If you’ve ever had clients who were more trouble than they were worth, you know how stressful such toxic relationships can be. Yet, it can be difficult to drop a client, especially if your business is just getting off the ground or cash is tight. That said, when dealing with certain problem clients, sometimes the best thing you can do is end the relationship.

Keep in mind, not every client is actually worth working with. In the worst cases, you’d be better off having never done business with some clients at all. With this in mind, if you’ve experienced one or more of the following issues with your clients, that’s a serious red flag that you should seriously consider letting them go.

1. Consistently Late Payments

In most instances, having a client make one or two late payments is a simple oversight, rather than a blatant attempt to avoid paying you. In such situations, a quick email or phone call should be enough to resolve the issue.

But if failing to pay on time becomes more than the occasional slip-up, you should consider ending the relationship. Just think about what would happen if you paid your team a few weeks, or months, late. They’d probably quit—and with good reason.

One way to avoid late-payment issues is to include specific terms in your sales agreements outlining your payment schedule and detailing penalties and/or other methods of recourse for delayed payments. Or you might want to require clients to pay upfront or put down a deposit before starting work. No matter what you choose, you must require ALL clients to sign a sales agreement, including specific terms for payment, before you do any work.

As your Family Business Lawyer™, we can assist you in creating solid agreements to help ensure that late payments never become anything more than a minor oversight.

2. Getting Paid Too Little

It’s absolutely crucial to get the appropriate compensation for your work. Yet far too many business owners have an unhealthy relationship with money. This can lead you to undervalue your own time, energy, and attention when it comes to making money. As a result, you may feel uncomfortable, or even guilty, for charging clients the rates you actually deserve.

Much of this “money dysmorphia” can be traced back to ingrained fears and beliefs that have negatively conditioned your views about the role that money plays in your life. If you don’t face these false beliefs, it can wreck your health, business, and relationships—and this is particularly true with your client relationships.

By appropriately valuing your work, you project confidence in both your business and yourself, which clients will respect. Not only that, but keeping even a few low-paying clients can not only impact your bottom line, it can also wreak havoc on your self-esteem. This can cause your passion to dwindle, your quality of work to suffer, and eventually manifest in professional and personal burnout.

As your Family Business Lawyer® firm, we have been specially trained to help you develop a healthy relationship with money. Using the highly successful Money Map to Freedom program, we’ll show you how you can take back your non-renewable resources of time, energy, and attention and create all the money you need to live a life of true freedom—a life in which you’ll never feel uncomfortable asking clients to pay you what you’re truly worth.  

3. Scope Creep

You’ve undoubtedly had clients who want you to go above and beyond the amount of work outlined in your agreement. At first, they might ask for small changes every now and then. But before you know it, you’re doing all kinds of extra work on every one of their projects, which is not only unfair to you, but to all of your other clients.

You should seriously reconsider your relationship with such clients—but don’t break things off right away. Clients who ask you to do extra work aren’t always bad actors. For one, if you set a precedent that you’re willing to do more work than you’re getting paid for and never say anything, what reason do they have to stop? They’re getting an incredible bargain!

Recognize your clients’ need for additional work, and ask them to pay for it. If you’ve ever done any remodeling to your house and decided to add anything on to your build, you know all about “change orders,” and if you aren’t using them yourself when scope creeps in your own business, you should start now. In the end, if you end the relationship without ever asking for more money, you could needlessly lose a loyal client, who would be more than happy to pay you whatever you request. Of course, if they’re not willing to pay for the extra work—or at least stick to what’s in the agreement—it’s time to end things.    

Establish Healthy Relationships With Your Clients

While it can be stressful to sever ties with problem clients, as with ending any dysfunctional relationship, you’ll be better off in the long run by ending things—and the sooner the better. You can always find new clients, but you can never recover the time, energy, and attention wasted by staying with a lousy client longer than you should have.

As your Family Business Lawyer™, we will support you when dealing with dysfunctional business relationships. Whether it’s creating airtight sales agreements, assisting you in overcoming your subconscious hang-ups over money, or helping convince late-paying clients to pay you what they’ve agreed upon, you can count on us to have your back. Schedule a visit with us, your local Family Business Lawyer™ 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. 

Over just the last two years, we’ve seen historic levels of damage caused by natural disasters in the U.S. From blizzards in Texas and wildfires in California to hurricanes in Louisiana and tornados in the Midwest, few regions of the country are immune to such catastrophes. And based on the latest data from the United Nations World Meteorological Organization (WMO), things are only going to get worse.

The WMO found that climate change has helped drive a five-fold increase in the number of weather-related disasters in the last 50 years, and these calamities are getting more severe each year. As a result of climate change, weather records are being broken all the time, turning previously impossible events into deadly realities.

Despite this threat, a majority of homeowners lack the insurance coverage needed to protect their property and possessions from such calamities. Roughly 64% of homeowners don’t have enough insurance, according to a 2020 report from CoreLogic, the nation’s largest source of property and housing data. One major factor contributing to this lack of coverage is the mistaken belief that homeowners insurance offers adequate protection from natural disasters.

In truth, however, much of the damage caused by natural disasters is not covered by a standard homeowners policy. To fully protect your home and other property, you often need to purchase a separate policy or endorsement that covers specific types of natural disasters. To help you get the proper coverage, here we’ve highlighted the various types of insurance available and explained what these policies typically will—and won’t—cover.

Wildfires

Although homeowners insurance typically doesn’t pay for damage caused by natural disasters, most policies do cover fire damage, including wildfires like the recent ones that have devastated the West. Generally, the only instances of fire damage a homeowners policy won’t cover are fires caused by arson or when fire destroys a home that’s been vacant for at least 30 days when the fire occurred.

That said, not all homeowners policies are created equal, so you should review your policy to make certain that it includes enough coverage to do three things: replace your home’s structure, replace your belongings, and cover your living expenses while your home is being repaired, known as “loss-of-use” coverage. 

What’s more, in certain areas that are extremely high-risk for wildfires, it can be quite difficult to find a private company to insure your home. In such cases, you should look into state-sponsored fire insurance, such as California’s FAIR Plan.

Earthquakes

Unlike fires, earthquakes are typically not covered by homeowners policies. To protect your home against earthquakes, you will need a freestanding earthquake insurance policy. And contrary to popular belief, Californians aren’t the only ones who should have such coverage.

Most parts of the U.S. are at some risk for earthquakes. In fact, the U.S. Geological Survey found that between 1975 to 1995, earthquakes occurred in every state except Florida, Iowa, North Dakota, and Wisconsin. To gauge the risk in your region, consult with the Federal Emergency Management Agency’s (FEMA) earthquake hazard maps.

While earthquake insurance is available just about everywhere, policies in high-risk areas typically come with high deductibles, ranging from 10% to 15% of a home’s total value. Additionally, though earthquake insurance covers damage directly caused by the quake, some related damage, such as that caused by flooding, will likely not be covered. Carefully review your policy to see what’s included—and what’s not.

Floods

Though homeowners insurance generally covers flood damage caused by faulty infrastructure like leaky or broken pipes, nearly all policies exclude flood damage caused by natural events like heavy rain, overflowing rivers, and hurricanes. To protect your property and possessions from these events, you’ll need stand-alone flood insurance.

The threat from flooding is so widespread, Congress created the National Flood Insurance Program (NFIP) in 1968, which allows homeowners in flood-prone areas to purchase flood insurance backed by the federal government. In some coastal regions, especially where hurricanes are prevalent, you might even be required by law to have flood insurance for your home. To determine the risk for your property, consult FEMA’s Flood Maps.

Even if you live in a location where flood insurance isn’t required, you may want to consider buying it anyway. That’s because 90% of all natural disasters include some form of flooding, and more than 20% of flood-damage claims come from properties outside high-risk flood zones. Given how commonplace flood damage can be, you should carefully consider whether or not such coverage is warranted in your area.

Hurricanes & Tornadoes

Most homeowners policies do provide coverage for wind-related damage. However, whether or not a policy covers such claims often depends on the type of storm that caused the damage. For example, wind damage from tornadoes and even some tropical storms is typically covered, while wind damage from hurricanes generally requires a separate windstorm policy, or in some cases, a hurricane rider.

Because damage from hurricanes is often measured in the billions, windstorm policies usually have high deductibles, and they are frequently based on a percentage of your home’s value, instead of a fixed dollar amount. Some policies also come with a cap on coverage, so be sure to review exactly what type and amount of coverage your policy offers.

Of course, high winds aren’t the only threat posed by hurricanes. These tropical systems often cause severe flooding, which is typically the storm’s most damaging element. But as mentioned earlier, whether it’s caused by a hurricane or a tornado, flooding is generally not covered by homeowners insurance. For flood protection, you’ll need to purchase a separate flood insurance policy through the NFIP.

Be Ready To Go: Pack A Go-Bag

Beyond having the right insurance, if your family is forced to evacuate your home in the event of a natural disaster, you’ll need important documents and supplies on-hand to recover in the wake of the catastrophe. We recommend you take a cue from the U.S. military, which requires its members to always have a “go-bag” ready and packed with the essential items needed to survive for at least three days following a disaster or other emergency.

In addition to clothes, toiletries, medications, and food, your go-bag should include copies of your passport, birth certificate, driver’s license, state ID card, and/or other essential identification. Other documents to pack include the deed to your home if you have one on-hand, copies of your insurance policies, the original copy of your will (if your lawyer isn’t already storing it for you in a fireproof safe), vehicle titles/registration, and a recent family photo with faces clearly visible for easy identification.

While all of your estate planning documents should be included in your go-bag, having your medical power of attorney and living will readily accessible is especially critical for medical emergencies. Without these documents, doctors and other medical professionals won’t know your wishes for treatment or which of your loved ones should help them make decisions in the event of your incapacity from illness or injury, which is all the more likely during a disaster scenario.

To make everything as portable as possible, download your estate plan and other important documents to a flash drive you can carry in your go-bag, and upload additional copies to the cloud.

Finally, make sure your family knows about your go-bag and estate planning documents—as well as how to find them. Even if you have all of the necessary legal documents in place, they won’t do you any good if your loved ones don’t know about them or can’t quickly locate them during an emergency. You might even want to keep your go-bag near your home’s primary exit, so you or someone else can grab it on the way out the door.

Preserving Your Family’s Most Precious Mementos

Obviously, not all of your family’s belongings can be replaced, so you should take additional precautions to safeguard your most precious sentimental items: photo albums, home videos, old letters, family histories, and treasured cards from the past. Since you won’t have the time or space to pack these items in your go-bag, we recommend you make digital copies of these keepsakes and store them in the cloud.

As your Personal Family Lawyer®, we are keenly aware of the priceless value these items represent, and we believe safely storing your sentimentals online is so important we offer this as a service to all of our clients. Be sure to ask us how we can help you preserve your family’s most precious mementos.

Protect Your Home & Family Today

To make certain that you have the proper insurance and other estate planning documents in place to protect your home, family, and belongings from the ever-increasing threat posed by natural disasters, consult with us, your Personal Family Lawyer®. We’ll help you evaluate the specific risks for your area, assess the value of your home and other assets, and support you to obtain the proper insurance and estate planning vehicles to fully safeguard you and your loved ones from every possible emergency. Call 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.

One of the main reasons for setting up your business as a corporation or limited liability company (LLC) is to shield your personal assets from debts and other liabilities incurred by your business. Corporations and LLCs exist as separate legal entities from their owners, which allows the business itself to acquire assets, enter into contracts, and take on debt. 

In turn, if your business is unable to pay its debts, creditors are typically allowed to only go after your company’s assets, not your personal assets. However, there are several circumstances in which business owners can be held personally liable, and you should understand how these potential pitfalls can leave you vulnerable.

In some cases, business owners simply make innocent mistakes when running their business, and these errors leave them personally liable. Other times, when business owners take certain improper actions, such as using the corporation to promote fraud, failing to observe corporate formalities, or even just inadvertently commingling business and personal assets, a court can hold the owners personally liable for the debts and liabilities of the business. When this happens, it’s known as “piercing the corporate veil.”

If you’re thinking of incorporating your business, or if you already own a corporation or LLC, you should become familiar with the following scenarios that can leave you personally on the hook for your business debts.

Commingling Business & Personal Finances
The biggest risk to your business (and your personal assets) when running a small business is commingling your personal finances with those of your business. It can be something as benign as using a company bank account to pay your mortgage or depositing a check made out to your business into your personal account. If this is happening to you now—and we bet it is, because it happens to almost every business owner we serve—there’s no shame in it, but there could be major risk to you.

Commingling your business and personal finances means that if you are ever in a lawsuit related to your business and a judgment is obtained against your business, a court can decide that you’re using your company as an extension of yourself, and therefore you should be held personally liable for its debts. In that case, everything you’ve read or believed about your business entity protecting your personal assets just goes right out the window, and you lose all the protections of having that entity. On top of that, commingling business and personal finances means you will not be able to make wise strategic decisions based on the financials of your business, and that’s actually your biggest risk, bar none.

To prevent this kind of thing, when you work with us, as your Family Business Lawyer™, we regularly review your company’s financials with you and your accountant to ensure you’re keeping all of your finances separate in the exact way required to protect your personal assets.

Making Personal Guarantees

If you cosign a business loan or personally guarantee a financial obligation for your corporation or LLC, you share responsibility with the company for paying it back. And if your business defaults on a loan you’ve personally guaranteed, your company’s creditors can come after your personal assets, even if you have a business entity in place.

Using Personal Assets As Collateral
Since many small business owners don’t have a lot of startup capital, you may be asked to use your personal property, such as your home or other assets, as collateral on a business loan. If so, the personal assets you pledged as collateral can be seized and sold off to pay your company’s creditors in the event your company fails to pay back the loan.

Committing Fraudulent Actions
Of course, if you make fraudulent representations or omissions to secure a business loan, you can be held personally liable for those debts. Similarly, if your corporation or LLC was created to further a fraudulent purpose or you made business deals knowing the company wasn’t able to pay for them, you can be convicted of fraud, thereby voiding your personal liability protection.

Failing To Follow Corporate Formalities
Corporations and LLCs are legally required to follow certain administrative formalities and observe certain rules. If you fail to treat your business like a corporate entity by not abiding by these formalities—such as keeping detailed records (minutes) of meetings where important business decisions are made or adopting corporate bylaws—the court can rule your company is nothing but a shell and remove the veil of protection shielding your personal assets.

In fact, maintaining corporate formalities is among the most important actions needed to keep you safe from business creditors, and most small business owners simply don’t do this because it’s the last thing on their priority list. As your Family Business Lawyer™, we will put you top of our priority list, with our corporate  maintenance packages and systems that are specifically designed to help you abide by these formalities and keep your personal assets secure.Keep Your Veil Intact
In light of all of the complexities surrounding corporations and LLCs, you should meet with us, your Family Business Lawyer™ to make sure you’re not opening yourself up to be personally liable for your business debts. We will not only help you decide which business entity structure is best suited for your operation, we’ll also assist you in properly setting up and maintaining the entity, so your personal assets are always well protected. Call 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. 

Whether you’ve met with an estate planning lawyer before or it’s your first time, it’s important to understand how working with us, your Personal Family Lawyer® is different from meeting with a traditional lawyer. 

Here we will explain what’s involved with our process, in hopes that it will inspire you to meet with us, your Personal Family Lawyer® and get clear on what your family needs you to have in place, so you don’t leave behind a mess if you become incapacitated or when you die. We promise to help you make the wisest, most affordable, most effective, time-saving plan for yourself and the people you love. 

Meeting With A Traditional Lawyer

Given the unique approach of Personal Family Lawyer® firms, an initial consultation with our firm is quite different from an initial consultation with a typical estate planning attorney. A typical “initial consultation” would be a meet-and-greet-type of meeting, in which the lawyer describes the various legal documents you need to put in place and quotes you a fee to provide those documents.

In those types of meetings, it will likely be quite difficult for you to know exactly what you need for your unique family situation, assets, and how to make the right decision, outside of simply considering whether the cost of these documents fits within your budget. Deciding what you need based solely on the cost of documents will likely lead to you receiving a set of documents that won’t serve and protect your family or your assets when they need the most support.

Unfortunately, we’ve seen it all too often: You have the best of intentions to do the right thing and get a will or trust in place, but you either don’t do it, don’t complete it, or work with a lawyer who puts in place a documents-only plan that is little more than what you could do yourself online through an online document service. And then you become incapacitated or die, and your family is left with a mess: They don’t know where your assets are, they don’t know who to turn to, your documents are out-of-date, and your loved ones are lost, confused, and grieving all at once. 

We’ve designed our entire process, which we call Life & Legacy Planning, to support an entirely different reality—one in which you use the estate planning process to not only leave behind a plan for the people you love, but to make your life even better right now. Let me explain how we do that.

Family Wealth Planning Session™

As your Personal Family Lawyer® firm, our entire process is designed to support you to make the right decisions for yourself and the people you love during your life and to leave a legacy of support and love to the people you care about most. 

In service to that, our initial meeting with you is a two-hour working session, called a Family Wealth Planning Session. During this session, you’ll educate us on everything you own and all of your family dynamics, and we’ll educate you on how the law would apply to you, your assets, and your family in the event of your incapacity or death. Then, together we will create a plan for how to structure your affairs, how you’d like to have your family supported, and how to keep track of your assets, so your family never feels lost, confused, or alone during a time of grief. And by the time you leave the Session, you’ll feel relieved, cared for, and more clear than you’ve ever been about how to make life choices in alignment with the legacy you desire to leave, as a parent, as a business owner or professional, and as the CEO of your life.

This Planning Session is $750. But if you’d like us to waive this fee, we will do so if you are willing to do a bit of homework ahead of time. This homework is a critical part of the planning process, and it will benefit your loved ones whether you engage in a full plan with us or not. The homework will guide you to find everything you own, and document it, using our Personal Resource Map: Family Wealth Inventory and Assessment.

Just completing this initial assessment will likely get you more financially organized than you’ve ever been before.

We are consistently surprised to see that many of our clients do not have a clear awareness of what they own or how to locate all of their assets. And if you don’t know what you have and where it is and you haven’t documented it, how will your family know? This is exactly why there is more than $58 billion (yes, that’s billion with a “b”) of lost and unclaimed assets held by state and federal agencies in the U.S. This happens when you become incapacitated or die, and your family is unable to find or simply overlooks assets you’ve worked so hard to create because most people fail to properly inventory their assets and/ or keep that inventory regularly updated. So we support you to start there.

We know you haven’t devoted years of your precious time and energy to build your family wealth only for your heirs to lose track of it when something happens to you. That’s one reason the Family Wealth Planning Session is so beneficial. Whether you decide to create a full estate plan or just rework the one you have, after working with us, at the very least your family will know what you have and how to locate it should anything happen to you. 

And if you do decide to create an estate plan or redesign an existing plan with us, the Family Wealth Planning Session will guide you to choose the type of plan you want based on your budget, what’s most important to you, what’s not important to you, and with a clear understanding of the impact of your choices. We will guide you to choose the most affordable and effective planning solution for your life and the people you love, so you can get your affairs in order and keep them that way throughout your lifetime and through all of life’s changes

This investment of your time now will save your family countless hours of heartache and work down the road, while also keeping your loved ones out of conflict and out of court. If you choose to work with us, you’ll get the peace of mind that comes with knowing you never have to make another financial or legal decision without our guidance again. And if and when something happens to you, your loved ones will get the same type of trusted advisor, who will be there for them when you can’t be.

Death is unavoidable. But you can make it far easier on the people you love by the choices you make now. And facing the reality of this fact allows you to make choices that will let you enjoy your current life even more. In fact, our clients often report a huge sense of relief after meeting with us, and they frequently say they wished they’d created a life and legacy plan sooner.

Life & Legacy Planning

You see, we’ve discovered that estate planning is about far more than planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning.

As your Personal Family Lawyer®, we are specially trained to educate, empower, and support you to make the right decisions for your life and for the people you love. Furthermore, because your plan will be designed to provide for your loved ones in the event of your death or incapacity, we aren’t just here to serve you—we’re here to serve your entire family. 

In the end, your Life & Legacy Plan goes far beyond simply creating documents and then never seeing us again. We will develop a relationship with you and your family that lasts not only for your lifetime but for the lifetime of your children and their children if that’s your wish. And this all starts with our Family Wealth Planning Session. If you’d like to learn more about this process or schedule your appointment, contact us, your Personal Family Lawyer® 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.

Even if the process is amicable, divorce can be one of life’s most stressful events. With so many major changes taking place, it’s easy to forget to update your estate plan—or simply put it off until it’s too late. After all, dealing with yet another lawyer is probably the last thing you want to do.

However, neglecting to update your estate plan for divorce can have potentially tragic consequences. And you shouldn’t wait until the divorce is final to rework your plan—you should update it as soon as you realize the split is inevitable.

Here’s why: Your marriage is legally still in full effect until your divorce is final, so if you die or become incapacitated while your divorce is ongoing and haven’t changed your estate plan, your soon-to-be ex spouse could wind up with complete control over you life and assets. Unless you want your ex to have that kind of power, you need to take action as soon as possible.

However, keep in mind that some states have laws that limit your ability to change your estate plan once your divorce is filed, so you may want to  consider making some or all of the following changes to your estate plan as soon as divorce is on the horizon and before you’ve filed. As your Personal Family Lawyer®, we can support you to ensure your estate plan is properly updated to reflect the latest changes in your life situation, family dynamics, and asset profile. Contact us as soon as you know divorce is coming, or right away if you’ve already begun the divorce process.

1. Change Your Power Of Attorney Documents

Unless you want the person you are removing from your life to make all of your legal, financial, and medical decisions in the event of your incapacity, you need to update your power of attorney documents as soon as divorce is inevitable. All adults over age 18 should have both a durable financial power of attorney and a medical power of attorney in place.

A durable financial power of attorney allows you to grant an individual of your choice the legal authority to make financial and legal decisions on your behalf should you become unable to make such decisions yourself. Similarly, a medical power of attorney grants someone the legal authority to make your healthcare decisions in the event of your incapacity.

Without these documents in place, your spouse has priority to make financial and legal decisions for you. And since most people typically name their spouse as their decision maker in these documents, you need to take action even before you begin the divorce process and grant this authority to someone else, especially if things are anything less than amicable between the two of you.

Once divorce is a sure thing, don’t wait—immediately contact us, your Personal Family Lawyer® to get these documents created or changed. And unless your attorney is an expert in estate planning, we recommend you don’t rely on your divorce lawyer to update these documents for you. There are just far too many important details in these documents that can be overlooked by a lawyer using a standard form, rather than the custom documents we will prepare for you.

2. Change Your Beneficiary Designations

As soon as you know you are getting divorced, you should update the beneficiary designations for assets that do not pass through a will or trust, such as life insurance policies and retirement plans. Failing to update your beneficiaries can lead to serious trouble down the road, and unfortunately, we see this happen all the time.

If you get remarried following your divorce, for example, but you haven’t changed the beneficiary of your 401(k) to name your new spouse, the ex you divorced 10 years ago could end up with your retirement account upon your death. And since there are often restrictions on changing beneficiary designations once a divorce is filed, the timing of your beneficiary change is particularly critical.

In most states, once either spouse files divorce papers with the court, neither party can legally change their beneficiaries without the other’s permission until the divorce is final. With this in mind, you may want to consider changing your beneficiaries prior to filing divorce papers, and then post-divorce you can always change them again to reflect whatever is determined in the divorce settlement.

If your divorce is already filed, meet with us your Personal Family Lawyer® to see if changing beneficiaries is legal in our state—and whether it’s in your best interest. And if naming new beneficiaries is not an option for you now, once the divorce is finalized it should be your number-one priority. In fact, put it on your to-do list right now!

3. Create a New Will

You should create a new will as soon as you decide to get divorced, since once divorce papers are filed, you may not be able to change your will. And because most married couples name each other as their executor and the primary beneficiary of their estate, it’s important to name a new person to fill these roles as well.

When creating a new will, rethink how you want your assets divided upon your death. This most likely means naming new beneficiaries for any assets that you’d previously left to your future ex and his or her family. Keep in mind, some states have community-property laws that entitle your surviving spouse to a certain percentage of the marital estate upon your death, regardless of what your will says. So if you die before the divorce is final, you probably won’t be able to entirely disinherit your surviving spouse through the new will.

That said, it’s almost certain you wouldn’t want him or her to get everything. In light of this, you should create your new will as soon as you realize divorce is inevitable to ensure the proper individuals inherit the remaining percentage of your estate should you pass away while your divorce is still ongoing.

And should you choose not to create a new will during the divorce process, don’t assume that your old will is automatically revoked once the divorce is final. State laws vary widely in regards to how divorce affects a will. In some states, your will is revoked by default upon divorce. In others, unless it’s officially revoked, your entire will—including all provisions benefiting your ex—remain valid even after the divorce is final.

Given the uncertain legal landscape, meet with us your Personal Family Lawyer®  as soon as you know divorce is coming. We can advise you on our state’s laws and how to best navigate them when creating your new will—whether you do so before or after your divorce is final.

4. Amend Your Existing Trust Or Create A New One

If you have a revocable living trust, you’ll want to update it too. Like wills, the laws governing if, when, and how you can change a trust during a divorce can vary, so you should consult us as soon as possible if you are considering divorce. In addition to reconsidering what assets your soon-to-be-ex spouse should receive through the trust, you’ll probably want to replace him or her as successor trustee, if they are so designated.

And if you don’t have a trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide an array of benefits that are unavailable with a will, and they’re particularly well-suited for blended families. Given the likelihood that both you and your spouse will eventually get remarried—and perhaps have more children—trusts are an invaluable way to protect and manage the assets you want your children to inherit.

By using a trust, for example, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritance.

Given the enhanced protection and control that a trust can provide compared with a will, you should at least discuss creating a trust with us, your Personal Family Lawyer®  before ruling out the option entirely.

5. Revisit Your Estate Plan Once Your Divorce is Final
During the divorce process, your primary objective is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacited before divorce is final. For this reason, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401(k), or add to your estate plan in any other way while the divorce is ongoing are often just temporary.

Once the divorce is final and your marital property has been divided up, you should revisit all of your estate planning documents and update them accordingly based on your new asset profile and living situation. From there, your plan should continuously evolve along with your life circumstances, particularly following major life events, such as getting remarried, having additional children, or when family members pass away.

Get Started Right Away

Although it may be tempting to put off changing your estate plan when you are going through a divorce, especially if the process has been contentious, you can’t afford to wait. Meet with us to review your estate plan immediately upon realizing that divorce is unavoidable, and then schedule a follow-up visit once your divorce is final.

If you delay updating your estate plan, even just for a few days during your divorce, it can make it legally impossible to change certain parts of your plan, so act now. And if you’ve yet to create any estate plan at all, an impending divorce is the perfect time to finally take care of this crucial responsibility. 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.

In the last decade, the rise of the gig economy has fueled an unprecedented increase in the number of independent contractors (ICs) in the U.S. workforce. And that growth has only accelerated in the wake of the pandemic, with more companies relying on remote work arrangements, and many workers laid off during the shutdowns and forced to go solopreneur choosing to remain independent.

In fact, the number of independent contractors in the U.S. workforce rose by 34% in 2021, according to MBO Partners’ 11th Annual State of Independence in America report. As a business owner, using independent contractors in lieu of full-time employees has a number of distinct advantages, including big savings on labor costs, taxes, and training—but using contractors is not without risks.

Employers Facing Increased Scrutiny
Along with the rise in ICs, there’s been an equally steady increase in the number of companies being targeted by state and federal agencies for misclassifying workers. And with the election of President Biden, employers are facing even more scrutiny. 

Last May, the Department of Labor (DOL) rescinded a Trump-era rule that would have made it easier for employers to designate workers as independent contractors, rather than employees under the Fair Labor Standards Act (FLSA). And as part of his $6 trillion budget proposal unveiled this summer, Biden pledged to end “the abusive practice of misclassifying employees as independent contractors.” To fund this effort, Biden proposed a 12% increase in funding for the DOL’s Wage and Hour Division, which deals with worker classification. 

Most recently, in January the DOL and the National Labor Relations Board struck an agreement to collaborate on investigations and share information on potential violations, specifically targeting independent contractor misclassification. The deal will create a new referral process for violations of federal labor and employment laws, making it easier for the government to pursue employers who have breached laws enforced by both agencies.

The Cost Of Misclassification
If you misclassify an employee, you can face hefty fines from the DOL, IRS, and state agencies. Moreover, you can be held responsible for paying back taxes and interest on employee wages, along with FICA taxes that weren’t originally withheld.

You can also be held liable for failing to pay overtime and minimum wage under the FLSA as well as under state laws. Such claims can go back as far as three years if it’s found you knowingly made the misclassification. And if the IRS believes your misclassification was intentional, there’s also the possibility of criminal penalties.

Outside of the fines paid to state and federal agencies, if an employee is misclassified, they’re eligible to claim employee benefits he or she missed out on. These can include healthcare coverage, stock options, 401(k) matches, PTO, and even unpaid break time.

Best Practices To Avoid Misclassification
Fortunately, with the support and guidance from us, your Family Business Lawyer™, you can easily avoid these risks and stay totally compliant. While you should meet with us for an in-depth review of your employment agreements and worker classification procedures, implementing the following best practices can go a long way toward ensuring your team members are correctly classified.

1) Conduct An Internal Audit Of Your Classification Process

The first step to ensuring that your ICs are classified properly is to conduct an internal audit of your current classification policies and practices. And if you don’t have any formal policies or practices in place, now is the time to create them.

While the federal government, the states, and the courts don’t have a single common test to determine a worker’s classification, there are some overarching themes that they all consider. In general, if you have the right to control or direct how an IC’s work is done, not just what’s to be done, the worker is more likely to be an employee, not an IC. With ICs, you’re only permitted to direct and control the end result of their work, not the manner and methods of getting it done.

Since there are many complex legal issues related to this process, it’s important that you work with us, your Family Business Lawyer™ to review each worker’s on-the-job practices. Many times an IC’s employment agreement may state one thing, but their actual work performance and relationship with you may be something entirely different.

For example, an IC’s contract might state that they’re to work independently, but in reality they work under close supervision. Or their contract may state that they’re free to work with other clients, but the audit shows that the way you’ve structured the relationship makes it impractical or impossible for them to work for anyone but you.

By auditing your policies and practices in this way, you can identify and change any problem areas internally, before a regulatory agency steps in to investigate.

2) Review And Revise Your Employment Agreements

Even if you’ve worked with someone for years without any problems using a verbal agreement, it’s crucial that every contractor you hire has a properly drafted contractor agreement in place, describing exactly what services the contractor is providing and laying out the parameters of their relationship with you.

We cannot emphasize this point enough: Well-drafted agreements are the foundation of your protection from misclassification. Your IC agreements should clearly define the scope of work, the time frame involved, their communication process with you, and the terms of payment. Additionally, the agreement should clearly state that the worker is responsible for his or her own workplace, equipment, and expenses.

Finally, don’t forget to include terms in your IC agreements protecting your intellectual property. This can be done fairly easily using work-for-hire and copyright assignment clauses. To ensure your agreements offer you the maximum protection, be sure to have us review the terms of your agreements, even those prepared by another lawyer.

3) Implement And Enforce Classification
Once you’ve identified and fixed any gaps or areas needing improvement in your IC classification policies and practices, the final step is to make certain these criteria are implemented and enforced. Your policies and agreements are worthless if they’re not actually being followed.Keep in mind, the DOL, state agencies, and courts are only concerned with what an IC is doing, not what’s in their contract or job description. If necessary, revise your company’s operating manual and procedures to ensure that the provisions of the agreements and policies are thoroughly documented, implemented, and enforced.

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. 

No matter what line of business you are in, the reality of being a successful business owner is that you open yourself up to a number of different risks—and the more successful you get, the more risks you face.

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

In fact, once a claim or lawsuit is filed, if you take certain actions to protect your assets, you could be at risk of being charged with fraud. So take action now, while there is nothing to worry about, and you still have access to a full array of options to protect your business and its assets.

While the specific protections you need will depend on the particulars of your business and personal assets, the following four strategies form the foundation of any comprehensive asset-protection plan.

1. Limit Personal Liability With Business Entities

One of the most fundamental asset-protection strategies is setting up the proper entity structure for your business. Without the correct entity in place, your personal assets would be at risk if your business ever falls into debt 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 would come after your personal assets to pay off your business debts.

By structuring your business as a limited liability company (LLC) or corporation, you can shield your personal assets from liabilities incurred by your business. Such 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 the separation of your business and personal assets, both LLCs and corporations effectively create a barrier between you and the activities of your business. In that case, creditors, clients, and other potentially litigious entities can go after your business assets, but not your personal assets. That said, you can still 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.

However, with our legal and financial systems and trusted guidance, keeping up with your entity’s administrative and compliance formalities is a snap. Contact 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 protection possible for your personal assets.

2. Invest In Business Insurance

While setting up a separate legal entity can safeguard your personal assets from your company’s liabilities, an entity will not protect your business assets—that’s where business insurance comes in. And since a single catastrophic event or lawsuit can wipe out your company, it’s vital that you have the proper insurance coverage in place from the moment you launch your business.

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

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

3. Put Sound Legal Agreements In Place

Although using proper contracts and business agreements might not seem like a major priority for asset protection, the value of these documents should never be underestimated. In fact, these agreements are designed to protect your company’s most essential elements: your personal liability, your personal and professional relationships, your intellectual property, and your 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 do-it-yourself (DIY) legal documents you find online when creating your business agreements. Instead, reach out to us, your Family Business Lawyer™ to support you in creating, reviewing, and updating your company’s legal documents—even those created by another lawyer—to ensure you have the most robust legal protection in place at all times.

In all cases, you must enter into legal 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.

What’s more, in certain cases, the terms of your business agreements can be drafted to limit the level of liability and potential damages your business would face should a contractual dispute arise. That said, when it comes to limiting liability through contracts, state laws vary widely, so your agreements should be drafted and reviewed by a business attorney licensed in our state like us, your Family Business Lawyer™.

4. Protect Your Business With Trusts

If you’re looking for the maximum level of protection, you may want to consider using specially designed trusts to safeguard your business. Such trusts are set up so that 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 creditors or lawsuits.

These asset-protection trusts are not the same as the living trusts designed to protect the inheritance you want to leave for your family from 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 during your lifetime.

Because you still retain ownership of assets held by revocable living trusts, a revocable living trust does not provide you with any asset protection from creditors. Asset protection trusts, however, are irrevocable.

The most airtight 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 or grandparent. And if you anticipate growing the value of the business significantly, this kind of trust setup can also provide extremely valuable estate tax protection. The one hitch here 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 airtight protection.

If you already have an ongoing business that you want to protect using asset protection trusts, you can transfer your business into a creditor-shielded asset protection trust, but there are many restrictions, and your protections will only begin after several years, depending on the state in which the trust is established. If this is something you’d like to consider to protect your assets from creditors that may arise in the future, or from significant estate taxes in the future, contact us now to discuss your  options.

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 you are running a business, it’s easy to give estate planning less priority than your other business matters. After all, if you’re facing challenges meeting next month’s payroll or your goals for growth over the coming quarter, concerns over your potential incapacity or death can seem far less urgent.

But the reality is considering what would happen to your business in the event of your incapacity or when you die is one of your most pressing responsibilities as a business owner. Although estate planning and business planning may seem like two separate tasks, they’re actually inexorably linked. And given that your business is likely your family’s most valuable asset, estate planning is crucial not only for your company’s continued success, but also for your loved one’s future well being.

Without a proper estate plan, your team, clients, and family could face dire consequences if something should happen to you. Yet these dangers can be fairly easily mitigated using a few basic estate planning strategies. To demonstrate why proper estate planning is so important for business owners, here are four issues your company and family are likely to encounter as a result of poor estate planning, along with the corresponding estate planning solutions you can use to prevent and/or mitigate those issues.   

Issue #1: If your estate plan consists of only a will, your estate—including your business and its assets—must go through probate when you die. 

When it comes to creating an estate plan, most people typically think of a will. While it’s possible to leave your business to someone in your will, it’s far from the ideal option. That’s because upon your death, all assets passed through a will must first go through the court process known as probate.

During probate, the court oversees your will’s administration to ensure your assets (including your business) are distributed according to your wishes. But probate can take months, or even years, to complete, and it can also be quite expensive, which can seriously disrupt your operation and its cash flow. What’s more, probate is a public process, potentially leaving your business affairs open to your competitors.

Plus, while your family and team may know how to run your company without you, they might be unable to access vital assets, such as financial accounts, until probate is concluded. Moreover, even if they can access all of the needed assets, the legal fees charged by the lawyers your family will likely have to hire to help them navigate probate can quickly deplete your company’s coffers.

And this is all assuming your will isn’t disputed during probate, which is also a real possibility, especially with a highly profitable business at stake. If your heirs disagree about whom you name to control your business and/or how the business assets should be divided, a vicious court battle can ensue and drag on for years, dividing your family and crippling your company.

Estate Planning Solution: Given the drawbacks associated with a will, a much better way to ensure your business’s continued success following your death is by placing your company in a trust: either a revocable living trust, an irrevocable trust, or some combination of the two. A trust is not required to go through probate, and all assets placed within the trust are immediately transferred to the person, or persons, of your choice in the event of your death or incapacity.

When you die, having your business held in trust would allow for the smooth transition of control of your company, without the time and expense associated with probate. Plus, trusts are not open to the public, so your company’s internal affairs would remain private, and the transfer of ownership can take place in your lawyer’s office, not a courtroom. Finally, trusts, especially irrevocable trusts, can help shield your business and its assets from creditors and lawsuits, which could threaten your company with you out of the picture.

Issue #2: If you become incapacitated by illness or injury and you haven’t legally named someone to manage your business assets, the court will choose someone for you.

Another issue with relying solely on a will is that a will only goes into effect when you die and offers no protection for your business if you’re incapacitated by accident or illness. With just a will—or no estate plan at all—the court will appoint a financial guardian or conservator to assume control of your business until you recover.

Like probate, the court process associated with guardianship can be long and costly. And whether the guardian is a family member, employee, or outside professional, it’s doubtful that individual would run your business exactly how you would want them to, and this can seriously disrupt your operation. Not to mention, having a court-appointed guardian managing your business affairs can lead to serious conflicts and strife within both your team and family, particularly if you’re out for a lengthy period.

Estate Planning Solution: One estate planning vehicle that can prevent this is a durable financial power of attorney. A durable financial power of attorney allows you to name the person you would want to run your business and handle all of your other financial affairs if you ever become unable to do so yourself. If you’re sidelined by illness or injury, this person will be granted legal authority to handle your business affairs, such as managing payroll, signing documents, and making financial decisions. 

This not only speeds the expense and delay associated with the guardianship process, but it also ensures that while you are incapacitated, your company and other financial interests will be managed by someone you trust, rather than relying on the court to choose someone for you.

Though again, most ideally having a trust and a named Trustee, would allow your business to be operated in the event of your incapacity, without the necessity for any court process at all. 

Issue #3: If your business partner dies and you don’t have a legal agreement that allows you to purchase your partner’s share of ownership in your company, along with a source of liquidity to fund that purchase, you could find yourself in business with your partner’s heirs. 

If you share ownership of your business with one or more other people, it’s crucial that you have a legally binding plan in place designating what would happen to each partner’s ownership interests should one of you leave the company, get divorced, die, or become incapaciated. Without such a plan in place, along with the funds needed to execute that plan, all sorts of potential problems and conflicts can arise.

For example, should your partner die without such a plan in place and the partner’s children inherit his share of ownership in your business, you could find yourself in business with your partner’s kids or be forced to pay an inflated price for their share of the business. A similar situation could arise should your partner get divorced and your partner’s former spouse is awarded a share of the company in the divorce settlement.

Estate Planning Solution: To prevent such conflicts, you should create a buy-sell agreement. A buy-sell agreement outlines exactly what would happen to your business in the event an owner leaves the company for any number of reasons, or when one of the owners die, becomes incapacitated, or gets divorced. 

For example, a buy-sell agreement can ensure that should certain triggering events occur—like a partner’s retirement, death, or permanent incapacity—the remaining owners are able to purchase that partner’s share of the business. In this way, an effective buy-sell agreement can prevent you from having to deal with new partners you didn’t count on. At the same time, a buy-sell can help prevent your loved ones from getting stuck owning a business they don’t want and can’t sell.

In addition to having a buy-sell agreement in place, you will also need to have a source of funding that allows the surviving owners to buy out the deceased partner’s shares. In most cases, the best way to fund your buy-sell is by purchasing life insurance. For example, the company can purchase a life insurance policy on each of the owners, and the company would receive the death benefit to purchase the deceased owner’s share of the business and/or buy out the deceased’s heirs.

Issue #4: If you name a family member to run your company after your death and you don’t provide them with a detailed plan, your business can be ruined by just a few poor decisions.

There are countless stories of family members assuming control of multi-million-dollar businesses and running things into the ground in just a short span of time. And if such massive fortunes can be squandered so easily, it’s seriously doubtful that smaller operations like yours will fare much better.

Even if your successor doesn’t destroy your company, he or she can cause serious conflicts among your staff, clients, and family simply by managing the business radically differently than you. For this reason, simply naming a successor to take the reins in your absence is not enough.

Estate Planning Solution: A comprehensive business succession plan can help ensure your company doesn’t fall apart when you pass on. Beyond simply naming a successor, such plans provide stability and security by allowing you to lay out detailed instructions for how the company should be run.

From specifying how ownership should be transferred and providing rules for compensation and promotions to establishing dispute resolution procedures, an effective succession plan can provide the new owner with a roadmap for your company’s continued success following your death or retirement.

Secure Your Business, Your Legacy, and Your Family’s Future

If you haven’t taken the time to create a proper estate plan, your business is missing one of its most essential components. During our Life & Legacy Planning Process, as your Personal Family Lawyer®, we will work with you to create a comprehensive estate plan to ensure the company and wealth you’ve worked so hard to build will survive—and thrive—no matter what happens to you.

Furthermore, every estate plan we create has built-in legacy planning services, which can greatly facilitate your ability to preserve and communicate your most treasured values, insights, stories, and mementos with the loved ones you’re leaving behind. By working with us, you can rest assured that your business and legacy will offer the maximum benefit for the people you love most. 

You see, we’ve discovered that estate planning is about far more than planning for your death and passing on your “estate” to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning. Contact us today to get started with a Family Wealth Planning Session.

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 your company has (or plans to have) employees, a well-written employee handbook is an essential communication resource between you and your team. An effective handbook can set expectations for new hires, outline company policies, simplify onboarding, as well as enhance training and enforcement. Ultimately, your handbook ensures that your team is not only aware of your rules and policies, but also the federal and state laws governing their employment.

You can use your employee handbook to introduce your team to your company and its culture, explaining what’s expected of them—and what they can expect from you. Though it should never take the place of employment agreements, your employee handbook can provide you with an extra layer of legal protection if an employee ever decides to take you to court.

Your handbook should reflect the way you do business, and whatever policies you include in it should be consistently enforced. Depending on the size and scope of your operation, the handbook’s content can vary widely. However, the following nine topics are a good place to start.  

1) General company Information: Provide a general overview of your company, its philosophy, history, and culture. In addition to this introduction, point out that the handbook is not a contract—merely a general overview of your basic policies—and as such, it offers no promise of continued employment and is subject to change with time.

2) Attendance and time-off policies: Lay out your company’s policies regarding work hours, schedules, attendance, and telecommuting. Here, you may want to discuss sick leave, PTO, family and medical leave, bereavement, jury duty, and military leave. Also, list holidays your company observes, along with your vacation policy, spelling out how vacation time is earned and how to schedule time off.

3) Anti-discrimination policies: Include a section covering the state and federal laws related to non-discrimination, equal employment opportunity, and harassment, such as Title VII and the Americans with Disabilities Act. You should let employees know how they’re expected to comply and describe the procedures you have in place for reporting violations and/or complaints.

Having a procedure in place for documenting complaints can help protect your business from legal liability for things like sexual harassment and discrimination. Just be sure you’re aware of the specific laws in your state, as they can vary greatly depending on where your offices—and employees—are located. As your Family Business Lawyer™, we can help ensure your company is in full compliance with all applicable employment laws.

4) Compensation: Discuss the methods of payment you offer like check, direct deposit, and online pay applications, along with listing pay periods and pay dates. If applicable, lay out your overtime policies as well as any additional compensation options, such as bonuses and stock options.

5) Standards of conduct: Discuss your expectations and rules for employee behavior. Depending on your company, this can include a wide variety of issues, such as dress code, smoking policy, sexual harassment, personal cell-phone use, alcohol/substance use, and inter-office dating.

Pay special attention to policies regarding web technology like email, social media, and texting. Inform your employees that such office communications are not private and may be monitored. You should also discuss any conflict-resolution procedures and/or employee discipline processes you have in place related to managing employee behavior.

6) Benefits: Include a brief summary of the benefits you offer, such as healthcare, life insurance, dental, vision, and retirement plans. Don’t go into specific details here; refer them to the official plan documents for a full explanation. That said, you should discuss who’s eligible for benefits, when and how to enroll, as well as how benefits can be changed after certain events, like marriage, divorce, and/or birth of a child.

7) Employee safety and security: Lay out your policies for creating a safe and secure workplace. This might include your compliance with any applicable Occupational Safety and Health Administration (OSHA) laws requiring employees to report accidents, injuries, potential safety hazards, safety suggestions, and health issues to management.

If applicable, include your safety policies regarding driving company vehicles, as well as any procedures for dealing with natural disasters and/or severe weather conditions. Don’t forget that by law many states require companies to inform employees of their states workers compensation policies in writing, so it may be a good idea to include those here too.

Finally, given the pandemic, you should clearly outline any rules or policies you have related to COVID-19. This may include policies and procedures concerning social distancing, masking, remote work, vaccinations, and symptom checking. 

8) Remote and hybrid work policies: If your company offers remote or hybrid work arrangements, make sure you formalize your policies. As such, your employee handbook should identify the positions eligible for remote work, provide a process for requesting and authorizing remote arrangements, and provide a process for terminating the remote arrangement. In addition, you should consider the impact remote work has on employee-related issues, such as compliance, cybersecurity, employee engagement, and liability, and clearly document any rules or policies affecting these issues.

9) Employment acknowledgement page: To verify that your employees have read and agree to abide by these rules, you should include an acknowledgement page at the end, which employees are required to sign. The acknowledgement should state that the employee has read, understands, and agrees to follow the handbook’s policies. It’s a good idea to make this page detachable, and once signed, place it in their personnel file.

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. 

Life insurance is a key component of your family’s estate plan, offering those who depend on you for their financial security a safety net in the event of your death. Whether those dependents include your spouse, children, aging parents, business associates, or all of the above, investing in life insurance is a way to say “I love you” and make certain that when you pass away, the people you love will have a reliable source of financial support to count on.

Although purchasing life insurance may seem fairly straightforward, it can actually be quite complex, especially given all of the different types of coverage available. Plus, because insurance agents often earn hefty commissions on the policies they sell, it can be challenging to determine exactly how much coverage (and what type of insurance) you actually need—and who you can trust to give you objective and accurate advice about that coverage.

With this in mind, we’ll break down the common types of life insurance coverage, explain how each of the different types work, and outline what you need to know in order to purchase a policy that will adequately address your needs, objectives, and family situation. While you should always meet with your Personal Family Lawyer® to ensure you get the proper coverage, here are a few of the most important factors to consider when shopping for a life insurance policy.

Betting On Your Life

Depending on the type and purpose of your coverage, a life insurance policy pays benefits to your family or business (whomever you choose as the beneficiary) in the event of your death. And while you don’t need it until you die, the earlier in life you purchase your policy, the less expensive your monthly or annual premiums will be. Of course, investing in life insurance early on also means that you’ll pay into the policy for a longer period of time.

By the same token, the healthier you are when you get life insurance, the less you’ll pay in premiums, because your policy is basically a bet between you and the insurance company about when you’ll die. The insurance carrier is betting they’ll be able to earn enough from the premiums you pay before you die, so that they’ll have received more than enough money to pay out the death benefit to your designated beneficiaries by the time you pass away. To that end, many carriers require a medical exam before you are issued a policy.

Life insurance comes in two main forms, which you can think of as permanent and non-permanent. With permanent coverage, such as whole life and universal life, as long as you pay the premiums, your insurance cannot be canceled, and your policy will be there and pay out when you die (unless you live longer than the guaranteed period). 

With non-permanent coverage, known as term life insurance, you pay premiums over a certain number of years—usually 10, 20, or 30—and if you have not died during that period, the insurance ends, your premiums are gone, and no benefits are paid out when you die.

Permanent vs Term Life Insurance: Which Do You Need?

To determine which type of life insurance policy you should purchase for your family—permanent or term—you’ll need to consider a number of factors. When it comes to buying life insurance for your family, you will need to die with life insurance coverage in place if any of the following three scenarios apply:

1. You are likely to have dependents—minor children, a non-working spouse, or senior parents—who rely on you for their financial needs, and you will not have enough saved up at the time of your death to provide for their needs for the rest of their life.
2. You have a business that will need a cash infusion if you die to keep it running, until it can be sold or for your loved ones to buy out a business partner.
3. You will have an estate tax bill that you want to make sure is covered by life insurance so your family doesn’t have to sell assets to pay your estate taxes.

In each of these situations, you want to make sure you have either term life insurance that will continue long enough to cover your needs, or you’ll want to consider purchasing permanent coverage.

Term Life Insurance
The coverage periods of term life policies can vary widely: 10, 15, 25, 30 years, or longer. Because your coverage expires after a certain number of years, term life insurance is much cheaper than permanent. Term policies are typically used by people who expect that they’ll only need the insurance for a certain period of time or for a certain purpose, but at some point in the future, they will no longer need the coverage.

For example, you might purchase term life coverage in order to pay off your home mortgage in the event you die before it’s paid off. Or you might have minor children, who rely on your income for their basic needs, and you need a term policy to ensure they have enough money to live on until they become financially independent should you die before they reach adulthood.

Permanent Life Insurance

Permanent life insurance comes in several different forms, such as whole life, universal life, and variable universal life. And it’s mostly used for estate tax planning, very high-end income tax planning, and can also be used as key-person insurance, which pays out benefits if you fill a vital role in a company that would need cash upon your death to continue operating. As mentioned earlier, the various forms of permanent life insurance pay a death benefit whenever you die, no matter how long you live (unless the policy contract has a termination provision at a specific age). 

Permanent life insurance policies typically have two components: the amount that goes toward paying for the life insurance, and the amount that builds up as an investment, called the “cash value” component. The cash value amount of your premium is invested tax-free, and depending on the policy, you may be able to use the cash value component in several ways: You can borrow against it throughout your lifetime (in which case you pay interest to the insurance company), you can take out cash withdrawals (in which case your death benefit would be reduced accordingly), or you can use it to pay future premiums.

There are some caveats to mention here: You often need to pay premiums on a permanent life insurance policy for 10 to 15 years before there is enough cash value to borrow against or use to pay premiums. If you access the cash value of your life insurance, you’ll reduce your death benefit, and you also may have to pay fees or taxes, depending on the policy and how much you take out. And if you withdraw too much, your coverage could terminate.

Keep in mind that life insurance is for providing your loved ones with a death benefit when you die, so you should always consult with us, your Personal Family Lawyer® and financial advisor before accessing the cash value funds.

How Much Life Insurance is the Right Amount? 

When purchasing life insurance, you’ll want to make sure you have enough term life insurance to cover the expenses that your dependents will require until they are no longer dependents, or until you are certain that you will have enough money saved up to cover the lifetime needs of those dependents.

If you have children with special needs or a non-working spouse, they will require a longer period of care after your death, compared to a family with two incomes and children who will achieve their own independence in their late 20s or early 30s. To determine the right amount of term life insurance, consult with us, your Personal Family Lawyer® or a fee-only financial planner.

If you plan on staying in your business well beyond the typical retirement age, if you are an absolutely indispensable part of your company’s continued success, or you will have estate taxes to cover upon your death, you should consider permanent life insurance. In that case, you’ll want to consult with us, as your Personal Family Lawyer®, before you meet with an insurance agent to make certain you understand the terms of the policy you are buying and why you are buying it.

Your Trusted Advisor

We all have unique assets, liabilities, and family situations, so there’s no way to know exactly what types and amounts of life insurance coverage your family needs without a full evaluation. Before you sit down with an insurance agent, meet with us, your Personal Family Lawyer® to identify the appropriate life insurance policy for your particular situation. Schedule your appointment 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.