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The pandemic has caused Americans to change their behavior in a number of different ways, and one of the most positive of these changes is related to estate planning. For the first time since the study’s inception, Caring.com’s 2021 Wills and Estate Planning Study found that young adults are now more likely to have an estate plan than middle-aged adults.

Specifically, the study found that in 2020 only 16% of Americans aged 18 to 34 reported having a will or another estate planning document, but in 2021, that percentage rose by 10 points to 26%—a 63% increase in just one year. Conversely, the 2021 study found that the number of 35 to 54 year-olds with an estate plan actually decreased from 27% in 2020 to 22% in 2021.

Since young adults are traditionally the least likely to engage in estate planning, the study’s results are particularly encouraging for this demographic. And the shift in behavior is largely due to the pandemic, with 45% of the 18 to 34 year-olds surveyed reporting that they were motivated by COVID-19 to get their estate plan started. Yet, it really shouldn’t take a global pandemic to motivate young people to take estate planning seriously.

In fact, all adults over age 18 should have some basic estate planning documents in place. And this is true regardless of how much money you have, whether you are married or single, and whether or not you have kids. On that note, if you are an adult of any age and the pandemic didn’t inspire you to create your estate plan, here are four reasons why you shouldn’t wait another day to get your plan started.

1. Incapacity Leaves Your Vulnerable

Most people assume estate planning only comes into play when they die, but that’s dead wrong—pun fully intended. Although planning for your eventual death is a big part of the process, it’s just as important—if not more so—to plan for your potential incapacity due to a serious accident or illness.

If you become incapacitated without an estate plan, your family would have to petition the court to appoint a guardian or conservator to manage your legal, financial, and medical affairs. This process can be extremely costly, time-consuming, and traumatic for everyone involved. Plus, the court could appoint a family member you’d never want in control of such crucial decisions (just look at what happened to Britney Spears), or the court could appoint a professional guardian, which would give a total stranger nearly complete control of your life and your assets.

As your Personal Family Lawyer®, we can help you put estate planning vehicles in place that grants the person(s) of your choice the immediate authority to make your medical, financial, and legal decisions for you in the event of your incapacity. We can also implement estate planning strategies that provide specific guidelines detailing exactly how you want your medical care to be managed during your incapacity, including critical end-of-life decisions.

While you may not be able to prevent a potential incapacity, meet with us your Personal Family Lawyer® to ensure you have control over how your life and assets will be managed if it ever does occur.

2. Control Who Inherits Your Assets

If you die without an estate plan, the court will decide who inherits your assets, and this can lead to all sorts of problems. Who is entitled to your property is determined by our state’s intestate succession laws, which hinge largely upon whether you are married and if you have children.

Spouses and children are given top priority, followed by your other closest living family members. If you’re single with no children, your assets typically go to your parents and siblings, and then more distant relatives, if you have no living parents or siblings. If no living relatives can be located, your assets go to the state.

Yet you can prevent all of this with proper estate planning and ensure your assets are distributed according to your wishes. Moreover, it’s important to note that state intestacy laws only apply to blood relatives, so your unmarried partners and/or close friends would get nothing if you fail to create a plan. If you want someone outside of your family to inherit your property, having an estate plan is an absolute must.

If you’re married with children and die with no estate plan, you might think things would go fairly smoothly, but that’s not always the case. If you’re married but have children from a previous relationship, for example, the court could give everything to your new spouse and leave your children with nothing. In another instance, you might be estranged from your kids or not trust them with money, but without a plan, state law controls who gets your assets, not you.

Or, in another situation, you and your spouse could both die, leaving assets to children who aren’t old enough to manage them, and requiring a long-term professional guardian to manage assets in ways you would never choose.

Moreover, dying without a plan could also cause your surviving family members to get into an ugly court battle over who should inherit your property. You may think this would never happen to your loved ones, but we see families torn apart by it all the time, even when there’s little financial wealth involved.

As your Personal Family Lawyer®, we can help you create a plan that distributes your assets in the exact manner you wish, taking into account your family dynamics and other contributing factors, so your death won’t be any more painful or expensive for your family than it needs to be.

3. Keep Your Family Out Of Court And Conflict

If you don’t have an estate plan—or if you only have a will (yes, even with a will)—you are forcing your family to go through probate upon your death. Probate is the court process for settling your estate, and even if you have a will, it’s notoriously slow, costly, and public. But with no plan at all, probate can be a total nightmare for your loved ones.

Depending on the complexity of your estate, probate can take months, or even years, to complete. And like most court proceedings, probate can be expensive. In fact, once all of your debts, taxes and court fees have been paid, there might be nothing left for your loved ones to inherit. And if there are any assets left, your family will likely have to pay hefty attorney’s fees and court costs in order to claim them.

Outside of these issues, the most burdensome part of probate is the frustration and anxiety it can cause your loved ones. In addition to grieving your death, planning your funeral, and contacting everyone you’re close with, your family will be stuck dealing with an overloaded court system that can be challenging to navigate even in the best of circumstances. Plus, the entire affair is open to the public, which can make things all the riskier for those you leave behind, especially if the wrong people take an interest in your family’s affairs.

Fortunately, the expense and drama of the court system can be almost totally avoided with proper planning. Using a trust, for example, we can ensure that your assets pass directly to your family upon your death or incapacity, without the need for any court intervention. And as long as you have planned properly, just about everything can happen in the privacy of our office and on your family’s time.

4. Minimize the Mess

Entirely separate from anything to do with court, conflict, or your legal documents, consider the reality of the mess you’ll leave behind if you do nothing. Look around yourself right now, what do you see? Someone would have to deal with all of that, if something happens to you, whether that something is an illness, injury, or death.

Then, imagine that same someone trying to figure out what you own, where it is, and how to access it? That’s the reality of the kind of mess you are subjecting someone you love to deal with if you do not get your affairs in order now.

With a Life and Legacy Plan in place (like the plans we create for our clients), you are minimizing the mess, providing clear instructions, and making it as easy as possible for the people you love to handle things for you, if and when something happens to you.

5. Ensure Your Kids Are Raised By the People You Trust

If you’re the parent of minor children, the most devastating consequence of having no estate plan is what could happen to your kids in the event of your death or incapacity. Without a plan in place naming legal guardians for your kids, it will be left for a judge to decide who cares for your children. And this could cause major heartbreak not only for your children but for your entire family.

You’d like to think that a judge would select the best person to care for your kids, but it doesn’t always work out that way. In fact, the judge could pick someone from your family you’d never want to raise them to adulthood. And if you don’t have any family or the family you do have is deemed unfit, your children could be raised by total strangers.

What’s more, if you have multiple relatives who want to care for your kids, they could end up fighting one another in court over who gets custody. This can get extremely ugly, as otherwise, well-meaning family members fight one another for years, making their lawyers wealthy, while your kids are stuck in the middle.

In light of these facts, if you have minor children, your number-one planning priority should be naming legal guardians to care for your children if anything should happen to you. This is so critical, we’ve developed a comprehensive system called the Kids Protection Plan® that guides you step-by-step through the process of creating the legal documents naming these guardians.

That said, naming legal guardians won’t keep your family out of court, as a judge is always required to finalize the legal naming of guardians in the event of death or incapacity of parents. But if it’s important to you who raises your kids if you can’t, you need to give the judge clear direction—and the Kids Protection Plan® does just that.

Additionally, you need to take steps to keep your kids out of the care of strangers over the immediate term, while the authorities figure out what to do if you’re incapacitated or dead. We handle that in a Kids Protection Plan®, too. And note MOST estate plans—even those created by lawyers—skip over this critical step because most lawyers aren’t well-trained on how to create plans for families with minor children. As a Personal Family Lawyer®, we’ve invested in specialized training to serve families with young children, and we are able to include Kids Protection Plans® with every plan we create.

Get this process started right now for free by visiting our Kids Protection Plan® website, and then schedule a follow-up visit to put in place other estate planning strategies to ensure your children are fully protected no matter what happens to you.

Stop Making Excuses

While many people said that the pandemic inspired them to see a greater need for creating an estate plan, the 2021 Caring.com study also found that more than one in three Americans still don’t think that estate planning is important—or they haven’t even thought about it at all. But as we’ve outlined here, not having an estate plan can be incredibly traumatic and costly for both you and your loved ones, who will be forced to deal with the mess you’ve left behind.

You simply cannot afford to put off creating your estate plan any longer. As your Personal Family Lawyer®, we will guide you step-by-step through the planning process to ensure you’ve taken all the proper precautions to spare your loved ones from needless stress, conflict, and expense.

However, the biggest benefit you stand to gain from putting a plan in place is the peace of mind that comes from knowing your loved ones will be provided and cared for no matter what happens to you. Don’t wait another day—contact us, your Personal Family Lawyer® right now to schedule an appointment, so you can finally check this urgent task off your to-do list.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

A comprehensive estate plan can protect the things that matter most. For many, this means their property and their family.

Including provisions for the care of your children in your estate plan is essential for peace of mind. But many parents struggle with including such provisions as naming a legal guardian for their child in their plan. Indeed, even the fictional parents in the popular television sitcom Modern Family struggled with this issue in a recent episode. While Jay and his new and much younger wife Gloria agonized and argued about who they should name as a legal guardian for their children, their children were left at risk that if something happened to Jay and Gloria before they decided and properly named guardians in a legal document, a judge would make the decision for them. Not ideal, under any circumstances.

When naming a legal guardian for your minor children, there are many factors to consider, such as whether the guardian has similar values to yours or can provide a welcoming home environment. But the toughest decisions are often the most important. Consider the outcome if you died without having legal protections for your children in place. Your children could be subject to conflict between relatives or they could be raised by someone you would never want, or in a way you wouldn’t want. They could even temporarily be taken into the care of strangers.

Identifying and naming a legal guardian for your children in your estate plan is a difficult and important task. Don’t put off naming a legal guardian for your child. While thinking about what will happen to your child if you die is difficult even for fictional parents, your kids deserve the protection and you deserve the peace of mind that a legal guardian can provide.

Unfortunately, even if you have made the hard decisions and worked with a lawyer to name legal guardians in a Will, your kids could still be at risk, because that would not take into account what happens if you become incapacitated, or if your named guardians all live far from your home, and it wouldn’t protect against anyone who may challenge your decisions. The only way to ensure your kids are raised by the people you want, in the way you want, never taken into the care of strangers (even temporarily) and that your kids would never be raised by anyone you wouldn’t want, is by creating a comprehensive Kids Protection Plan®, which only a select few lawyers, like us, are trained to prepare.

If you are ready to take that step, start by sitting down with us. As your Personal Family Lawyer®, we can walk you step by step through creating a comprehensive Kids Protection Plan® that not only names a legal guardian for your child in your Will, but also ensures your kids care is fully provided for, in the short-term and the long-term, and in the event of your incapacity.

Working with a trusted Personal Family Lawyer® will ensure your entire family is protected and cared for no matter what. Contact us today to get started!

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

Even if you put a totally solid estate plan in place, it can turn out to be worthless for the people you love if it’s not regularly updated.

Estate planning is not a one-and-done type of deal—your plan should continuously evolve along with your life circumstances and other changing conditions, such as your assets and the law.

No matter who you are, your life will inevitably change: families change, laws change, assets change, and goals change. In the absence of any major life events, we recommend reviewing your estate plan annually to make sure its terms are up to date.

Additionally, there are several common life events that require you to immediately update your plan—that is, if you want it to actually work and keep your loved ones out of court and out of conflict. With this in mind, if any of the following events occur, contact us, your Personal Family Lawyer® right away to amend your plan.

1) You get married: Marriage not only changes your relationship status; it changes your legal status. Regardless of whether it’s your first marriage or fourth, you must take the proper steps to ensure your estate plan properly reflects your current wishes and needs.

After tying the knot, some of your most pressing concerns include naming your new spouse as a beneficiary on your insurance policies and retirement accounts, granting him or her medical power of attorney and/or durable financial power of attorney (if that’s your wish), and adding him or her to your will add/or trust.

2) You get divorced: Since divorce can be one of the most stressful life events, estate planning often gets overshadowed by the other dramatic changes happening. But failing to update your plan for divorce can have terrible consequences.

Once divorce proceedings start, you’ll need to ensure your future ex is no longer eligible to receive any of your assets or make financial and medical decisions on your behalf—unless that’s your wish. Once the divorce is finalized and your property is divided, you’ll need to adjust your planning to match your new asset profile and living situation.

3) You give birth or adopt: Welcoming a new addition to your family can be a joyous occasion, but it also demands entirely new levels of planning and responsibility. At the top of your to-do list should be legally naming both long and short-term guardians for your child. Our Kids Protection Plan offers everything you need to complete this process for free right now.

Once you’ve named guardians, consider putting estate planning vehicles, such as a revocable living trust, in place for your kids. These planning tools can make certain the assets you want your child to inherit will be passed on in the most effective and beneficial way possible for everyone involved. Consult with your Personal Family Lawyer® to determine which planning strategies are best suited for your family situation.

4) A loved one dies: The death of a family member, partner, or close friend can have serious consequences for both your life and estate plan. If the person was included in your plan, you need to update it accordingly to fill any gaps his or her absence creates. From naming new beneficiaries, executors, and guardians to identifying new heirs to receive assets allocated to the deceased, make sure you address all voids the death creates as soon as possible.

5) You get seriously ill or injured: As with death, illness and injury are an unavoidable part of life. If you’ve been diagnosed with a serious illness or are involved in a life-changing accident, you may want to review the people you’ve chosen to handle your healthcare decisions as well as how those decisions should be made. The person you want to serve as your healthcare proxy can change with time, so be sure your plan reflects your current wishes.

6) You relocate to a new state: Since estate planning laws can vary widely from state to state, if you move to a different state, you’ll need to review and/or revise your plan to comply with your new home’s legal requirements. Some of these laws can be incredibly complex, so consult with us to make certain your plan will still work exactly as you desire in your new location.

7) Your assets or liabilities change significantly: Whenever your estate’s value dramatically increases or decreases, you should revisit your estate plan to ensure it still offers the maximum protection and benefits for yourself and your loved ones. Whether you inherit a fortune, take out a new loan, close your business, or change your investment portfolio, your estate plan should be adjusted accordingly.

8) You plan to buy or sell a business: If you plan to sell a business, you can engage in estate planning strategies to avoid almost all of your capital gains taxes, if you revisit your estate plan ahead of time. And, of course, if you are buying a business, you’ll want to ensure your plan is updated to take into account your succession plans for the new business.

For every business you own, you should consider creating a buy-sell agreement and/or a business succession plan to protect both your business and your family in case something happens to you. In your estate plan, you can not only decide who will take over your role as the company’s owner should something happen to you, but you can also provide him or her with a road map for how the business should be run in your absence by creating a comprehensive business succession plan.

At the same time, you should consult with your Personal Family Lawyer® to take advantage of the numerous tax-savings opportunities that may be available when you buy or sell your business. The tax laws are constantly changing, so you should consult with us to amend your estate plan to achieve the maximum level of tax savings possible in light of the latest changes to the tax code.

A Common Mistake

Outside of not creating any estate plan at all, one of the most common planning mistakes we encounter is when we get called by the loved ones of someone who has become incapacitated or died with a plan that no longer works because it has not been properly updated. Unfortunately, once something happens to you, it’s too late to adjust your plan, and the loved ones you leave behind are forced to deal with the aftermath.

Keeping your estate plan updated is so important, we’ve created proprietary systems designed to ensure these changes are made for all of our clients, so you don’t need to worry about whether you’ve overlooked anything like your family, the law, and your assets change over time. Be sure to ask us about these systems during your visit.

Furthermore, because your plan is designed to protect and provide for your loved ones in the event of your death or incapacity, as your Personal Family Lawyer®, we’re not just here to serve you—we’re here to serve your entire family. We take the time to get to know your family members and include them in the planning process, so everyone affected by your plan is well-aware of what your latest planning strategies are and why you made the choices you did, along with knowing exactly what they need to do if something happens to you.

For The Love of Your Family

As your Personal Family Lawyer®, our estate planning services go far beyond simply creating documents and then never seeing you again. We 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.

Plus, we support you in not only creating a plan that keeps your family out of court and out of conflict in the event of your death or incapacity, but we will also ensure that your plan is regularly updated to make certain that it works and is there for your family when you cannot be. Contact us today to get started.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

Yours, mine and ours … in today’s modern family, it’s oh so common. The blended family is the product of 2nd (or more) marriages, in which one or more of the parties comes with children from a prior marriage. And then, they may even go on to have children together.

If you have or are part of a blended family, it’s important to understand how estate planning could be exactly what you need to keep your family out of conflict and in love, both during life, in the event of incapacity, and when one or more of the senior generation (read: parents) dies.

Let’s begin with understanding where potential conflicts could arise when you have a blended family.

Consider the ones you love

If you have children from a prior marriage, and you become incapacitated or die, leaving everything to your new spouse or partner, there is almost certain to be some conflict (whether spoken or not) between your children and new spouse. Your children may feel unloved, forgotten or resentful.

You may think that this can be avoided by leaving everything to your new spouse or partner, and then on their death, to your children. But this too could set up a scenario where your children feel the need to monitor your spouse/partner’s use of your assets, during their life. And that may not be what you want.

Conversely, you may have a partner or spouse that you have not legally planned for, who you would want to inherit some or all of your assets. But, as things stand right now, your entire estate may go to your children from a prior marriage. This could create a reality where your current partner even gets kicked out of the house you share if something happens to you before your plan is updated.

You can avoid all of this (and even use the estate planning process to build stronger bonds with those you love) by having clear planning in place that has been discussed with your children and your new spouse or partner. We facilitate this as part of the planning process for all blended families.

If you are the child of a parent who has remarried or re-partnered, after a divorce or death, of your other parent, you may want to bring these issues to your parent’s attention.

If you are ready to create a well-thought-out estate plan for your blended family, start by sitting down with us, your Personal Family Lawyer®. During your Family Wealth Planning Session™, we can help you plan for the needs of your unique family and ensure everything and everyone you love is protected and provided for as you wish – including you. Our estate planning process guides you to protect and preserve what matters most. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will support your thinking on what you own, what’s most important to you, and what you can do to ensure your family is taken care of. You can schedule your Family Wealth Planning Session™ online with us or give us a call if you have any questions. We’re happy to help!

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

When you hear the words, “trust fund,” do you conjure up images of stately mansions and party yachts? A trust fund – or trust – is actually a great estate planning tool for many people with a wide range of incomes who want to accomplish a specific purpose with their money.

Simply put, a trust is just a vehicle used to transfer assets, and trusts are especially useful for parents of minor children as well as those who wish to spare their beneficiaries the hassle of going to Court in the event of their incapacity or death.

And why would you want to keep your family out of court (known as avoiding probate)?

Perhaps you’d like to keep private the details of the assets you are leaving your heirs. Leaving assets via a will that must go through probate to go into effect makes your estate a matter of public record. A trust is a private document and distributes assets upon your death without the need for probate, which can tie up assets for a long period of time in court.

The court process can take longer than is necessary and keep your family from getting access to your assets as quickly as they want or need them.

If you have minor children, you need to create a trust in order to leave your assets to them since minors cannot inherit directly. You will want to name a trustee to manage those assets for your children. Even if your children are adults, a trust can help protect assets you leave for them from creditors, legal judgments, divorce, or even their poor money management habits.

You can even establish a trust for yourself in case you become incapacitated and cannot manage your own finances at some future time. The trust assets are managed by a successor trustee, which avoids the need for a court-appointed conservator if you become incapacitated.

Trusts are also wonderful tools for those who are members of a blended family. If you are remarried and have children from a previous marriage, you can provide for your current spouse while ensuring your assets pass to your children from another marriage using a by-pass trust.

With this kind of trust, the assets will pass to your children free of estate tax upon the death of your surviving spouse.

As you can see, there are many reasons to create a trust, and being rich isn’t necessarily one of them. You can learn more about how a trust might benefit you or your family by scheduling a Family Wealth Planning Session™, where we can identify the best strategies that are unique to you and your family.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

On September 13, 2021, Democrats in the House of Representatives released a new $3.5 trillion proposed spending plan that includes a wide array of changes to federal tax laws. Specifically, the Democrats proposed a number of significant tax increases and other changes to fund the plan, including increases to personal income tax rates and the capital gains tax rate, along with a major reduction to the federal estate and gift tax exclusion and new restrictions on Grantor Trusts that would basically eliminate such trust’s ability to be used as planning vehicles.

While the proposed legislation is still under consideration and far from being finalized, given the broad-reaching impact these changes stand to have, we strongly encourage you to contact us now if you would be affected by the proposed legislation should it eventually pass. With the exception of capital gains rate increase, which could go into effect on transactions that occur on or after Sept. 13, 2021, most of the proposed changes would be effective after December 31, 2021, meaning that you do have time to plan now.

Due to the time it takes to plan and execute some of the financial and estate planning actions we’d support you with, we suggest you start strategizing now. However, please note that we expect to be quite busy with those who do decide to take action before year’s end, so please contact us as soon as possible to get onto the calendar, if you intend to make changes to your estate plan this year.

That way, you’ll have plenty of time to take appropriate action before the end of 2021. In addition, whether you will be impacted by any of these proposed changes or not, if you know that this is the time to get your affairs in order and have trusted guidance to do so, please contact us, your Personal Family Lawyer® as well, so we can get your planning handled before year’s end. Now is the time to get started.

Last week in part one, we discussed the new bill’s proposed changes to tax rates and estate planning vehicles, including several different types of trusts. Here, in part two, we’ll focus on what you should do now, given that the tax law is in flux and we may not have clear answers until close to the end of the year.

If you read last week’s article, or if you’ve been following the news about the coming changes, you know that none of us know what will ultimately happen—or even when we will know the final outcome. Given that the 2017 Tax Cuts and Jobs Act was not passed until December 2017, and the same thing could happen here, with some provisions potentially impacting your taxes this year, as well as provisions that could impact decisions you’d make for next year, but those decisions must be made now, what should you do?

This is exactly why we say it’s so important for you to have a relationship with a Personal Family Lawyer® that is ongoing, consistent, and allows you to get the support you need when you need it. As you likely well know, the one constant in life is change.

You acquire new assets. A child grows up and moves out. You change jobs, or start a new business, or leave an old one. A parent needs more care than before, and eventually dies.

In our book, life in motion is a life well-lived. And when you have a life in motion, you need ongoing direction, guidance, and support from a trusted advisor you can count on to be there for you through it all.

That’s us.

We are tracking the tax law changes, so you don’t need to—we know you’ve got far more important things to focus on in your life. We are consulting with financial advisors, CPAs, and our own mentors to ensure we’ve got our hearts and minds focused on the coming changes, so we can keep you informed and help you make the best decisions for yourself and the people you love.

That said, here’s what we know for sure—this last quarter of 2021 is going to be quite full, and it’s going to fly by. So if you have not already taken action to get your affairs in order, here’s what you should do now to be most prepared for whatever new changes eventually come down the pike:

1. Engage with us as your Personal Family Lawyer®, and get started with our Family Wealth Planning Session (FWPS).
2. By engaging with the FWPS process, you’ll get a clear view into what you have, where it is, and we will be on your team with clarity about what will be impacted by the new tax law changes, so we can get into action for you when the final bill is passed by the end of the year.
3. If you have already done your planning with us, and you think you may be impacted by any of the tax law changes we wrote about last week—most notably if you have an estate valued over $5 million or you have a business that you think could grow to over $5 million before your death, you have retirement account assets valued in excess of $10 million, or you have retirement account assets that are invested in a self-directed IRA in non-registered investments—get in touch with us immediately, so we can schedule a meeting with you, your financial advisors, and your CPA to begin to plan strategic action now.
4. NOTE: Even if the size of your estate is far less than this and you have not engaged in any tax planning yet, you might think you can continue to put it off. But here’s why you should not wait to plan, even if you have a small estate.

Whether you will be impacted by the tax law changes or not, if you were to become incapacitated due to illness or injury today, or if you were to die tomorrow, your family would be left with a mess. Even if you have done your own estate planning with a DIY online service, your family would still be left with a mess. No matter how the tax laws change, if you have not planned, your family would be left with a mess. And it does not have to—and frankly should not—be that way. If you’ve ever experienced such events in your own family, you know the cost of such a mess.

If you haven’t already, consider what it is that is keeping you from getting your affairs in order. Then, think about the potential cost to both you and your family if you don’t take the time to properly manage your affairs, and your loved ones are forced to do it for you.

This is exactly why we’ve structured our firm as we have: Our number-one goal is to make the planning process as affordable, effective, and easy for you, while providing the most benefit beyond just dollars and cents.

Most of our clients leave the initial Family Wealth Planning Session process saying, “Wow, I never expected to feel like this after estate planning.” Our process is designed to help you be a better parent, a better business owner (if you own a business), and a better citizen of our community—and that’s exactly how you’ll feel when you are done.

So again, we don’t know yet exactly what the government will do about the coming tax law changes. What we do know is there will be change. And with that in mind, we are reaching out directly to our clients who we already know will be impacted by that change.

If you are not yet a client, contact us to get started today. It’s going to be an incredibly busy few months until the year’s end, and that starts right now. We’d love to help you get your affairs in order, so you can be prepared for whatever happens.

Don’t Wait To Take Action

If your family stands to be impacted by any of the new bill’s proposed changes, it’s vital for you to take action as soon as possible to ensure that whatever changes to your planning that need to be made can be planned and executed before the end of the year—or in some cases, even sooner. Not only that, but given the number of proposed changes that are coming, financial advisors, CPAs, and estate planners are sure to be extremely busy in the coming months.

With such limited time, don’t wait to schedule an appointment with your Personal Family Lawyer®. The sooner you meet with us, the sooner we can make certain that you can properly amend your planning strategies to minimize the impacts of this new bill on your financial, retirement, and estate planning.

And as we mentioned above, even if you have a relatively modest estate, and you know that you won’t be impacted by any of the new tax law changes, you still need to get your affairs in order to protect and provide for your family should something happen to you. If that’s you, contact us, your Personal Family Lawyer® today to schedule a Family Wealth Planning Session, so you can finally take care of your estate planning and do right by those you love. Don’t put it off any longer—contact us today to get started.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

On September 13, 2021, Democrats in the House of Representatives released a new $3.5 trillion proposed spending plan that includes a wide array of changes to federal tax laws. Specifically, the Democrats have proposed a number of significant tax increases and other changes to fund the plan, including increases to personal income tax rates and the capital gains tax rate, along with a major reduction to the federal estate and gift tax exclusion and new restrictions on Grantor Trusts that would basically eliminate such trust’s ability to be used as planning vehicles.

While the proposed legislation is still under consideration and far from being finalized, given the broad-reaching impact these changes stand to have, we strongly encourage you to take action now if you would be affected by the proposed legislation if it does pass. With the exception of capital gains rate increase, which could go into effect on transactions that occur on or after Sept. 13, 2021, most of the proposed changes would be effective after December 31, 2021, meaning that you have time to plan now.

That said, due to the time it takes to plan and execute some of the financial and estate planning actions we’d need to support you with, we suggest you start strategizing now. That way, you’ll have plenty of time to take the appropriate action before the end of the year. With that in mind, here we’ll outline how the proposed tax law changes stand to affect your financial, tax, and estate planning, so you can contact us if you would be impacted if the new bill does pass.

1. Increase in Individual Income Tax Rates

Proposed changes: Under the proposed legislation, the top personal income tax rate would increase from 37% to 39.6% for married individuals filing jointly with taxable income over $450,000; single taxpayers with taxable income over $400,000; and married individuals filing separate returns with income over $225,000. Additionally, this increase would also apply to trusts and estates with taxable income over $12,500.

The bill would also create a new 3% surcharge on individuals with modified adjusted gross income (AGI) exceeding $5 million (or $2.5 million for married individuals filing separately) as well as on trusts with AGI greater than $100,000.

Additionally, the net investment income tax (NIIT) would be extended to cover net investment income derived in the ordinary course of a trade or business for individuals with taxable income of greater than $400,000 for individuals or $500,000 for those filing jointly, as well as for trusts and estates. The NIIT tax does not apply to earnings already subject to FICA tax.

These proposed changes are set to be effective for tax years beginning after December 31, 2021.

Potential planning solutions: Since these increases will apply to taxable years beginning after December 31, 2021, we suggest you earn as much as you can this year and consider pushing deductions into next year, while you can still take advantage of historically low tax rates. Keep in mind that if you have a high income and decide to put off planning, you may pay much more in income taxes because of the 3% surcharge on high income and the 3.8% NIIT that will now apply to active business income for high incomes.

Moreover, the increase in personal income tax rates, along with the new 3% surcharge and changes to the NIIT have critical importance to estate planning, since the highest rate applies to estates and trusts with taxable income over $12,500, which is a drastically lower income level at which the highest tax rates apply to individuals, such as beneficiaries of a trust. Given these changes, it may be worth accelerating income for estate and trusts in 2021, while rates are lower.

For so-called “complex” or “non-grantor trusts” that pay their own income tax, distributions may carry out income to the beneficiary in order to be taxed at a lower rate. That said, the benefits of a possibly lower tax rate should be weighed against the impact of an outright distribution of funds to a beneficiary and the inclusion of those funds in the beneficiary’s estate if the distributed funds are not spent. For example, would an outright distribution negatively impact a beneficiary with poor money-management skills or issues with substance abuse?

If you will earn more than these income limits this year, meet with your Personal Family Lawyer® as soon as possible to discuss a plan to adapt your financial and estate planning to offset the impact of these changes.

2. Increase in Capital Gains Tax Rates

Proposed changes: The new bill would increase the long-term capital gains tax rate from 20% to 25% on individuals with taxable income over $400,000. The increase is set to be effective for the tax year ending after September 13, 2021, and it also applies to qualified dividends. However, the bill includes a transition rule that provides that any transactions completed on or before September 13, 2021—or subject to a binding written contract entered into on or before September 13, 2021 (even if the transaction closes after September 13)—are subject to the prior 20% tax rate.

Any capital gains recognized after September 13, 2021, would be subject to the new 25% rate. So, for example, if you entered into a contract to sell your home in May 2021, and the sale closes in November 2021 and exceeds your exemption, your transaction would be subject to the 20% rate. However, if the bill passes, and you enter into a contract after September 13, your tax rate will be 25%. This applies equally to sales of appreciated stock and other investments.

Potential planning solutions: While it may seem that it’s too late to do anything about your capital gains on sales at this point, it’s not, but it will require planning. This means if you are selling any assets this year that will result in significant capital gains tax to pay, contact us now to discuss your options. Once the sale happens, it’s too late. Don’t wait.

3. Reduction in Estate and Gift Tax Exclusion

Proposed changes: The bill would dramatically reduce the federal estate and gift tax exclusion from its current level of $11.7 million for individuals and $23.4 million for married couples to its 2010 level of $5 million per individual, adjusted for inflation, which would bring the estate and gift tax “coupon” to roughly $6 million.

The proposed reduction would apply to estates of decedents who die or make gifts after December 31, 2021. This reduction would expose estates and gifts above the exclusion amount to a 40% federal estate tax.

Potential planning solutions: In light of the proposed reduction, individuals with assets in excess of $6 million (including life insurance) should take a “use it or lose it” approach to gifting, and make any gifts before the end of the year to qualify for the higher exclusion rate. That said, some families should consider making such gifts before the legislation is officially passed due to the changes to Grantor Trusts and other estate planning strategies described below. If your estate is already over the $6 million exemption, or you expect it to be in the future, contact us now. Again, do not wait.

4. New Restrictions On Grantor Trusts

Proposed changes: The new bill targets Grantor Trusts and would effectively shut them down as planning vehicles. Currently, a Grantor Trust is a trust that can be considered separate and apart from the grantor (individual who creates the trust) and contributor to the trust for estate tax purposes, but be considered as owned by the grantor for income tax purposes.

Since the grantor is considered the owner of the trust for income tax purposes, transactions between the trust and the grantor are “disregarded,” meaning that assets can be sold or exchanged with the trust, without triggering any income tax consequences. However, that same trust can also be used to move assets outside of your estate for estate tax purposes, freezing the value of those assets at their current value, such that when you die, any appreciation in the value of those assets is not taxed for estate tax purposes, saving your family 40% or more.

The new bill provides that any Grantor Trust created on or after the date of the legislation’s enactment will now be included in your estate for estate tax purposes. Distributions from Grantor Trusts (other than to the grantor or the grantor’s spouse) would be treated as gifts made by the grantor, and therefore subject to the gift tax exemption. If the bill is enacted and Grantor Trust ceases to be treated as such during the grantor’s life, the grantor would be deemed to make a gift of the trust assets, and sales of assets between a grantor and the Grantor Trust would no longer be disregarded for income tax purposes.

The good news is that under the new bill Grantor Trusts established and funded before the enactment of the new law would be “grandfathered” in, as would promissory notes that are in place at the time of the law’s enactment.

Potential planning solutions: Contact us if your assets are above the proposed estate tax exemption amount of approximately $6 million, or you anticipate they will be, so we can move some of your assets outside of your estate this year.

5. Impact To Discounts & Other Estate Planning Vehicles

Proposed changes: The bill would not only affect the use of Grantor Trusts, but it would also eliminate valuation discounts, unless the asset gifted or sold is an “active trade or business.” Moreover, depending upon how the legislation is applied and interpreted, the new bill may also prevent planners from being able to use irrevocable life insurance trusts (ILITs)—at least to some degree (more about ILITs below)—as well as Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), and Grantor Charitable Lead Annuity Trusts (CLATs).

Irrevocable life insurance trusts (ILITs) are among the most commonly used irrevocable trusts for estate planning, and since most ILITs have traditionally been structured as Grantor Trusts, these trusts will be largely undermined by the new bill. Since the trust would be included in your estate, new ILITs will no longer be feasible. As a workaround, new ILITs may need to be structured as non-Grantor Trusts to avoid estate inclusion.

However, this structure will create an array of problems. First, it will require the trust to expressly prohibit trust income from being used to pay life insurance premiums on your life as the creator of the trust. Second, for those existing trusts that are grandfathered in, no new gifts should be made to the ILIT, or a portion of the trust assets (including life insurance proceeds) will also be included in your estate.

Potential planning solutions: If your estate plan includes any of these trusts or planning strategies, contact us right away for guidance in amending your estate plan to offset the impact of these changes.

As we approach the end of 2021, if your family stands to be impacted by any of these changes, it’s imperative to take action as quickly as possible to ensure that whatever actions that need to be taken can be planned and executed before the end of the year. Not only that, but given the number of proposed changes that are coming, financial advisors and estate planners are sure to be extremely busy in the coming months.

Given this, don’t wait to schedule an appointment with your Personal Family Lawyer®. The sooner you meet with us, the sooner we can make certain that you can amend your planning strategies accordingly to minimize the impacts of this new bill on your financial and estate planning.

Next week in part two, we’ll discuss the rest of the changes proposed in this new bill, with a primary focus on the bill’s impact on retirement planning.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

As the host of the wildly popular The Joy of Painting TV series on PBS, Bob Ross became a pop-culture icon, who was equally famous for his giant head of hair, soothing baritone voice, and folksy demeanor as he was for his iconic landscape paintings. And like so many other artists, Bob’s artwork and image would become even more popular following Bob’s death in 1995.

Bob’s philosophy in both painting and life was that there “were no mistakes in life… just happy little accidents.” Sadly, as detailed in the recent Netflix documentary Bob Ross: Happy Accidents, Betrayal & Greed, Bob’s failure to coordinate his business agreements with his estate plan was anything but happy, leaving his only son largely unable to benefit from his father’s fame and fortune.

Bob’s planning failures led to an ugly court battle between his former business partners and his family, who were fighting for control of the lucrative intellectual property rights to the Bob Ross brand. And while Bob’s son Steve ultimately lost his fight to benefit from the business empire built on his father’s persona and painting skills, here in part two, we’ll explain the steps you can take to ensure that your loved ones don’t suffer the same fate and are able to fully benefit from all of your business assets following your death.

Ensure Your Business Agreements Are In Accord With Your Estate Plan

As we learned last week, although Bob intended to leave all of his intellectual property rights to his son, Steve, and half-brother, Jimmie Cox, and he even changed his estate plan to transfer those rights to them, the court ruled that Bob couldn’t transfer those rights because Bob didn’t own those rights to begin with. The court ruled that Bob had transferred all rights to his intellectual property to Bob Ross Inc. (BRI) during his lifetime via oral contracts, and therefore it didn’t matter what his estate plan said, because those rights weren’t Bob’s to give away.

Bob started BRI in 1985, with his wife Jane Ross, along with husband and wife Walter and Annette Kowalski. The four were initially equal partners in the corporation, but following Jane’s death in 1992, the bylaws of BRI required that Jane’s share in the company be divided equally among the surviving three partners. As a result, Bob was reduced to owning just one-third of the company that bore his name and likeness, and this was the structure in place upon Bob’s death in 1995.

Bob’s situation is fairly common among business owners. When business owners first create their governing documents—operating agreements, bylaws, partnership agreements, etc.—they often aren’t thinking ahead about what would happen to their business and its assets when they die or if they become incapacitated. And because of this, they don’t take the proper precautions to ensure that their business assets are properly protected by their estate plan should something happen to them.

In other cases—and as we saw with Bob—business owners falsely assume that their estate plan will override any business agreements they are party to, and therefore any assets they pass to their loved ones via their will or trust will transfer to their intended beneficiaries regardless of what’s in their business agreements. However, this is false, and in fact, the very opposite is true. Whether it’s a partnership, LLC, corporation, or some other business structure, your estate plan does not have the power to modify, undo, or override any business agreements to which you are a party.

The bottom line: When it comes to the ownership of business assets, the legal agreements governing the ownership rights of a business are what determines who owns the business and its assets upon the death of an owner, regardless of what your estate plan says. This is why it’s essential that you make certain that any business agreements you enter into are in coordination with your estate plan. We can help you do this as long as we know about all of your business holdings, including your intellectual property and business entities when we handle your estate planning with you.

As we saw with Bob’s case, failing to properly coordinate your business agreements with your estate plan can lead to disastrous consequences. Fortunately, as your Personal Family Lawyer®, we can ensure that your business agreements are fully coordinated and integrated with your estate plan, so all of your business assets, including any intellectual property you own, will pass seamlessly to your loved ones in the event of your death or incapacity.

Whether your business is just getting started or you’ve been in business for years, here are the steps you need to take to avoid making the same not-so-happy mistakes that affected Bob Ross and his family.

The Right Way To Plan

The ideal time to coordinate your business agreements with your estate plan is when you first launch your business. This way you can address the ownership rights to all of your business assets, including any intellectual property, from the very start and incorporate those ownership rights into your company’s governing documents.

If your business has multiple owners, you’ll want to enter into the process of making agreements with your partners, and not just rely on form documents, or sign documents you have not fully understood. All too often, business agreements are created via form or template documents that do not give any real consideration to your most valuable assets. If that’s the case for you, now is not too late to make a change—but tomorrow might be.

Make certain that the governing documents address the ownership rights to all of the company’s assets, including any intellectual property, intentionally. And be sure to consider what happens to the company, and its assets, upon a sale, death, or disability of each owner of the company.

To ensure your intellectual property (and all of the assets of your business) are properly considered in your governing documents, you should consult with a trusted attorney like me, your Personal Family Lawyer®, who has experience in both intellectual property and estate planning (or can bring in the proper intellectual property advisors), to ensure that everything is documented and in alignment with your wishes, and your most valuable assets are properly handled.

If you are like Bob and many other business owners and you failed to coordinate your company’s governing documents with your estate plan at the start of your business, you’ll need to hire a lawyer like us to review your company’s existing governing documents to determine how the documents address the ownership and succession of the company’s assets. And if you haven’t created your company’s governing documents yet, now is the time to put these essential legal agreements in place.

When reviewing your governing documents, you’ll want to ensure that they properly address the ownership rights to your company’s intellectual property and other assets upon an owner’s death or incapacity, as well as upon the sale or dissolution of the business. If upon reviewing the governing documents, you find that the ownership rights are not in alignment with your estate planning goals, it may be possible to renegotiate the agreement with the other owners and amend the documents to better fit with your aims.

If renegotiating the ownership rights proves infeasible, at least your Personal Family Lawyer® will be aware of this fact, and we may be able to come up with an alternative solution to transfer ownership of these assets to your heirs. It’s certainly not the ideal situation, but it’s far better to learn this now while you are still alive, rather than learning it after your death as happened with Bob’s son Steve.

Succession Planning

Once you’ve ensured the proper distribution of your intellectual property and other business assets through your company’s governing documents, you must then use your estate plan to protect and pass on the ownership rights to your share of the business interests you own. This often takes place through a coordinated business succession planning process.

Unfortunately, far too few business owners take the time to prepare for their company’s continued success following their retirement, death, or incapacity. Yet, creating a comprehensive succession plan as part of your overall estate plan is just as crucial as any other planning you do for your business, if not more so.

As we saw with Bob Ross, not planning for the future of your business after you are no longer in the picture can have terrible consequences for your family if (and when) something should happen to you. Whether you exit your business with a sale, your retirement, your incapacity, or as a result of your death, there will come a point when it’s time for you to exit your business. And a succession plan is designed to ensure that your company will continue to prosper once you are no longer running the show.

A Road Map For The Future Of Your Business

That said, when it comes to estate and succession planning, it can be difficult to even identify clear goals for a future that doesn’t involve you. This is just natural. If planning were simply another operations issue that needed solving, you’d have a plan in place in no time flat. However, multi-generational planning is by default something you’re almost certainly unfamiliar with.

In fact, business strategies that worked for your grandfather and father might not have worked for you. And by the same token, what worked for you may not work for coming generations. This can make it feel impossible to even know where to begin with your plan, much less identify what problems might arise and how to address them. But start you must.

This is where experienced estate planning lawyers like us come in. We can guide and support you to create a comprehensive estate plan to ensure the company and wealth you’ve worked so hard to build will last for generations to come. In particular, this includes putting in place a long-term business succession plan that not only names your successor but also provides a detailed roadmap for him or her to follow when you’re no longer around to offer your wisdom and advice.

If you’ve yet to create an estate plan that includes a comprehensive succession plan for your business’s future, meet with your Personal Family Lawyer® right away to take care of this vital responsibility. And even if you already have a plan in place, you should have us review it to make certain you’ve covered all your bases, as this is one of the areas we see most often overlooked in estate planning. Taking these actions will not only help shield your company and family from unforeseen tragedy but also give you the peace of mind needed to take your business to the next level.

Leveraging Your Intellectual Property For Future Generations

After you’ve decided how you want your business to be run in your absence and formally spelled this out in your succession plan, you may want to consider separating your operating activities and your intellectual property into separate entities. In that case, you’ll want to consider which estate planning vehicles are best suited for protecting and transferring the ownership of your intellectual property rights to your heirs. In most cases, the best planning vehicle for this purpose is going to be a trust, either a revocable living trust, an irrevocable trust, or a combination of the two.

Using a trust, you can spell out exactly how you’d like your intellectual property distributed to your beneficiaries. In addition to considering the best way to distribute your intellectual property to your beneficiaries, you’ll also want to consider which of your loved ones is best suited for owning and managing these intangible assets, as well as how you’d like those assets to be used for the benefit of your loved ones.

Intellectual property, such as trademarks, copyrights, and patents, can be leveraged to create revenue in a number of different ways. Your beneficiaries could simply sell your intellectual property assets outright, or they could use the intellectual property as collateral to take out a loan. Or they could decide to license the use of your intellectual property to others, which can generate an ongoing revenue stream that can last indefinitely. Indeed, as we saw with Bob Ross’s case when properly managed, the licensing fees for a company’s intellectual property can generate millions in revenue, and that income stream has the potential to continue for generations to come.

Avoiding A Not-So-Happy Accident

Don’t let what happened to Bob Ross’s family happen to yours. If you own a business, it’s absolutely crucial that you put in place an effective estate plan, including a comprehensive succession plan, to ensure that all of the wealth and assets you’ve worked so hard to build will be properly passed on to your loved ones in the event of your death or incapacity.

Furthermore, you must also ensure that your estate plan is properly coordinated with your business agreements, or your estate plan may not work as intended. And in that case, your loved ones may find themselves in the same situation as Bob’s son Steve, who was left with virtually nothing, while the business built on his father’s name and persona continues to bring in millions of dollars every year.

As your Personal Family Lawyer®, we know that your business is one of your family’s most precious assets, and with our support and guidance, we can ensure that it will continue to provide the maximum benefit for your loved ones following your death or incapacity. If you haven’t taken the time to put proper estate planning in place, consult with us, your Personal Family Lawyer® today, so we can help you find the estate planning strategies best suited for your asset profile and family dynamics.

And if you already have an estate plan—even one created by another lawyer—you should have us review your plan to ensure it will work as intended and that it’s properly coordinated with your business agreements. Contact us today to get started.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

As the host of the wildly popular The Joy of Painting TV series on PBS, Bob Ross became a pop-culture icon, who was equally famous for his giant head of hair, soothing baritone voice, and folksy demeanor as he was for his iconic landscape paintings. And like so many other artists, Bob’s artwork and image would become even more popular following Bob’s death in 1995.

Bob’s philosophy in both painting and life was that there “were no mistakes in life… just happy little accidents.” Sadly, as detailed in the recent Netflix documentary Bob Ross: Happy Accidents, Betrayal & Greed, Bob’s failure to coordinate his business agreements with his estate plan was anything but happy, leaving his only son largely unable to benefit from his father’s fame and fortune.

As we’ll discuss in this series, Bob’s planning failures have led to an ugly court battle between his former business partners and his family, who were fighting for control of the lucrative intellectual property rights to the Bob Ross brand. And while Bob’s son Steve ultimately lost his fight to benefit from the business empire built on his father’s persona and painting skills, we’ll explain the steps you can take to ensure that your loved ones don’t suffer the same fate and are able to fully benefit from all of your business assets following your death.

Building Bob Ross

After meeting Bob at one of his early in-person painting classes, husband and wife duo Walter and Annette Kowalski convinced Bob to go into business with them, launching Bob Ross Inc. (BRI) in 1985. According to the Daily Beast, the corporation, which was formed in Virginia, initially consisted of four equal partners: Bob Ross and his wife Jane Ross, along with Walter and Annette.

With the Kowalski’s financial backing, BRI’s initial business model had Bob teaching a series of in-person painting classes up and down the U.S. east coast at which they sold painting supplies and art instruction manuals. But after signing on with PBS for The Joy of Painting series and launching their own line of Bob Ross-brand painting and art supplies, business began to take off.

From 1986 through 1994, BRI registered several trademarks using Bob Ross’ name and likeness, and the company also signed several licensing agreements with third parties, all with Bob’s consent. All four individuals—Bob, Jane, Walter, and Annette—were technically equal partners in the corporation, but it was widely acknowledged that Bob was the one in charge, as well as the one with the talent and the face of the brand.

In fact, when The Joy of Painting became one of PBS’s top-ranked shows at the close of the 1980s, the frizzy-headed artist grew into a bona-fide celebrity. Bob made appearances on popular talk shows of the day like Regis and Kathy Lee and Donahue, and Bob was also a featured star at the Grand Ole Opry in Nashville. At the peak of his fame, Bob even had plans to launch his own musical based on his TV show.

The success of the show and Bob’s fame boosted sales of Bob Ross art supplies, which branched out to include books and videos in addition to the paints and brushes adorned with Bob’s name and likeness. BRI eventually started offering painting workshops around the U.S., with teachers trained in Bob’s method doing the instruction.

All of this translated to significant financial success for the company. Based on records made public during the lawsuits over Bob’s estate, BRI was bringing in roughly a half-million dollars each year for the four partners to share, according to the Daily Beast. But the good times wouldn’t last.

Things Fall Apart

Things started to go downhill in 1992 when Bob’s wife Jane passed away from cancer. Following her death, the structure of BRI required that Jane’s share in the company be divided equally among the surviving three partners. As a result, Bob was reduced to owning just one-third of the company that bore his name and likeness. This was likely not understood by the Ross’s when they signed their partnership agreements.

Shortly after Jane’s death, Bob developed lymphoma. In 1994, while battling cancer, the Kowalskis offered Bob a deal. They reportedly faxed him an agreement that would give them all of Bob’s intellectual property rights as well as all of his artistic works. In return, the Kowalskis would pay Ross or his surviving heirs 10% of BRI’s profits, but only for the next 10 years. After 10 years was up, the Kowalskis would own all income from Bob Ross, Inc—forever.

Not surprisingly, Bob refused to sign the agreement, and he was reportedly infuriated that the Kowalskis would even ask him to sign such a one-sided deal. In an attempt to protect his rights to his business and intellectual property assets, Bob made several last-minute changes to his estate plan. The most notable change was made to Bob’s trust just two months before his death.

In the amendment to the Bob Ross Trust, Bob added a clause that specified that all intellectual property rights to Bob’s “name, likeness, voice, and visual, written, or otherwise recorded work” would pass to his son, Steve, and Bob’s half-brother, Jimmie Cox. Specifically, Bob assigned 51% of the interest to all of his intellectual property to Jimmie and 49% to Steve.

Oddly, though Bob’s estate plan specifically left his intellectual property to Steve and Jimmie, Jimmie apparently never shared this fact with Steve, who would only learn of the changes to his father’s estate plan some two decades later.

Grand Theft Bob

Bob Ross died on July 4, 1995, at age 52. Upon his death, his estate was valued at $1.3 million, half of which was his one-third share in BRI. Unable to gain full control over Bob’s share of BRI while Bob was alive, the Kowalski’s decided to sue Bob’s estate after his death. In addition to seeking all of his intellectual property rights in their lawsuit, the Kowalski’s also wanted all of Bob’s finished paintings—and even all of Bob’s art tools and paints down to his easel and brushes.

The Kowalski’s lawsuit was so expansive and their legal tactics so brutal that one of Bob’s old friends took to calling their efforts “Grand Theft Bob.” In the end, Kowalski’s legal strategy was designed to gain complete control of Bob’s afterlife, despite Bob’s clear wishes to the contrary.

Without the financial means to sustain a prolonged legal battle, the estate’s executor, Jimmie Cox, settled with the Kowalskis in 1997. The settlement agreement was accompanied by an assignment of all of Bob’s intellectual property rights, which stated that “To the extent, if any, any such rights or incidents of ownership are somehow vested in Estate, Estate hereby conveys, transfers and assigns all such rights and incidents of ownership and ownership itself to BRI.”

Additionally, both the estate and the Bob Ross Trust also signed separate mutual releases with BRI which state that the parties and their heirs, assigns, successors in interest, etc., “do, now and forever, absolutely and irrevocably, hereby release each other in and from any and all claims, suits, liabilities, complaints, losses, damages, and charges of every kind and character arising prior to the date of execution hereof.”

Bob Ross Reboot

As with so many other artists, Bob Ross’s fame reached its zenith in the years following his death. Although The Joy of Painting’s last episode aired in 1995, as the years went by, more and more people would discover the iconic artist’s work and persona via the Internet. And when Annette and Walt Kowalski handed control of BRI to their daughter Joan in 2012, the Bob Ross brand would reach dizzying new heights.

Things really began to take off in 2015, when Joan was approached by the licensing company Janson Media, which wanted to add The Joy of Painting to a new online streaming platform called Twitch. With 403 episodes to pull from, Twitch launched a Bob Ross marathon, and the Bob Ross brand soon reached millions of new fans.

Joan discussed the Bob Ross reboot with the online journal Vocativ in 2015: “Twitch. TV woke up the world,” said Joan. “They made everybody remember their childhood again even though we’ve always been here… We are freakin’ out.”

Following the Twitch broadcast, Joan was approached by another brand-management firm known as Firefly, and that’s when the money really started pouring in. Today, you can find everything from Bob Ross bobbleheads and Bob Ross chia pets to Bob Ross Christmas ornaments and even action figures. Both Netflix and Twitch stream The Joy Of Painting series, and there’s a Bob Ross sleep app available through the Calm meditation app platform.

All of these licensing opportunities translated to major money for BRI. According to the Daily Beast, in 2012, when Joan took over, BRI brought less than $200 in licensing revenue outside of its paint products. But by 2016, that figure had grown to $460,000, and by 2017, Bob Ross-branded products were bringing more than a million dollars in licensing fees to BRI each year.

Steve Sues BRI

Although shortly before his death, Bob amended his estate plan to transfer all of his intellectual property rights to his son, Steve, and half-brother, Jimmie Cox, Steve claimed that he never knew his father made such a move. In fact, it would be more than 20 years after his father’s death before Steve claims he found out about the clause in his father’s trust.

Based on this knowledge, Steve sued BRI, alleging that all of the licensing deals and products that used his father’s name and likeness were unauthorized. In his lawsuit, Steve demanded compensation for the years of unauthorized use of the intellectual property rights Steve claims to own based on his father’s estate plan.

Sadly for Steve, the court didn’t agree with his claim. In 2019, the court ruled that Bob Ross’s trust could not have assigned the intellectual property rights to Steve and Jimmie because the Trust did not own those rights to begin with. Specifically, the court stated in its ruling, “Plaintiff would not own the intellectual property at issue because the Trust never owned it. Similarly, because Bob Ross gave BRI his right to publicity during his lifetime, it could not have transferred to his son on his death.”

In other words, it didn’t matter that the Bob Ross Trust left Steve his father’s intellectual property rights because the Trust never owned those rights. Instead, the court found Bob had transferred all of his intellectual property to BRI during his lifetime via oral contracts. Therefore, the amendment to Bob’s trust was irrelevant, since Bob Ross had already given all of the rights to his intellectual property to BRI.

Although Steve thought he could win an appeal of his case, he didn’t have the money to continue to fight BRI, so he ended up settling with the Kowalski family. In exchange for a modest payment, Steve gave up his claims to his father’s intellectual property. However, in the settlement, Steve did win the right to move forward with a business using his own name.

Since then, Steve has launched his own business teaching painting workshops in the very same studio where his father began his career more than 25 years earlier. Steve was joined in his new venture by his father’s old friend Dana Jester, and they held their first workshop together in September 2019, when several dozen artists gathered to learn from the two most talented masters of the Bob Ross painting technique still alive today.

In the end, although Bob Ross clearly intended to leave his intellectual property rights to his son, because Bob failed to coordinate his business agreements with his estate plan, his son Steve will never share in the fortune that has been made by the vast business empire built on his father’s name, likeness, and persona.

Learn From Bob’s Mistakes

Fortunately, you can easily prevent your loved ones from suffering the same fate as Steve using proper estate planning. Next week in part two of this series, we’ll discuss how you can use estate planning to ensure that all of your business assets, including any intellectual property you own, are protected and passed on to your family following your death or incapacity.

Until then, if you have a business, intellectual property, or any other type of asset that you want to include in your estate plan, meet with us as your Personal Family Lawyer®. With our support and guidance, we can ensure that your loved ones will always be provided for and stay out of court and out of conflict no matter what happens to you.

This article is a service of Pam Maass, Personal Family Lawyer®. We do not 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 Family Wealth 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 to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.