms in these documents: how much you get paid, how and when you expect to be paid, along with how late payments and non-payment will be handled.

As your Family Business Lawyer™, we can support you to create legally binding agreements that clearly define your boundaries and outline exactly how they will be enforced in every one of your business relationships.

3. Communicate your boundaries upfront: It’s important that you discuss these expectations with your clients, answer any questions they have, and get them to sign off before you start work. With a written policy in place, you won’t have to waste time and energy figuring out how to handle things if a client fails to show up for an appointment or pays their invoice late—you’ll simply follow your established protocol.

Along these same lines, keep in mind that giving away your services, having overly long consultations with prospects, and giving out free or discounted services all work to discount your value. This can not only leave you feeling unappreciated, but it also sets up unhealthy expectations in your future dealings with clients.

Time is money, so make sure you are being compensated fairly for your time. Again, having clear, well-drafted agreements is a key way to communicate and enforce this particular boundary. And if you are unclear about the value of your time, and how to create boundaries around your time, ask us about our Money Map To Freedom program.

Using this program, we’ll show you how you can take back your non-renewable resources of time, energy, and attention to create all the money you need to live a life of true freedom. Additionally, we’ll help you establish healthy boundaries around money and time by mapping your income needs, your available time, and then assist you to wisely incorporate this data into your calendar and schedule to ensure it all works. Contact us for details.

4. Be consistent with enforcement: Overly demanding clients often don’t realize they’re overstepping boundaries—and this is particularly true if you’ve let them cross your boundaries already without saying anything. If you answer a client phone call during your off-hours or perform extra work that’s beyond the scope of your agreement without getting paid for it or without at least clarifying your boundaries, you’ve set a precedent that your time doesn’t really matter, and such behavior is likely to continue.

Setting boundaries is all about creating habits, and the most effective way to create a habit is by doing something consistently. If you don’t consistently enforce your boundaries, you are setting yourself up to have your boundaries crossed again and again. If this is happening, it’s not your clients’ issue to solve, it’s yours. Fortunately, clear enforcement of boundaries and consistent upholding of your agreements will typically solve this problem—at least with those clients that are worth keeping.

5. Get comfortable saying “no” and ending relationships with problem clients: When establishing boundaries, don’t think just about what you can do, but what you really want to do with your work. This is your business after all, so align your boundaries with your priorities and passion, so you have the freedom to do more of what you love and less of what you don’t.

This means getting comfortable saying “no” to clients and projects that are not in line with the vision you’ve set for your business. This may even require you to end relationships with clients who refuse to honor your boundaries. While you may feel anxious about turning down work or cutting ties with problem clients, you’ll be better off in the long run.

In the end, you aren’t going to lose any clients worth having by setting boundaries. In fact, most clients will respect you more for clearly defining the terms of the business relationship—it shows you are a professional who takes the job seriously. Ultimately, not every client is a good fit for your business, and establishing healthy boundaries is one way to weed out the bad ones before they cause serious problems.

Enlist Our Support

If you need support establishing healthy professional boundaries, reach out to us, your Family Business Lawyer™. Whether it’s helping you define your boundaries, putting your boundaries in legally binding agreements, or taking the appropriate actions to enforce your boundaries with your clients, we are here for you. Schedule your visit today to learn more.

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

When creating an estate plan, people are often most concerned with passing on the “big things” like real estate, bank accounts, and vehicles. Yet these possessions very often aren’t the items that have the most meaning for the loved ones we leave behind.

Smaller items, like family heirlooms and keepsakes, which may not have a high dollar value, frequently have the most sentimental value for our family members. But for a number of reasons, these personal possessions are often not specifically accounted for in wills, trusts, and other estate planning documents. 

However, it’s critical that you don’t overlook this type of property in your estate plan, as the distribution of such items can become a source of intense conflict and strife for those you leave behind. In fact, if you don’t properly address family heirlooms and keepsakes in your estate plan, it can lead to long-lasting disagreements that can tear your family apart.

Heirlooms & Keepsakes: Little Things With Big Value

Heirlooms and keepsakes are both prized for their sentimental value, but these possessions are slightly different from one another in terms of the manner in which the items are passed on. 

Heirlooms: Heirlooms are passed down among family members for generations, and the passing of heirlooms sometimes involves traditions. For example, the first daughter to marry inherits grandmother’s heirloom wedding ring.

Keepsakes: Keepsakes, on the other hand, are possessions that are given or kept specifically for sentimental or nostalgic reasons, and these items may only get passed on once. For example, photo albums are a typical keepsake that are treasured by many families. If a keepsake gets passed on multiple times, it may eventually become a family heirloom.

Although just about any personal possession could be considered an heirloom or keepsake, some of the most common examples of these items include the following:

  • Jewelry
  • Photographs
  • Books
  • Art
  • Musical instruments
  • Furniture
  • Clothing
  • Bibles
  • Recipes
  • Family documents (such as birth certificates, baptism records, and citizenship papers)
  • Collections (such as sports memorabilia, coins, stamps, and doll collections)

Issues Raised By Passing On Heirlooms & Keepsakes

In the legal world, both heirlooms and keepsakes are considered “non-titled personal property.” As mentioned earlier, when there is no plan in place for the distribution of these items following the owner’s death, it can create bitter conflicts among family members. Indeed, fights over heirlooms and keepsakes can cause close family members to never speak with one another again.

In her book “Who Gets Grandma’s Yellow Pie Plate?” Professor Marlene S. Stum, an expert in family social science at the University of Minnesota, warns of the infighting that can occur when there’s no plan for who inherits these personal effects.

“What surprises many people is that often the transfer of non-titled personal property creates more challenges among family members than the transfer of titled property,” says Stum. Research has shown that disputes over inheritance and property distribution are one of the major reasons for adult siblings to break off relationships with one another.” 

Given the potential trouble the distribution of heirlooms and keepsakes can cause for your heirs, you’ll want to take extra care in seeing that these family treasures are passed on properly. And this means incorporating them into your estate plan in one way or another. 

Strategies For Peacefully Distributing Heirlooms & Keepsakes
While there is no one perfect way to distribute these items in your estate plan, your primary goal should be to maintain harmony among your loved ones during an already emotional time. As with most sensitive issues, clear communication is vital to this process.

Because your family members can have vastly different values associated with certain heirlooms and keepsakes and you may have little idea about how each person feels, you should speak with each family member in advance. By talking with family members about their feelings and expectations regarding your possessions ahead of time, you will have a much better idea how to distribute these items to your loved ones with the least amount of conflict.

Additionally, you should decide ahead of time if you need to have any of your heirlooms or keepsakes appraised. In doing so, you provide your heirs with the necessary documentation to gauge the monetary value of these items, and you can save them from extra work while they are mourning your death. 

Again, the manner in which you distribute your heirlooms and keepsakes will depend largely on the items you have to pass on and your specific family situation. That said, here are a few estate planning strategies to consider when passing on these precious possessions.

Gifting during your lifetime: Of course, you don’t have to wait until you die to pass on your heirlooms and keepsakes, and you may prefer to give away certain special items while you are still living. By doing so, you get to personally witness the joy your loved ones experience when they receive the gift, and you can also personally explain the reasons you want each person to have a particular item.  

If your heirlooms and/or keepsakes have a high monetary value, you should keep gift tax issues in mind when you give them away. That said, the IRS has a high annual gift tax exclusion ($16,000 in 2022) and an equally high lifetime exclusion ($12.06 million in 2022), so few people will need to worry about such taxes.

Keep in mind, the lifetime exclusion amount will revert back to its pre-2018 level of around $5 million per individual in 2026, so if you are considering gifting high-value possessions, you may want to do it sooner, rather than later. In any case, if you have possessions you want to give away that might trigger gift taxes, meet with us, your Personal Family Lawyer® to discuss your options.

Include items in your estate plan using a personal property memorandum: As with other assets you want to pass on after your death, you should include heirlooms and keepsakes in your estate plan by adding them to your will or trust. The best way to do this is by using what’s known as a personal property memorandum.

A personal property memorandum is a separate document that is referenced in your will or living trust. The memorandum allows you to list which items you wish to leave to each individual and detail the reasons you are giving each item. In many states, if it’s properly incorporated into your will or trust, a personal property memorandum is a legally binding document.

Furthermore, unlike a will or trust, you can create and update your memorandum without a lawyer’s help. You can change your memorandum as many times as you like, just make sure you sign and date it each time to ensure authenticity. Your memorandum can be as long or short as you like, which allows you to account for even the smallest or seemingly insignificant possessions.

Most types of tangible personal property can be included in your memorandum, but it’s important to note that you cannot list certain assets in a memorandum, including titled property, such as real estate and vehicles; assets with a beneficiary designation, such as life insurance, 401(k)s, and bank accounts; or intellectual property, such as works protected by a copyrights or trademark. If you are unsure if you should include a certain possession in your personal property memorandum, consult with us.

Although you don’t need a lawyer to create or modify your personal property memorandum, if you need any help or support with yours, reach out to us, your Personal Family Lawyer®. That said, you should always enlist our assistance if you’d like to create or update your will or trust.

Pass on the values & stories behind the possessions: You may want to consider making audio recordings to accompany your heirlooms and keepsakes. In this way, your loved ones not only get to hear your voice, but they will also be able to learn the stories behind the possessions, as well as the reasons why you gave each person a particular item.

These stories not only help connect you with future generations, but having a strong family narrative also helps young people develop strong personal identities and boosts their self esteem. In the New York Times article, “The Stories that Bind Us,” author Bruce Feiler comments on this phenomenon: “The more children knew about their family’s history, the stronger their sense of control over their lives, the higher their self-esteem, and the more successfully they believed their families functioned.”

Best of all, you don’t have to worry about creating these recordings yourself, as we offer this exact service during our Family Wealth Legacy Interviews. In every estate plan we create for our clients, we will personally guide you to create a customized recording for the people you love, and then we will provide you with the recording digitally to ensure it will survive long after you are gone.

Don’t Let Anything Fall Through The Cracks
Of course, if no one can find your heirlooms and keepsakes, they aren’t going to do anybody any good. For this reason, it’s vital that you create and maintain a comprehensive inventory of all of your assets, including each of your family heirlooms and keepsakes. Fortunately, this is another service we offer all of our clients at no additional charge. Indeed, we will not only help you create a comprehensive asset inventory, we have systems in place to make sure your inventory stays consistently updated throughout your lifetime. 

To learn more and get your inventory started for free right now, visit the Personal Resource Map website to watch a webinar by Ali Katz, founder of Personal Family Lawyer®. Then, schedule a meeting with us, your local Personal Family Lawyer® to incorporate your inventory with your other estate planning strategies.  

Keep The Peace After You Are Gone
To ensure your heirlooms and keepsakes don’t create any unnecessary conflicts among your heirs, make sure that your estate plan includes all of your assets, especially your family heirlooms and keepsakes. As your Personal Family Lawyer, we can support you to ensure these precious treasures are protected and preserved as part of your Life & Legacy Plan, and that they pass to each of your loved ones in exactly the manner you would want, without causing a family feud. Contact us today to learn more.

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.

Few business owners are legal experts. Yet many act like they are veteran attorneys when it comes to their legal agreements by thinking they can simply wing it and create their own contracts or rely on cheap, fill-in-the-blank legal forms they purchase for cheap online.

However, this is playing with fire. In fact, you could end up paying tens of thousands of dollars in attorney’s fees and court costs—or even end up going out of business entirely—just because of one poorly constructed legal agreement. 

Unless you have a law degree, far too many things can go wrong with your agreements when you take the do-it-yourself route. To show just how complex legal agreements can be and demonstrate how ill-prepared you are to manage the creation of your own agreements, here are a few of the most common mistakes you are likely to encounter if you try to go it alone. 

1. Deal terms that don’t actually make sense: We see it all the time… a business owner comes to us after the breakdown of a partnership, a joint-venture relationship, or a client relationship, and when we try to understand the actual terms of the deal, the terms didn’t make sense to begin with. One of the best ways you can use a lawyer is to have him or her review every deal for terms that make sense, and then ensure the deal terms are being documented clearly enough that anyone could understand them.

2. Failure to establish a clear performance standard: It’s a no-brainer to enforce an agreement with a vendor who doesn’t deliver or a contractor who misses a deadline—the facts are clear in these situations. However, things can get much trickier when it comes to areas of an agreement that are more subjective, such as poor performance.

In your agreements, you must be extremely specific about the goals, objectives, and deliverables of the other party to ensure they meet the duties outlined within the agreement. If not, you are likely to get stuck with a shoddy product or a poorly performing team member, with no way to remedy the situation.

If you are hiring a new employee, for example, you should establish clear, measurable outcomes for the role, with specific metrics for success, along with time frames for specific goals and objectives to be achieved. Then, include this information in the employment agreement, so it’s abundantly clear what the expectations for the position are for the team member and for you.

3. Not defining what constitutes a breach: Along with establishing clear expectations for performance, it’s also vital to consider all of the things that can go wrong in a business relationship before work starts. From there, you need to establish a clear process for addressing each issue in the agreement.

For example, in the above scenario where you are hiring a new team member, you need to think about how you would deal with the team member if things didn’t work out as expected. What would happen if the team member needs to leave, can’t perform, or isn’t performing for some reason? What is each of you entitled to in the event the relationship needs to end? All of these scenarios need to be thought through and addressed in the agreement.

4. Failure to give yourself an out: In addition to terminating an agreement due to a breach, you need to consider how the relationship might end due to less acrimonious circumstances, as well. By giving yourself a clear exit strategy, rather than being caught off-guard or surprised when things change, the relationship can successfully adapt to the transition with ease.

When entering into an agreement with a new business partner, for instance, you should think about and plan for all of the ways each of you might potentially exit the business. What would happen in the event you decide to sell the business? What would happen if the business failed and you had to shut your doors? What will happen when one (or both) of you dies or if one of you becomes incapacitated? You need to get clear about all of these eventualities, and then document them in your operating agreement or corporate bylaws and/or a buy-sell agreement.

5. Failure to address conflict resolution: Along with having an exit strategy, your agreements should also address how to resolve any disputes that may arise—preferably without resorting to costly litigation, which should always be a last resort. To this end, consider adding terms to your agreements that require alternative dispute resolution processes, such as mediation and arbitration, before either party can file a lawsuit.

By including a clause requiring mandatory mediation or arbitration in your agreements, you can have better control of potential disputes before they occur and help ensure contractual conflicts are handled in the most productive way possible, without getting stuck battling one another in court. 

6. Not protecting your intellectual property: Your intellectual property is among your company’s most valuable assets, and as such, it needs to be fully protected in your legal agreements. This is especially important when working with independent contractors.

Unlike employees, with whom you generally own automatic copyrights to everything they produce while working for you, contractors typically retain full rights to their work—unless they’ve signed a written agreement stating otherwise. To this end,if you don’t have a properly drafted agreement in place, you may not even own the work you pay someone to produce for you. 

To secure ownership of your intellectual property, you need to include work-for-hire and copyright assignment clauses in every contractor’s agreement to ensure you actually own the work you are paying for. And yes, this means every single person, even those you may have worked with for years without a single problem.

Treat Your Agreements With The Respect They Deserve

Just as you would never try to wire your office’s electrical systems yourself if you weren’t an experienced electrician, you shouldn’t try to do the same with your company’s legal agreements by pretending you’re an attorney. When it comes to implementing such a critically important element of your operation, you should always consult with a licensed and experienced business lawyer.

Whether you need new agreements created or want us to review agreements you already have—even those drafted by another lawyer—meet with us, your Family Business Lawyer™.  We will support you to not only create clear concise agreements, but also implement an agreement process that will allow you to more effectively navigate the inevitable changes that take place in every relationship, while dealing with conflict in a way that’s both healthy and productive. Contact us today to get started.

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

As we head into summer, many parents will see their children graduate high school and prepare to leave home to attend college or pursue other life goals. This can be an exciting and emotional time, and with so much going on, estate planning probably isn’t at the front of your (or their) mind right now.    

However, estate planning should actually be a top priority for both you and your kids.

Here’s why: Once your kids turn 18, they become legal adults, and many areas of their life that were once under your control will become entirely their responsibility, whether you take action or not. To this end, if your kids don’t have the proper legal documents in place, you could face a costly and traumatic ordeal should something happen to them.  

If your child were to get into a serious car accident and require hospitalization, for example, you would no longer have the automatic authority to make decisions about his or her medical treatment or the ability to manage their financial affairs. Without legal documentation, you wouldn’t even be able to access your child’s medical records or bank accounts without a court order.

To deal with this vulnerability and ensure your family never gets stuck in an expensive and unnecessary court process, before your kids leave home, have a conversation about estate planning and make sure they sign the following three documents. 

1. Medical Power of Attorney

The first document your child needs is a medical power of attorney. A medical power of attorney is an advance healthcare directive that allows your child to grant you (or someone else) the immediate legal authority to make healthcare decisions on their behalf if they become incapacitated and are unable to make these decisions themselves.

For example, a medical power of attorney would allow you to make decisions about your child’s medical treatment if he or she is incapacitated in a car accident or falls into a coma due to a debilitating illness like COVID-19. 

Without a medical power of attorney in place, if your child suffers a severe accident or illness that requires hospitalization and you need to access their medical records to make decisions about their treatment, you’d have to petition the court to become their legal guardian. While a parent is typically the court’s first choice for a guardian, the guardianship process can be slow and expensive—and in medical emergencies, time is of the essence.

Not to mention, due to HIPAA laws, once your child becomes 18, no one—not even their parents—can legally access his or her medical records without prior written permission. However, a properly drafted medical power of attorney will include a signed HIPAA authorization, so you can immediately access your child’s medical records to make informed decisions about his or her treatment.

2. Living Will

While a medical power of attorney allows you to make healthcare decisions on your child’s behalf during their incapacity, a living will is an advance directive that provides specific guidance about these decisions, particularly at the end of life.

For example, a living will allows your child to advise if and when they want life support removed should they ever require it. In addition to documenting how your child wants their medical care managed, a living will can also include instructions about who should visit them in the hospital and even what kind of food they would want provided. For example, if your child is a vegan, vegetarian, or takes specific supplements, these things should be considered and documented in their living will.

Additionally, given the pandemic, speak with your child about the unique medical decisions related to COVID-19, particularly intubation, ventilators, and experimental medications. At the same time, your child’s living will should also outline their quality of life decisions to ensure their emergency medical treatment doesn’t end up doing more harm than good.

Although you’ll find a variety of medical power of attorney, living will, and other advance directive documents online, your child has unique needs and wishes that can’t be anticipated by these fill-in-the-blank documents. Given this, we recommend you and your child work with us, your Personal Family Lawyer® to create—or at the very least, review—their advance directives.

3. Durable Financial Power of Attorney

Should your child become incapacitated, you may also need the ability to access and manage their finances and legal affairs, and this requires your child to grant you durable financial power of attorney.

Durable financial power of attorney gives you the authority to manage their financial and legal matters, such as paying their tuition, applying for student loans, paying their rent, negotiating (or re-negotiating) a lease, managing their bank accounts, and collecting government benefits if necessary. Without this document, you’ll have to petition the court for this authority.

Start Adulthood On The Right Track
Before your kids leave the nest, discuss the value of estate planning and make sure they have the proper legal documents in place. By doing so, you are helping your family avoid a costly and emotional court process, while also demonstrating the importance of good financial and legal stewardship, which sets your kids on the right track from the very start.
As your Personal Family Lawyer®, we will not only help you draft these documents, we can also facilitate a family meeting to discuss the importance of estate planning with your kids. From there, we hope this will begin a life-long relationship with your children, as they start on their journey into adulthood and beyond. 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.