Recent advances in digital technology have made many aspects of our lives exponentially easier and more convenient. But at the same time, digital technology has also created some serious complications when it comes to estate planning. In fact, if you haven’t properly addressed your digital assets in your estate plan, there’s a good chance that most of those assets will be lost forever when you die.

Without the proper estate planning, just locating and accessing your digital assets can be a major headache—or even impossible—for your loved ones following your incapacity or death. And even if your loved ones can access your digital property, in some cases, doing so may violate privacy laws or the terms of service governing your accounts. Plus, you may also have certain digital assets that you don’t want your loved ones to inherit, so you’ll need to take steps to restrict or limit access to those assets.

There are a number of special considerations you should be aware of when including digital assets in your estate plan, and this series addresses each one. Last week in part one, we discussed some of the most common types of digital assets and the current legal landscape governing what happens to those assets upon your death or incapacity. Here, we offer some practical tips to ensure all of your digital assets are properly included in your estate plan, so these assets can provide the most benefit for your loved ones for generations to come.

5 Steps For Including Digital Assets In Your Estate Plan

If you’re like most people, you most likely own numerous digital assets, some of which may have significant monetary value and some which have purely sentimental value. You may also own digital assets which hold no value for anyone other than yourself or have certain digital property that you’d prefer your family and friends not access or inherit when you pass away.

To ensure all of your digital assets are properly accounted for, managed, and passed on exactly the way you want, take the following five steps:

1. Create a detailed inventory with access instructions: Start by creating a list of all the digital assets you currently own. Then, for each asset on your list, provide detailed information about where the asset is stored online and how it can be accessed, including all of the relevant login information and passwords. If you have a lot of different accounts, password management apps, such as LastPass, can help simplify this effort.

If you own cryptocurrency, prepare detailed instructions about how to access your cryptocurrency, and ensure that one or more people you trust know that you have a cryptocurrency and how to find your instructions. Because accessing cryptocurrency requires correct usernames and private keys, as well as knowledge of wallets, digital exchanges, and other storage devices, leaving a detailed “How To” guide may be essential to ensure your loved ones can access these assets. 

After you’ve created your inventory and access instructions, store these documents in a secure location with your other estate planning documents, and ensure your fiduciary (executor or trustee) and your lawyer (if you have an ongoing relationship with a trusted lawyer), knows how to access these documents in the event something happens to you. Back up any digital assets stored in the cloud to a computer, flash drive, or other physical storage devices to make them easier to manage. And remember to update your digital-asset inventory regularly to account for any new digital property you acquire or accounts you close.

2. Add your digital assets to your estate plan: Once you’ve created your inventory of digital assets, you’ll need to add those assets to your estate plan. As with any other asset you own, you’ll typically pass your digital assets to your loved ones through either a will or a revocable living trust. Consult with us, your Personal Family Lawyer® about which strategy is best suited for your particular situation.

From there, specify in your will or trust the person, or persons, you want to inherit each asset and include detailed instructions for how you’d like the asset to be managed in the future if that’s an option. Additionally, some assets might be of no value to your family or be something you don’t want them to inherit or even access, so you should specify that those accounts and files be closed or deleted by your fiduciary.

Do NOT provide the specific account info, logins, or passwords in your estate planning documents, which can be easily read by others. This is especially true for wills, which become public records upon your death. Keep this information stored in a secure place, and let your fiduciary know how to find and use it. Consider using a digital asset management service, such as Directive Communication Systems, to support you with securing and managing all of your digital assets.

It’s also a good idea to include terms in your estate plan allowing your fiduciary to hire an IT consultant if necessary, especially if your fiduciary doesn’t have a lot of technical knowledge. This will help them manage and troubleshoot any technical challenges that come up, particularly with highly complex assets like cryptocurrency. 

Alternatively, if your fiduciary isn’t particularly tech-savvy, you can designate a separate co-fiduciary just to manage your digital assets, known as a digital executor. A digital executor is someone who’s specifically tasked with accessing and managing your digital assets upon your death, and this might be a smart move if you have a lot of digital property or you own highly encrypted digital assets like Bitcoin.

Meet with us, your Personal Family Lawyer® to help decide if you should have a digital executor or would be better off using a different arrangement to manage your digital assets.

3. Limit access: In your estate plan, you also need to include instructions for your fiduciary about what level of access you want him or her to have. For example, do you want your executor or trustee to be able to read all of your emails, texts, and social media posts before deleting them or passing them on to your loved ones? If there are any assets you want to limit and/or restrict access to, we can help you include the necessary terms in your estate plan to ensure your privacy is fully honored.

4. Include relevant hardware: Your estate plan should also include provisions for any physical devices—smartphones, computers, tablets, flash drives—on which the digital assets are stored. Having quick access to this equipment will make it much easier for your fiduciary to access, manage, and transfer the online assets. And since the data can be wiped clean, you can even leave these devices to someone other than the person who inherits the digital property stored on it.

5. Check service providers’ access-authorization tools: Review the terms and conditions for each of your online accounts. Some service providers like Google, Facebook, and Instagram have tools that allow you to easily designate access to others in the event of your death. If such a function is offered, use it to document who you want to access and manage these accounts when you pass on.

Just make certain the people you named to inherit your digital assets using the providers’ access-authorization tools match those you’ve named in your estate plan. If not, the provider will probably give priority access to the person named with its tool, not your estate plan.  

Don’t Neglect Your Digital Assets In Your Estate Plan

As technology continues to evolve and our lives become increasingly digitized, it’s vital that you adapt your estate planning strategies to keep pace with these changes. As your   

Personal Family Lawyer®, we can assist you in updating your estate plan to include not only your traditional wealth and property but all of your digital assets as well.

As your Personal Family Lawyer®, we are keenly aware of just how valuable your digital property can be, and our estate planning strategies are designed to ensure your digital assets are preserved and passed on seamlessly to your loved ones in the event of your death or incapacity. Furthermore, we can accomplish all of this while ensuring you have the maximum level of privacy, and you stay in full compliance with the latest laws and regulations governing the ever-changing digital universe. Contact us today to get 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.

Whether it’s with an employee, client, vendor, or a business partner,  going to court to resolve a dispute is something you want to avoid at all costs, since even if you wind up winning your case, getting caught in the court process is time consuming, expensive, and almost never good for your company’s reputation. To this end, the next time you find yourself in a dispute, you might consider attempting to resolve the matter through alternative dispute resolution (ADR).

ADR refers to a variety of processes, such as mediation and arbitration, that help disagreeing parties resolve a dispute without resorting to litigation, and it is becoming increasingly popular with both business owners and the judicial system. Some courts even require you to use ADR before you can bring a case to trial, and it’s standard practice for big businesses to include a clause requiring ADR before litigation in their agreements. 

Indeed, whether you know it or not, if you use Facebook, Amazon, or Netflix, you’ve agreed to participate in ADR when you agreed to the company’s Terms Of Service. You might want to consider adding an ADR clause to your agreements, and if so, we can help with that.

While there are several different types of ADR, arbitration is among the most used methods, and it has become the go-to way to resolve disputes outside of the courtroom. Here we’ll discuss how arbitration works and why you might want to consider using it rather than (or at least prior to) taking your dispute to court.

How Arbitration Works

Like other forms of ADR, arbitration involves bringing your matter before a neutral third party, who oversees the process and helps the two sides resolve their dispute. The third party, or arbitrator, can be a single person or multiple individuals. Most arbitration proceedings today use a panel of multiple arbitrators, and the final decision is made by a majority vote.

Arbitrators serve a role like that of a judge in which they hear arguments and are presented with evidence from both sides, and they then use that information to decide the outcome. Although arbitration proceedings are like those in a trial, they’re far less formal, with fewer rules and procedures to adhere to and a much more flexible timetable.

Arbitration is also a private process, and all of the proceedings are kept confidential. In contrast, the litigation process is open to the public and part of the public record, which can lead to negative publicity for your brand.

Binding vs. Nonbinding

The final decision made by the arbitrators may be either binding or nonbinding. If the arbitration is binding, the parties waive their right to take the dispute to trial, and they agree to follow the arbitrators’ decision, which can be enforced by the courts. There’s typically no right to appeal the arbitrators’ decision.

Nonbinding arbitration means that either party is free to take the matter to court if they disagree with the decision. Whether arbitration will be binding or not is agreed upon by both parties in advance, although binding arbitration is far more common when it comes to business disputes.

The Advantages of Arbitration

Arbitration is generally faster, cheaper, and more convenient than litigation. It can also be more flexible, allowing the arbitrators to come up with more creative solutions than a court would be legally allowed to impose. Plus, the process is often less hostile than court proceedings, which can be a big benefit if you want to maintain your business relationship with the other party.

Moreover, because arbitration is kept private, it’s far less likely to have a negative impact on your company’s reputation, and it allows you to keep your confidential information from your competitors’ prying eyes.

While the process of arbitration does not require you to have an attorney present, many business owners do have lawyers on hand to serve as counselors and advocates during the proceedings. If that’s something you’d want, we can fill that role for you.

A More Productive Method for Managing Disputes

While disputes are an inevitable part of doing business, litigation doesn’t have to be. Arbitration can significantly reduce the direct and indirect costs of litigation by offering a quicker, more beneficial resolution for all parties involved. And by adding mandatory arbitration clauses to 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.

As your Family Business Lawyer™, we can help you decide whether arbitration is an appropriate solution to your company’s disputes and support you in adding effective arbitration clauses to your agreements. Schedule an appointment with us, your Family Business Lawyer™ 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

Recent advances in digital technology have made many aspects of our lives exponentially easier and more convenient. But at the same time, digital technology has also created some serious complications when it comes to estate planning. In fact, if you haven’t properly addressed your digital assets in your estate plan, there’s a good chance that most of those assets will be lost forever when you die.

Without the proper estate planning, just locating and accessing your digital assets can be a major headache—or even impossible—for your loved ones following your incapacity or death. And even if your loved ones can access your digital assets, in some cases, doing so may violate privacy laws or the terms of service governing your accounts. Plus, you may also have certain digital assets that you don’t want your loved ones to inherit, so you’ll need to take steps to restrict or limit access to those assets.

Indeed, there are several special considerations you should be aware of when including digital assets in your estate plan. Here we’ll discuss the most common types of digital assets, along with the current laws governing them, and then we’ll offer some practical tips to ensure your digital property is properly accounted for, managed, and passed on in the event of your incapacity or death.

Types of Digital Assets

Digital assets include a wide array of digital files and records that you have stored in the cloud, on smartphones and mobile devices, or on your computer. When it comes to estate planning, your digital assets will generally fall into two categories: those with financial value and those with sentimental value, which could mean far more to the people you love (and your future generations) than the assets with financial value.

Digital assets with financial value include cryptocurrency like Bitcoin or Ethereum, online payment accounts like PayPal or Venmo, loyalty program benefits like frequent flyer miles or credit card reward points, domain names, websites and blogs generating revenue, as well as other intellectual property like photos, videos, music, and writing that generate royalties. Such assets have real financial worth for your loved ones, not only in the immediate aftermath of your death or incapacity, but potentially for years to come.

Digital assets with sentimental value include email accounts, photos, video, music, publications, social media accounts, apps, and websites or blogs with no revenue potential. This type of property typically won’t be of any monetary value, but it can offer real sentimental value and comfort for your family following your death and inform future generations in ways you may not have considered. 

As an example, I cherish an image of one of my ancestors from the 1920s, and I only wish I knew more about him to inform my own understanding of life. Imagine if your future generations can use your digital assets to learn from your experiences as a direct result of how you handle those assets in your estate plan. 

Do You Own Or License The Asset?

Although you might not know it, you don’t own many of your digital assets at all. For example, you do own assets like cryptocurrency and PayPal accounts, so you can transfer ownership of these items in a will or trust. But when you purchase some digital property, such as Kindle e-books and iTunes music files, all you really own is a license to use it. And in many cases, that license is only for your personal use and is non-transferable.

Whether or not you can transfer this licensed property depends almost entirely on the account’s Terms of Service Agreements (TOSA) to which you agreed (or more likely, simply clicked a box without reading) upon opening the account. While many TOSA restricts access to accounts only to the original user, some allow access by heirs or executors in certain situations, while others say nothing at all about transferability.

Review the TOSA of your online accounts to see whether you own the asset itself or just a license to use it. If the TOSA states the asset is licensed, not owned, and offers no method for transferring your license, you’ll likely have no way to pass the asset to anyone else, even if it’s included in your estate plan.

To make matters even more complicated, though your loved ones may be able to access your digital assets if you’ve provided them with your account login and passwords, doing so may violate the TOSA and/or privacy laws. To legally access such accounts, your heirs will have to prove they have the legal authority to access them, a process which up until recently was a huge legal grey area.

The good news is most states have adopted laws that help clarify how your digital assets can be accessed and disposed of in the event of your death or incapacity.

The Law of the Digital Land

Until very recently, there were no laws governing who could access your digital assets in the event of your incapacity or death. As a result, if you died without leaving your loved ones your usernames or passwords, the tech companies who controlled the platforms housing the assets would often delete the accounts or leave them sitting in a state of online limbo, inaccessible to your family and friends.

This gaping hole in the legal landscape caused considerable heartbreak for families looking to collect their loved one’s digital history, and it caused major frustration for the executors and trustees charged with cleaning up the estate—it also led to the loss of an untold amount of both tangible and intangible wealth. The federal government finally stepped in to find a solution for this problem starting in 2012, and by 2014, the Uniform Law Commission passed the Uniform Fiduciary Access to Digital Access Act (UFADAA).

A revised version of this law, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) was passed in 2015, and as of March 2021, it has been adopted in all but four states. The law lays out specific guidelines under which fiduciaries, such as executors and trustees, can access your digital assets. The Act allows you to grant a fiduciary access to your digital accounts upon your death or incapacity, either by opting them in with an online tool furnished by the service provider or through your estate plan.

The Act offers three-tiers for prioritizing access. The first tier gives priority to the online provider’s access-authorization tool for handling accounts of a decedent. For example, Google’s “inactive account manager” tool lets you choose who can access and manage your account after you pass away. Facebook has a similar tool that allows you to designate someone as a “Legacy Contact” to manage your personal profile.

If an online tool is not available or if the decedent did not use it, the law’s second tier gives priority to directions given by the decedent in a will, trust, power of attorney, or other means. If no such instructions are provided, then the third tier stipulates the provider’s TOSA will govern access.

The bottom line: If you use the provider’s online tool—if one is available—and/or include instructions in your estate plan, your digital assets should be accessible per your wishes in most every state under this law. However, it’s important that you leave your fiduciary detailed instructions about how to access your accounts, including usernames and passwords, because without such information, your executor or trustee won’t be able to even access, much less manage, your digital assets if something happens to you. 

Make a Plan for Your Digital Assets

Given that leaving detailed instructions is the best way to ensure your digital assets are managed in exactly the way you want when you die or if you become incapacitated, in the second part of this series, we’ll offer practical steps for properly including your digital assets in your estate plan. Meanwhile, contact us, as your Personal Family Lawyer®, if you have any questions about your digital property or how to include it in your estate plan.

Next week, we’ll continue with part two in this series, discussing the best ways to protect and preserve your digital assets using your estate plan.

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.

Although it’s the likely most boring part of your website, having a well-thought-out Terms of Use page for your company’s website is a smart move. Your Terms of Use page sets the rules for your company’s website, and going without one opens your business up to a number of unnecessary risks.

Also known as “Terms and Conditions” or “Terms of Service,” your Terms of Use function as a legally binding agreement between your business and those who use your website. As such, your Terms of Use protect your company from liability by formally notifying users of the rules of your website and how your website’s content may, and may not, be used by others. 

Here we’ll discuss the basics of what these agreements should include and why they are so important. Keep in mind that depending on your specific business and whether or not you sell products or services online, your Terms of Use agreement may need to include much more expansive provisions than those covered here. 

Why You Need Terms of Use

While it’s not required by law, having a Terms of Use agreement is a must for any business with an online presence—website, blog, mobile app, or other web platforms—even if you are not actually selling goods or services online. This is especially true for sites with interactive features and those that allow users to post their own content, make comments, or share your content via social media.

Your Terms of Use establish the rules for access and use of your website, thereby helping to shield your business from legal liability due to harmful actions and abuse by your users, as well as protect your content and other intellectual property from unauthorized reproduction. Common examples of abuse by users include posting defamatory content, spamming other users, uploading illegal content to your site, and stealing your content.

Note that if you collect personal data from your users, you are required by law to have a Privacy Policy, which is another web-based agreement we’ll discuss more in-depth in a future post. As you’ll see below, some websites include the Privacy Policy within the Terms of Use, while others make it its own stand-alone page. 

What Elements To Include In Your Terms of Use
Although the specific language and provisions of your Terms of Use agreement will depend on the specifics of your business and the nature of your web offerings, some common elements contained in a typical Terms of Use include the following:

Ownership of content: This specifies who owns the content that is included or shared on your site, and outlines how users may, or may not, use or share your content. Make sure to state if you own intellectual property rights, such as copyrights or trademarks, to any of the site’s content.

Limit liability: This is a disclaimer alerting users that you are not liable for any errors or inaccuracies in your web content. And if you allow users to post content or comments, you should state that you aren’t liable for any illegal, abusive, or defamatory posts generated by third parties.  

Privacy policy: If you collect any personal data from your users or customers, such as email addresses or credit card information, you must include a privacy policy that outlines what data you collect, how it’s collected, and how you plan to use and protect the data. Again, this is the only element of your Terms of Use that you are legally required to post, and you may choose to include it within your overall Terms of Use or run it as its own separate page.

Governing law: This states where your business is located and specifies which law (state or country) you are governed by in the event you are taken to court. 

How To Create Your Terms of Use

As tempting as it may be to simply copy and paste terms from another company’s website, this is a bad idea. For one, you may be liable for copyright infringement, but more importantly, if you copy terms from another company, they likely won’t properly protect your business if you wind up in court.

While many Terms of Use provisions are pretty standard, others can be quite specific, depending on your industry and what types of information you collect, share, and the potential liability you face. Every company faces its own unique risks, so you should never expect that copied terms will adequately protect your business and its unique characteristics from all potential threats.

Given this, you should have a lawyer like us who’s familiar with your particular industry and business create a customized Terms of Use agreement for your business—or at the very least, have us review any terms you may have created on your own or with the help of another lawyer. That said, it’s perfectly acceptable and even recommended for you to review terms from other businesses like yours to get a sense of the type of elements you need to include in your own.

How To Implement Your Terms of Use

The primary purpose of your Terms of Use is to create a legally binding agreement between users of your website and your company. Your Terms of Use should make it clear that by using your website, the user is automatically agreeing to be bound by the Terms of Use. In short, users must be given notice of your terms and then agree to them.

You can obtain a user’s agreement to your terms in a few different ways. In the first, sometimes known as the “Browsewrap” method, you simply post prominent links to your Terms of Use page on your homepage and other sections of your site. The user is not required to take any action by checking a box or clicking a button. Although this is the easiest method, it’s also less likely to be upheld in court.

In the second method, also known as “Clickwrap,” you obtain the user’s assent by having them check a box or click a button to confirm they’ve read and agree to accept the terms before they can use your site. This is the most effective way to establish an enforceable legal agreement between you and the user, as the court is more likely to find that an agreement exists if the user has to take some kind of action. 

Finally, you may also choose to obtain a user’s assent by having them agree to your Terms of Use during your customer registration process or when they want to gain access to a certain site function or feature. 

Enlist Our Support To Create Your Terms of Use  

Even though it might not seem like a big deal, the Terms of Use agreement for your website is just as important as any other legal agreement used by your business. And for this reason, you should work with us, your Family Business Lawyer™, who will create your Terms of Use or review any existing agreement you may have, even if it was drafted by another lawyer. 

Chances are that few people will even bother to read your Terms of Use, but should something go wrong, and you find yourself in court, the fate of your business could hinge on this one boring agreement, so don’t take any chances. Contact us, your Family Business Lawyer™ today to schedule your appointment.

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

Since the age of 16, when she burst onto the charts with her debut single, “…Hit Me Baby One More Time,” Britney Spears has been one of the world’s most famous and beloved pop stars. Yet despite her massive fame and fortune, Britney, who is now 39, has never truly had full control over her own life.

As most familiar with pop culture know by now, Britney has been living under a conservatorship for the past 13 years. Also known as “adult guardianship,” a conservatorship is a legal structure in which the court granted Britney’s father, Jaime Spears, and other individuals nearly complete control over her legal, financial, and personal decisions. The conservatorship was initially established in February 2008 after Britney suffered a mental breakdown, which resulted in her being briefly hospitalized.

A Total Loss of Control
Back in 2008, the court-appointed Britney’s father and attorney Andrew Wallet as her co-conservators, as Britney was deemed mentally unfit to care for herself. The arrangement was only meant to be temporary, but in October of that year, the conservatorship was made long-term, and her father has remained in nearly complete control of Britney’s life ever since.

Although there has been widespread speculation that Britney’s conservatorship was abusive, the exact details of her conservatorship have been kept private. Moreover, until very recently, Britney had never spoken publicly about her life under the arrangement.

Years of Abuse and Conflict
However, as we detailed last week in part one, Britney recently testified in a court hearing during which she described a shocking pattern of abuse and exploitation at the hands of her father and others involved with the conservatorship. We also discussed how confidential court records obtained by the New York Times provided support for Britney’s claims and showed that the pop icon had expressed serious opposition to her conservatorship as early as 2014, and tried unsuccessfully on multiple occasions to have her father removed from his position.

In response, Britney’s father flatly denied any wrongdoing, and his lawyers filed a petition requesting the court investigate Britney’s allegations of abuse. Shortly after the hearing, both Britney’s court-appointed lawyer, Samuel Ingham, and Bessemer Trust, the wealth management company, which had previously signed on to be the co-conservator of Spears’ finances, asked the court to be removed from the pop star’s conservatorship.

In a follow-up court hearing held this week on July 14th, Judge Brenda Penny approved the resignation of Ingham and Bessemer Trust and granted a request by Britney to hire her own lawyer. To represent her moving forward, Britney chose Mathew Rosengart, a prominent Hollywood litigator and former federal prosecutor, as her new attorney.  

Britney, who phoned into the hearing, once again asked the court to remove her father as co-conservator, and she said that her father should be prosecuted for his alleged abuse. But Britney also reiterated that she’s not willing to undergo any more mental-health evaluations, which she called “stupid psych tests,” according to a report by NPR.

“I’m not willing to sit with anybody at this point to be evaluated,” Britney said. “I want to press charges for abuse. Instead of investigating my capacity, I want an investigation on my dad.”

Although Britney still hasn’t filed the formal legal document seeking to end her conservatorship, which is required by law, her new lawyer, who was present at the latest court hearing, told the judge he plans to file the petition to remove Jamie Spears from the conservatorship. If so, the judge could rule on the petition in the next court hearing on the conservatorship, which is scheduled for September 29.

Use Estate Planning To Avoid Britney’s Fate
Although we’ll have to wait to find out whether the court will allow Britney to terminate the conservatorship without undergoing another psychiatric evaluation, as we noted last week, Britney could have been saved from the years of control by her father,  if she had created a proper estate plan early on in her adult life.

In fact, using a variety of different estate planning vehicles, Britney could have not only chosen the person, or persons, who would be in charge of making decisions on her behalf during her incapacity, but she could have also created legally binding instructions stipulating how her assets and personal care should be managed during her incapacity. With the right planning, Britney could have even spelled out the specific conditions that must be met for her to be deemed incapacitated in the first place.

With this in mind, here in part two, we’ll discuss how you and your loved ones can use proactive estate planning to create a comprehensive plan for incapacity, so you can avoid suffering the same fate as Britney. And since a debilitating illness or injury could strike at any time, at any age, if you’ve yet to create your own incapacity plan, contact me, your Personal Family Lawyer® right away to get this urgent matter taken care of.

Planning For Incapacity: Where To Start
When planning for your potential incapacity, the first thing to ask yourself is, “If I’m ever incapacitated and unable to care for myself, who would I want to make decisions on my behalf?” Specifically, you’ll be selecting the person, or persons, you want to make your healthcare, financial, and legal decisions for you until you either recover or pass away.

The most important thing to remember is that you must choose someone. Like we’ve seen with Britney, if you don’t legally name someone to make these decisions during your incapacity, the court will choose someone for you. And this is where things can get extremely difficult for you and your loved ones.

Although laws differ by state, in the absence of any estate planning, if you become incapacitated, the court will typically appoint a conservator or guardian to make financial and legal decisions on your behalf. As with Britney, this person could be a family member you’d never want managing your affairs, a professional guardian who charges exorbitant fees, or even a crooked professional guardian who abuses and exploits you for their own financial gain.

Furthermore, like most court proceedings, the process of naming a guardian can be quite lengthy, costly, and emotionally draining for your family. And this is assuming your family members agree about what’s in your best interest. If your family members disagree about the course of your medical treatment or managing your finances, this could lead to ugly court battles between your loved ones.

Such conflicts can tear your family apart and drain your estate’s finances. For an example of just how bad things can get, look at the case of Florida’s Terry Schiavo, who spent 15 years in a vegetative state after suffering a heart attack at age 26. Because Terry did not have a living will or health care directive indicating in writing how she would want medical decisions made for her in such an event, Schiavo’s young husband fought Terry’s parents in court for more than a decade for permission to remove her from life support before she was ultimately allowed to pass away.

A Comprehensive Incapacity Plan
Fortunately, such turmoil can be easily avoided through proper estate planning. Determining which estate planning strategies you should use to grant and guide this decision-making authority depends entirely on your personal circumstances. There are several options available, but choosing what’s best for you is something you should ultimately decide after consulting with an experienced lawyer like us because there are many considerations beyond simply whether to “pull the plug”, including how to handle such matters in the event of a pregnancy, whether to keep providing hydration and nutrition (and, if so, what kind), and how to determine incapacity. These, and other factors, are not typically addressed in a standard advance health care directive. 

That said, we can tell you one estate planning tool that’s totally worthless when it comes to your incapacity—a will. A will only goes into effect upon your death, and then it merely governs how your assets should be distributed, so having a will does nothing to keep your family out of court and out of conflict in the event of your incapacity.

When it comes to creating your incapacity plan, your best bet is to put in place an array of different planning tools, rather than a single document. To this end, your plan should include some, or all, of the following:

Durable financial power of attorney: This document grants an individual of your choice the immediate authority to make decisions related to the management of your financial, business, and legal affairs, and can state how your affairs should be handled.

Revocable living trust: A living trust can immediately transfer control of your assets held by the trust to a person of your choice to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your assets should be managed, and the document can even spell out specific conditions that must be met for you to be deemed incapacitated.

Medical power of attorney: An advance directive that grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.

Living will: An advance directive that provides specific guidance about how your medical decisions should be made during your incapacity, including who should be able to see you and specifics regarding how you want your care to be handled. In some instances, a medical power of attorney and a living will are combined in a single document.

Documents Aren’t Enough
In the end, there’s one thing to remember about all of these documents—they are just documents, and they don’t provide your loved ones with a trusted advisor who is often needed to deal with all potential outcomes, and to navigate the legal system on your behalf. If you really want to keep your family out of court and out of conflict, you cannot just rely on documents to do it. Instead, these documents should be created by a lawyer like us who will get to know you, your wishes, and be there for you throughout the many stages of life—and ultimately be there for your family when you can’t be.

Furthermore, in addition to the above estate planning documents, it’s equally—if not more—important for your loved ones to be aware of your plan and understand their role in it. As part of the planning process, a Personal Family Lawyer® will hold a family meeting with all of the individuals impacted by your plan, where we walk them through your plan, explaining the reasoning behind your decisions and what they need to do if something happens to you.

In the end, you’ll find that the best protection comes from combining your comprehensive incapacity plan with a team of people who will care for you, can watch out for you, and know exactly what to do in the event tragedy strikes. As your Personal Family Lawyer®, we can guide and support you to put in place both of these elements. In doing so, it would make it virtually impossible for a conservator or legal guardian to ever be appointed—or even need to be appointed—against your wishes, and instead, we will create a robust plan that would allow you to stipulate how your life, healthcare, and assets should be managed if you ever become unable to manage them yourself.

Timing Is Everything

Keep in mind that your incapacity plan must be created well before you become incapacitated. You must be able to clearly express your wishes and consent in order for these planning documents to be valid, and even slight levels of mental illness or dementia could get them thrown out of court.

Plus, as we mentioned earlier, an unforeseen accident or illness could strike at any time no matter your age, so don’t wait—contact us right away to get your incapacity plan started.

Finally, it’s vital that you regularly review and update your estate plan to keep pace with changes to your life, family dynamics, and the law. If any of the individuals you’ve named becomes unable or unwilling to serve for whatever reason, you’ll need to revise your plan accordingly, and we can help with that, too. 

Let Britney’s Story Be A Lesson

Although Britney’s story is certainly tragic and we can’t be sure how it will ultimately play out, her case has at least shined a spotlight on the potential for abuse that exists within the conservatorship and guardianship system. In fact, Britney’s case has already inspired lawmakers at both the state and federal level to take a closer look at adult guardianships and push for increased oversight and transparency for these legal arrangements.

As one Congresswoman from Massachusetts told Politico, “If this could happen to someone who is as famous as Britney Spears, I mean, think about what’s happening to regular Americans. We need to pull back the curtain on this.” said Rep. Lori Trahan. 

By the same token, Britney’s story should inspire you to make certain that you and your loved ones have the proper estate planning strategies in place to prevent the loss of autonomy, family conflict, and potential for abuse that comes with court-ordered conservatorships and guardianships.

To this end, if you’ve yet to plan for incapacity, schedule a Family Wealth Planning Session™ right away, we, your Personal Family Lawyer®, can advise you about the most suitable estate planning vehicles to put in place. And if you already have an incapacity plan prepared—even one created by another lawyer—we can review it to make sure it’s been properly set up, maintained, and updated. Contact us, your Personal Family Lawyer® today to plan for your life.

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.

Choosing the person to take over your business after you exit isn’t about selecting someone who’s exactly like you or even selecting someone you like. The most important thing is that you choose someone who’s not only well-qualified for the role, but who also has the vision and skills to lead your company into the future.

With so much riding on your decision, you should be careful to avoid these three common mistakes business owners often make when naming successors. Such missteps can cloud your objectivity and diminish your chosen candidate’s ability to effectively take control of your company.  

1. Attempting To Clone Yourself

When selecting your successor, it can be tempting to look for someone who thinks and acts just like you. But choosing a successor isn’t about cloning yourself—it’s about finding someone to build upon what you’ve already accomplished and take your business to the next level.

Indeed, the most qualified successor may turn out to be someone whose leadership style, skills, and business strategy are entirely different from yours. As long as the two of you share the same fundamental values and vision for the company, you shouldn’t let the fact he or she manages things in a different way cloud your judgment.

Ultimately, you may realize that your successor’s way of doing things, while different than yours, is actually more effective.

2. Not Considering The Future

Remember, your successor will not only be responsible for leading your company

in today’s business environment, but tomorrow’s as well. Today’s marketplace is constantly changing, especially when it comes to technology, so the skill set and business strategies that work now may not work in the future. Indeed, choosing a successor is about ensuring your company’s long-term success.

Think about how you’d like your company to grow and evolve, and then identify those candidates whose skills and strengths best align with your vision for the future. Don’t hire a successor based solely on where your company is now, but on where you want the company to be in the next 10 to 20 years.

3. A Lack Of Transparency

When it comes to making a major change in your company’s leadership, it’s best to be transparent about the process. People are often resistant to change—especially when it involves their employer—and if your team only learns about the move when new leadership is announced, it could hurt their morale. 

Letting your team know that succession planning is ongoing also helps build your team’s trust in the process. This is particularly true for those in senior positions who may be interested in being considered for the job. If someone feels they were kept in the dark about a leadership transition, he or she may be resentful and even consider leaving.

In the end, it’s crucial that your successor not only has your trust and support but your team’s trust and support, too. To this end, do your best to make things as transparent as possible, because no matter how qualified your successor is, they’ll never make it unless they’re accepted and respected by the rest of your team.

Enlist Our Support

No matter how you look at it, choosing the right person to take over your business can be incredibly challenging. This is especially true if your choice includes family members or close colleagues. As your Family Business Lawyer™, we serve as your trusted, unbiased advisor to help you make your decision on what’s objectively best for the company and not let emotions get in the way.

What’s more, effective succession planning isn’t just about naming your replacement—it involves every facet of your operation, and planning for your exit is just as important as any other planning you do for your business, if not more so. As your Family Business Lawyer, we can guide you through the entire process and help ensure the business legacy you worked so hard to build will continue to thrive no matter who is running the show. 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

Since the age of 16, when she burst onto the charts with her debut single, “…Hit Me Baby One More Time,” Britney Spears has been one of the world’s most famous and beloved pop stars. Yet despite her massive fame and fortune, Britney, who is now 39, has never truly had full control over her own life.

As most familiar with pop culture know by now, Britney has been living under a conservatorship for the past 13 years. Also known as “adult guardianship,” a conservatorship is a legal structure in which the court granted Britney’s father, Jaime Spears, and other individuals nearly complete control over her legal, financial, and personal decisions. The conservatorship was initially established in February 2008 after Britney suffered a mental breakdown, which resulted in her being briefly hospitalized.

A Total Loss of Control
Back in 2008, the court appointed Britney’s father and attorney Andrew Wallet as her co-conservators, as Britney was deemed mentally unfit to care for herself. The arrangement was only meant to be temporary, but in October of that year, the conservatorship was made long-term, and her father has remained in nearly complete control of Britney’s life ever since.

Under the conservatorship, Britney’s father has the power to restrict her visitors; he is in charge of arranging and approving her visits with her own children; he has the authority to make her medical decisions; and he has the final say in all of her business deals, including when she works, and the complete authority over all of her financial matters.

As it stands now, Britney’s current mental-health status remains unclear, and we can’t be sure whether or not she still requires someone to help her manage her financial and business affairs. But what is abundantly clear is that given the chance, Britney would have undoubtedly preferred to have some say in not only who should be in charge of making decisions on her behalf during her incapacity, but also how those decisions should be made.

Yet because Britney did not create legal documents indicating who should make decisions for her if she could not make decisions for herself, a judge decided for her—and as you’ll read below, this has resulted in immense trauma for Britney and destroyed her relationship with her father. With this in mind, here in this series of articles, we will first discuss the latest details on Britney’s conservatorship and the impact the arrangement has had on the pop star’s life and career. From there, we’ll discuss how you can prevent something similar from happening to you and your loved ones using proactive estate planning and our Family Wealth Planning process. 

Years Of Abuse And Conflict
Although there has been widespread speculation that Britney’s conservatorship was abusive, the exact details of her conservatorship have been kept private. Moreover, until very recently, Britney had never spoken publicly about her life under the arrangement. 

Britney’s father and others involved with the conservatorship have consistently maintained the arrangement saved Britney from herself and others looking to exploit her when she was at her lowest point. They described how the conservatorship helped pull Britney out of debt and allowed her to earn a fortune estimated to be worth nearly $60 million. Plus, representatives for the conservatorship have noted that Britney could move to end the conservatorship whenever she wanted.

However, two shocking developments within the past few weeks finally revealed just how much Britney has suffered under the conservatorship and how she has fought unsuccessfully for years to regain control of her life from her father. The first was a report published by the New York Times on June 22.

According to confidential court records obtained by the newspaper, Britney had expressed serious opposition to her conservatorship as early as 2014, and on multiple occasions, the pop icon pushed for her father to be removed from his position. The very next day in a public court hearing on June 23, Britney finally broke her silence, and what she described was stunning.

During an emotional 24-minute speech delivered via Zoom, Britney pleaded with Judge Brenda Penny to end the conservatorship under which she claimed she has endured years of abuse and exploitation, including having to take a powerful mood stabilizer that makes her feel drunk, being compelled to work while seriously ill, and being forced to remain on birth control, so she can’t have more children. (Read a full transcript of Britney’s testimony)

In response, Britney’s father vehemently denies any wrongdoing and insists he’s acting in his daughter’s best interests. In fact, a few days later, his lawyers filed a petition requesting the court investigate Britney’s allegations of abuse. According to the petition, if Britney’s claims prove true, then “corrective action must be taken,” and if not, then the conservatorship “can continue its course.”

A week later, Judge Penny denied Britney’s request to remove her father as conservator. However, the judge’s ruling was only in response to a filing by Britney’s lawyer made in November 2020 to have a wealth management company, Bessemer Trust, take over as sole conservator, and was not in response to Britney’s impassioned testimony. As it turns out, Britney’s court-appointed lawyer, Samuel Ingham, has yet to file a formal petition to terminate the conservatorship, but the judge said she would be open to such a filing.

According to CNN, Britney has since instructed Ingraham to immediately file the necessary paperwork in order to formally terminate the conservatorship once and for all. If filed, the judge could rule on Britney’s petition and her father’s request for an investigation in the next court hearing on the conservatorship, which is scheduled for next week on July 14.

A Broken System
Britney’s story highlights the real potential for abuse that exists within the conservatorship and guardianship system. In fact, as we’ve covered in previous articles, there have been dozens of highly publicized reports in recent years involving corrupt professional guardians, who exploit those under their care for their own financial gain. Yet, in those cases, the victims have nearly all been elderly, and their abusers were strangers. But Britney’s situation makes it clear that people of any age can fall prey to these restrictive legal arrangements, and the abusers can even be your own family members.

Furthermore, and perhaps the most puzzling part of the whole situation, is why someone as young and active as Britney is still living under a conservatorship. Conservatorships and guardianships are typically used to protect the elderly and mentally disabled who are incapable of making their own decisions and caring for themselves, and they often remain in effect until the person dies.

Although Britney may have initially needed the conservatorship to protect her from her own poor decisions and others looking to take advantage of her in the aftermath of her breakdown in 2008, since then, the Grammy winner has worked almost nonstop and earned millions of dollars. In fact, over the past decade during which she was deemed “incapable of making her own decisions,” Britney has released four albums, headlined multiple world tours, performed nearly 250 shows in a Las Vegas residency, and served as a judge on the TV show “The X Factor.” 

That said, due to the private nature of her conservatorship and the fact that Britney has never fully disclosed the specifics of her diagnosis, we don’t know the full circumstances of her mental health. Although there have been rumors and speculation that Britney is suffering from bipolar disorder, this has never been substantiated, and her medical records are sealed.

What’s more, although it was reported in 2019 that Britney checked herself into a mental health facility and was prescribed lithium, an older medication that’s used to treat bipolar disorder, according to court records obtained by the New York Times, this wasn’t entirely true. In 2019, Britney testified that she was forced into the facility against her will, and during her most recent testimony, she told the judge that she was forced to take the lithium against her wishes as well.

In the end, if Britney does petition to terminate her conservatorship, she will need to prove to the court that she currently possesses the capacity to handle her own life, health, and financial choices. In order to do this, however, Britney will almost certainly have to undergo another mental health evaluation, which would likely involve a court hearing and testimony from mental health professionals.

In an interview with the culture and music website Vulture, Tamar Arminak, a conservatorship attorney who worked on a similar conservatorship involving 27-year-old actress Amanda Bynes, said that the process to prove Britney’s capacity would likely involve a “mini-trial” to determine whether the conservatorship continues to be in the singer’s best interest.

“You have to present evidence and show a changed circumstance,” said Arminak. “You will have to have testimony from doctors, psychiatrists, therapists, and witnesses who will testify for you that you shouldn’t be under this conservatorship.”

Unfortunately, undergoing yet another mental health evaluation is something Britney is hesitant to do. Indeed, in her recent testimony, she made this point clear. “I truly believe this conservatorship is abusive… I want to end the conservatorship without being evaluated,” Britney told the judge.

According to Vanity Fair, a source close to Britney said the reason for Britney’s reluctance to undergo another mental health examination is due to the fact that she has had such poor experiences over the years with the doctors hired by her father.

“She doesn’t have much trust for the doctors that she has worked with so far,” the source said. “She feels like they have failed her.”

The source went on to say that Britney’s reluctance to be evaluated is also one of the reasons her lawyer has yet to formally file the petition to end the conservatorship. After her past experiences with mental health professionals, it’s understandable that Britney would be hesitant to trust yet another doctor hired by her father or appointed by the court.

However, if Britney wants to finally be free and have full control over her life, that might be the only choice she has.

Avoid Britney’s Fate With Incapacity Planning

Whether it’s mental illness, age-related dementia, or a serious accident, we are all powerless to prevent the potential for incapacity. However, with the proper estate planning, you can at least have control over how your life, healthcare, and assets will be managed if something does happen. Moreover, such planning can also prevent your family from enduring the bitter conflict and expense that can result when you leave control over your life in the hands of the court like Britney did.

Working with us, your Personal Family Lawyer®, we can put an array of estate planning vehicles in place that would make it practically impossible for a conservator or legal guardian to ever be appointed—or even need to be appointed—against your wishes. In part two, we’ll outline those options in more detail, but to learn more, contact us 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.

Coming up with a solid concept for a new business and working to get your operation off the ground can be an expensive undertaking. But the good news is that you can write off a number of the expenses involved with the startup process.

That said, the rules for deducting startup expenses are a bit different from those for writing off general business expenses incurred by an existing company. For example, most start-up expenses are considered capital investments and cannot be written off in the same year they are incurred, but instead need to be “amortized” (meaning stretched out and deducted over a longer period) over 15 years. Let’s say, for example, that you have $15,000 in qualified startup expenses. Instead of deducting all of those expenses against your first-year income, you would receive a deduction of $1,000 per year for 15 years. However, there are some exceptions to this as you’ll read below.

To confirm what you can write off and when, you should consult with me, your Family Business Lawyer and your certified public accountant (CPA) to understand exactly how to record your  startup expenses in a way that most benefits your business. Meanwhile, here we’ll take a look at some of the basic rules for writing off startup expenses and how you might use them to reduce your new company’s income tax liability.

What Startup Costs Can Be Deducted?

According to the IRS, there are three categories of startup expenses that are eligible for deductions: expenses for creating your business, expenses for launching your business, and expenses for organizing your business. Each category consists of a number of different types of costs, including the following:

Creating your business: These expenses include activities associated with researching your business concept and finding a proper location for your business. Expenses in this category might include consumer surveys, feasibility studies, market research, and travel expenses to potential business sites.

Launching your business: These are costs incurred while getting your business up and running and include things like recruitment and training your team, selecting vendors, advertising, and professional fees, such as our legal fees. However, you cannot include equipment purchases in your startup expense deductions, as they are depreciated under non-startup business deduction rules.

Organizing your business: You can also write off costs associated with creating your business entity, which might include filing fees, legal fees, accounting fees, and expenses for holding organizational meetings.

How To Take Startup Deductions

Now that you understand what kind of expenses can be written off, let’s look at how to include those deductions on your federal income tax return. Although the IRS allows you to deduct certain startup expenses, there are several restrictions and limits that may apply.

The IRS does allow you to write off up to $5,000 in startup costs and another $5,000 in organizational costs in your first year of business (as opposed to amortizing the deductions over a 15-year period), but only if your total startup costs are $50,000 or less.

If your startup or organizational costs exceed $50,000, the first-year deduction cap will be reduced by the amount over $50,000. For example, if your startup expenses total $54,000, your first-year eligible deduction is reduced to just $1,000, and the rest of your expenses would need to be amortized over 15 years.

However, if your total startup costs are more than $55,000, the first-year deduction is eliminated entirely, and all of your start-up costs will be amortized.

Timing Matters
It’s often best to take the startup deductions for your business in the same year your business opens, but not always. If you will not generate profits in your first year, it could be better to amortize your deductions over time.

Speak with me, your Family Business Lawyer and CPA to determine when taking these deductions makes the most financial sense for your company.

Finally, if your business never gets off the ground and fails before you actually open your doors, your startup costs could be considered personal costs and would not be eligible for these deductions. In certain cases, however, these costs could be regarded as capital losses, so always consult with your CPA to ensure you are taking advantage of every available tax break.

Maximize Your Startup Deductions

As you can see, writing off your startup costs isn’t quite as straightforward as deducting regular operating business expenses. That said, helping you identify and allocate your startup expenses properly is where we come in. Sit down with me, as your Family Business Lawyer, to help you navigate the process and maximize the tax savings available to your new business. Contact me today to schedule your appointment.  

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

Estate planning is an obvious concern for all parents, but if you have a child with special needs, it’s crucial that you are aware of the unique considerations that go into planning for a child who may be dependent on you at some level for their lifetime. If your child has special needs, you must understand exactly what’s necessary to provide for the emotional, physical, and financial needs of your child, in the event of your own eventual death or potential incapacity.

When creating your estate plan, there are two major considerations for you to focus on: 1) Who would care for your child if and when you cannot (also known as guardianship), and 2) How will your child’s financial needs be met when you are not there to meet them.  

Naming Legal Guardians for a Lifetime of Care
The first and most critical step in ensuring the future well-being of your child with special needs is to name both short and long-term legal guardians to take custody of and care for your child in the event of your death or incapacity. And as you well know, if your child will never become fully capable of independently caring for him or herself, your parenting responsibilities will continue on long after your child reaches adulthood.

Although this lifetime responsibility likely feels overwhelming, we’ve been told repeatedly by our clients who have a child with special needs that naming legal guardians and knowing their child will be cared for in the way they want, by the people they want, creates an immense sense of relief. Not only that, but we often build in unique plans through which the named guardians are carefully instructed—and even incentivized—to give your child the same level of attention and care you provide.

For example, we’ve created plans in which the named guardian is compensated for taking your child to dinner and the movies every week or participating in some similar activity if this is something your child enjoys doing with you. However, without written instructions (and perhaps compensation) built into your estate plan, fun activities like this are often neglected once you are no longer there.

For guidance on selecting the individual(s) best suited to serve as legal guardians and creating the proper instructions for them to provide your special needs child with the same level of care as you, consult with us as your Personal Family Lawyer®.

Providing For Your Child’s Financial Future: Special Needs Trusts

Beyond naming legal guardians for your child with special needs, you’ll also need to provide financial resources to allow your child to live out his or her life in the manner you desire. And this is where things can get tricky for children with special needs.

In fact, it may seem like a “Catch-22” situation—you want to leave your child enough money to afford the care and support he or she needs to live a comfortable life, yet if you leave money directly to a person with special needs, you risk disqualifying that individual for much-needed government benefits like Medicaid and Supplemental Social Security Income (SSI).

Fortunately, the government allows assets to be held in what’s known as a “special needs trust” to provide supplemental financial resources for a physically, mentally, or developmentally disabled child, without affecting his or her eligibility for public healthcare and income assistance benefits. However, the rules for such trusts are complicated and can vary greatly between states, so you should always work with us, your Personal Family Lawyer® in order to create a comprehensive special needs trust that’s properly structured and appropriate for your child’s specific situation.

Setting Up The Trust

Funds from a special needs trust cannot be distributed directly to your child, and instead must be disbursed to a third party who’s responsible for managing the trust. Given this, when you initially set up the trust, you will likely be both the Grantor (trust creator) and Trustee (the person responsible for managing the trust), and your child with special needs is the trust’s Beneficiary.

You’ll then name the person you want responsible for administering the trust’s funds upon your death or incapacity as the Successor Trustee. To avoid conflicts of interest, overburdening the legal guardian with too much responsibility, and providing a system of checks and balances, it may be a wise decision to name someone other than your child’s legal guardian as a Trustee.

As the parent, you serve as the Trustee until you die or become incapacitated, at which time the Successor Trustee takes over. Each person who serves as Trustee is legally required to follow the trust’s terms and use its funds and property for the benefit of your special needs child.

Additionally, you should name multiple Successor Trustees—which can even be a trust company, bank, or another professional fiduciary—as backups in case something happens to prevent the individual you’ve named as primary Trustee from serving.

There are two ways to set up a special needs trust. In the first option, we build it into your revocable living trust, and it will arise, or spring up, upon your death. From there, assets that are held in your living trust will be used to fund your child’s special needs trust.

In the other option, we can set up a special needs trust that acts as a vehicle for receiving and holding assets for your child right now. This option makes sense if you have grandparents or other relatives who want to give your special needs child gifts sooner rather than later.

Finally, it is important to ensure that the trust will have sufficient funds to last throughout the life of your child. One common method to provide funding is for you (or another loved one) to name the special needs trust as the beneficiary of your life insurance policy. Another way is for family members and friends to make donations or gifts to the trust and/or include it as a beneficiary in their will.

Meet with us, as your Personal Family Lawyer®, to discuss all of your available options for ensuring your child’s special needs trust has sufficient funds to last for his or her lifetime and for guidance on the estate planning vehicles best suited for passing money to the trust.

The Trustee’s Role

Once the trust is funded, it’s the Trustee’s job to use the trust funds to support your child without jeopardizing eligibility for government benefits. To ensure this is handled properly, the Trustee must have a thorough understanding of how eligibility for such benefits works and stay current with the ever-changing laws. The Trustee is also required to pay the beneficiary’s taxes, keep detailed records, invest trust property, and stay current with the beneficiary’s needs.

Given this immense responsibility, it’s often best that you name a legal or financial professional who’s familiar with the complexities of the law as Trustee or Co-Trustee, so they can properly handle the duties and not jeopardize your child’s eligibility for government benefits. Alternatively, we can advise your named personal Trustee on how to manage the Trust.

Your Trusted Source For Special Need Planning
If you have a child with special needs, meet with us, as your Personal Family Lawyer®, for trusted guidance and support in creating a special needs trust and other estate planning vehicles for your child. We offer an array of estate planning strategies that are designed to accommodate the unique needs presented by a child with special needs and their families. 

We will assist you in passing on the financial assets needed for your child to have a rich quality of life, without jeopardizing his or her eligibility for government benefits. We’ll also support you in finding and appointing a legal guardian and/or Trustee to ensure your child is protected and provided for in the exact manner you wish when you die or if you become incapacitated. Contact us, your Personal Family Lawyer® today to get 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.

If you are like most business owners, you’ve likely been presented with legal documents that contained terms you didn’t fully understand. You may have even signed documents that you didn’t completely read because you were intimidated by the confusing legalese. There have surely been times when a client or team member has signed a legal document you presented to them, even though they didn’t fully read or understand what they were signing.

Unfortunately, such scenarios are far too common. But it doesn’t have to be, rather than creating confusion and anxiety, the agreement process should do the exact opposite.

Indeed, the agreement process is your opportunity for creating clarity on your relationships, policies, and procedures, and delivery of your product or service. Take it from us, as your Family Business Lawyer ™, if you avoid reviewing, rethinking, and revamping your agreement process, you are not only putting your assets and business at risk, you are short-changing yourself, your work, and your relationships.

In addition to creating clarity, when done right, the agreement process is ultimately about creating connection, consistency, setting boundaries, and establishing expectations. If your current agreement process isn’t providing you with these outcomes, then this article is for you.

Contracts vs Agreements: What’s the Difference?

As we mentioned in a previous blog article, in some cases, you do not need to put an agreement in writing to create a legally enforceable agreement. As long as the proper elements exist, a valid contract can be created verbally.


But putting semantics aside for a moment, in that case, do you really have an agreement? If you don’t put it in writing, you may have a contract, but a contract and an agreement are actually two different things. A great agreement that is often overlooked in writing requires these elements of agreement as well:

  • Connection,
  • Being on the same page,
  • Alignment,
  • Clarity,
  • Coherence 

This is how many business owners end up in unnecessary, expensive and messy conflicts. They have contracts, but not true agreements. To help ensure you don’t end up in the same situation, we recommend you rethink your relationship to legal agreements by implementing the following best practices.

What Do You Want From the Relationship?

First of all, before you ever sign a contract or enter into any business agreement or arrangement, get clear on what you actually want from the relationship. In doing so, it’s vital that you are completely honest with yourself—and be willing to be completely honest with the other person as well. 

When it’s unclear what you want from the relationship, be willing to seek support in order to become clear. This might mean finding a safe space to talk through what you think you want from the relationship. Or it could mean speaking out loud about your unsurfaced assumptions and receiving reflective feedback. It may also look like asking questions you may not have initially thought about.

Achieving this kind of clarity is one of the major differences between using generic template agreements you find online versus working with us, your Family Business Lawyer™, who serves as your trusted advisor. As your trusted advisor, we will support you to get clear, test your assumptions, and surface what you cannot see. This allows you to get out of your head and achieve a truly objective perspective from a position that you may not be fully aware of you can if you are solely relying on a generic online agreement.

If you are resistant to receiving counseling to create high-quality legal agreements or working with a lawyer who is not a great counselor and they are only providing you with templates full of confusing blanket terms, you are missing out on one of the most significant opportunities a business owner can have. The counseling process of a Family Business Lawyer ™ allows you to work through all aspects of a business relationship that may bring up uncomfortable feelings ahead of time, rather than having those uncomfortable feelings surface down the road, resulting in expensive conflicts that could have easily been avoided with the proper planning.

Start With The Ideal Outcome In Mind
Once you are clear, putting in place the legal agreement is easy. Follow these steps below to gain clarity on the foundation of the agreement:

Start by identifying your desired outcome of the business agreement. If you could see into the future and achieve the ideal result the relationship is to provide, what would be true for it to be successful? To understand the ideal outcome, first, imagine yourself celebrating a future in which the relationship met all expectations. Suppose you worked together in all the best ways, and you accomplished all of your goals together. What would need to happen for everything to go that well? That’s what you want to document in your agreements.

If you are hiring a team member, for example, how will they know they are succeeding? Based on what that success looks like, 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 that information in the employment agreement, so it’s abundantly clear what the expectations for the position are for the team member and for you.

On the other hand, you also need to think about how you would work 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? Are you agreeing to any payment beyond just payment for performance? If so, that needs to be documented, and if not, that also needs to be documented.

Next, what are the reasons you can terminate the relationship? On what basis can the team member walk away? 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 planned for during the agreement process.

Along these same lines, whenever you bring on a new client, you should establish similar metrics of success for that relationship and document them in your client service agreement. What would need to happen for the engagement to be fully complete? How will you know when it’s time for the relationship to transition to the next level? What happens if the agreement is not followed or the scope of work changes? 

Lastly, and perhaps most importantly, you should similarly outline your payment terms in your agreement: how much you get paid, how and when you expect to be paid, along with how late payments and non-payment will be handled. The more clarity you can achieve around these outcomes and document what the ideal outcomes would look like, the better things will be for both you and your client.

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