My father, a lifelong entrepreneur, died when he was 49. He left his family a solid will and a thriving business, which has sustained a wife, three sons and a nephew for 16 years.
Aside from these two very important things, my dad did little in the way of estate planning.
Now my mother is experiencing a health crisis, and was recently admitted to an assisted-living facility. My brothers and I have been urging Mom to get her financial affairs in order, and over the past few months the family has had a crash course in estate planning.
Here's what we've learned about some of the tools available to us:
A will provides clear, legally binding instructions about what happens with your money and possessions after you die. Simply telling relatives what you want to happen isn't enough. Without a valid will or living trust, your state's laws determine where your property goes after you die.
A living trust (or revocable living trust) helps your survivors avoid probate, the court process used to pay debts and distribute property to heirs. Some living trusts reduce taxes or protect financial privacy. A living trust doesn't replace a will, but is worth considering (in addition to a will) if your estate is valuable.
A living will (or advance medical directive) tells your family what to do if you're incapacitated or terminally ill. This is the document you need if you don't want to be kept on life support.
Lawyer up or DIY?
If you're the do-it-yourself type, you can create part of your estate plan yourself using books, software and the web
With LegalZoom.com and LawDepot.com, you fill out an online questionnaire and the company uses the info you provide to create the documents you need.
Quicken WillMaker is desktop software that guides you through the process of creating an estate plan.
Nolo.com is an excellent source for books and software about legal topics, including estate planning. (Many public libraries have a good selection of Nolo books and other resources to help you prepare an estate plan.)
Using resources like these, you can put together a simple will in less than an hour. But be warned: These tools are aimed at folks with basic needs. The documents they produce are better than nothing, but your best bet is to contact an attorney. --J.D.R.
With a durable power of attorney, you can appoint somebody you trust to take care of your financial affairs when you can't. Because my mother granted me power of attorney, I'm now able to pay her bills, cancel unused credit cards and more. Without, the family would be powerless.
Life insurance is important if anyone (such as your spouse or children) depends on your income. For most, term life insurance is best. How much? There's no hard and fast rule, but your policy should provide enough for your survivors to cover immediate expenses and meet financial goals.
Though often overlooked, disability insurance is also vital. You're far more likely to become disabled than to die prematurely, and the loss of income is just as real. If you and your family need your salary to live on, you should have disability insurance.
If we'd done research earlier, long-term care insurance would have been useful for my mother. A policy would have defrayed the costs of a nursing home or assisted-living facility. But because we waited, Mom's not eligible.
Lastly, it's vital to have a master document with all the info your family will need to take care of your affairs. This should include account locations, numbers and passwords; a list of emergency contacts; final arrangements; and so on. (You can download a set of free planning documents at EmergencyBinder.com.)
Estate planning isn't over once you create the initial documents. When you experience any major life change--you get married or divorced, have children, move to another state or change careers--review your will and other documents to be sure they're still valid and reflect your intentions.
Driving to clients' homes always made Brandi Greygor nervous. As the owner of Sassy Mama Boutique, Greygor often drove as much as $10,000 in women-and-kids' clothing and accessories to home parties and exhibition halls. She would set up merchandise, which then sat overnight unattended before an event took place.
Greygor wasn't so worried about a dismal sale. She had no business insurance, and if a child were injured using one of her toys or a shopper was hurt, she could be sued for health-care costs. Also, if anything went wrong – if, say, merchandise were damaged, lost or stolen -- Sassy Mama would face a big loss.
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"That $10,000 of wholesale merchandise is $20,000 to $30,000 of income, if I were to lose that," says Greygor, who is based in Union, Ky. Her 1-year-old home-based business was uninsured for more than nine months until April, when her worries about her risks led her to purchase insurance coverage.
Sassy Mama's story is a common one. Sixty percent of home-based businesses lack adequate business insurance, according to the Independent Insurance Agents & Brokers of America, based in Alexandria, Va.
Related: How to Create a Productive Home Office Space
One reason owners forgo insurance is confusion over what may be already covered by a homeowner's or a renter's policy. But most home-business owners have little or no coverage from their homeowner's policy. What's more, if you file a homeowner's (or renter's) claim for losses sustained by a previously undisclosed home-based business, your insurer may refuse to cover it or cancel your policy, says Ryan Hanley, an insurance agent at Murray Group Insurance Services in Albany, N.Y. At best, you might receive a small reimbursement.
"People do not realize that if the UPS guy comes to your door with a business package in his hand and slips and hurts himself, there is no coverage for that injury in their homeowner's policy," Hanley says.
If you’re doing business at home, you’re smart to have insurance. The amount of your sales doesn’t matter. The amount of loss you could face should something go wrong is what counts.
So how can an entrepreneur protect a home-based business? Start by insuring your business right away. You can choose from one or more of these three basic types of insurance, depending on your business's complexity and type.
1. Rider to a homeowner's or renter's insurance policy
The most inexpensive home-based business insurance is an add-on or rider that expands a homeowner's or renter's policy to cover the company. The cost of such a rider is minimal -- perhaps $100 a year -- but it generally provides about $2,500 of additional coverage, says Loretta Worters, vice president of the Insurance Information Institute in New York City, an industry trade group and information clearinghouse.
This type of insurance may be appropriate for a one-person business without a lot of valuable equipment or many business-related visitors, and unlikely to suffer a major loss if unable to operate for a while as a result of fire or another disaster. Such coverage may work, for example, for an accountant who works at home preparing customers' taxes and delivers the returns via email, Hanley says. But it could leave a home-based business owner on the hook for costs such as a large medical bill for that injured UPS man.
2. In-home business policy
An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the bank for deposit. An in-home policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering as many as three employees, Worters says. Rates typically run from $250 to $500 and the plans can cover as much as $10,000 in losses.
Most serious home-based business owners may want to consider picking up at least an in-home policy, says Rebekah Marshall, multiproduct insurance manager at the National Federation of Independent Business. "This covers business equipment and liability [for injury]," she says. "That's important if people are coming in and out."
If you've got an expertise and a way with words, you may be in the perfect position to launch a business teaching others about your expertise. This business is called information marketing and your products can take the form of books, audio programs, DVDs, newsletters, seminars and other content vehicles. What is essential is the actual information: the unique knowledge that you are taking from your brain and putting on paper or screen or into a video or seminar script.
The most exciting part of launching an information marketing business can be researching your market and creating your products. However, you also need to put protections in place before you launch. Paperwork and legal protections may not seem as sexy as writing your first book or making a seminar sale, but this work can be vital.
As you grow and make money, your success may make you a target, which can make you vulnerable. The following legal protections will help you protect your assets, products, customers and yourself.
Copyright
Copyright can protect your words in whatever form from people stealing them. It creates a protection under federal law for your products and sales materials. You need to include copyright notices in your products and sales letters, and have documented agreements with all your writers and content providers.
Related: How to Stake and Protect Your Claim on Intellectual Property
Registering your products with the U.S. Copyright Office is the only way for you to fully protect them. It's a quick and easy process. Most importantly, it provides you with the right to statutory damages and attorney's fees should someone copy your original works. These penalties and fees can be a terrific deterrent when you are pursuing people who are stealing your work. Even if you never recover those damages, the threat can often be enough to stop continued infringement.
Registration is voluntary but if you ever want to bring a lawsuit against an infringer, registration is key. You register a work with the U.S. Copyright Office with a simple form, copies of your work, and a $30 fee.
Fair Use and Permissions for Copyright-Protected Work
Did you come across a killer sales letter you want to adapt to your business or an order form you want to edit into your own? It's always better to ask for permission. That letter or form is likely copyright protected, exposing you to legal liability should you use it without express permission.
Even if something is protected under intellectual property laws, your unauthorized use may still be legal. There are exceptions to each of the laws protecting creative work--situations where authorization is not required. For example, under copyright law, a principle known as "fair use" permits you to copy small portions of a work for certain purposes such as scholarship or commentary. Under the fair use doctrine, you can reproduce a few lines of a sales letter without getting permission. However, to prevent hard feelings or threats of lawsuits, it's always best to ask.
Related: How to Make Money As an Expert
Always get permissions in writing. Relying on an oral or implied agreement is almost always a mistake. You and the rights owner may have misunderstood each other or may remember the terms of your agreement differently. This can lead to disputes. If you have to go to court to enforce your unwritten agreement, you'll have difficulty proving exactly what the terms were.
Trademarks
Trademarks protect distinctive words, phrases, logos, symbols, slogans, and any other devices used to identify and distinguish products or services in the marketplace.
There are, however, areas where both trademark and copyright law may be used to protect different aspects of the same product. For example, copyright laws may protect the artistic aspects of a graphic or a logo used by a business to identify its goods or services, while a trademark may protect the graphic or logo from use by others in a confusing manner in the marketplace. Similarly, trademark laws are often used in conjunction with copyright laws to protect advertising copy. Trademark law protects a product or service name and any slogans used in the ad, while copyright law protects the additional creative written expression contained in the ad.
Product Disclaimers and Insurance
To protect yourself fully and to properly educate your customers, you should always include publisher's legal notices and disclaimers in your information products and publications, literature, order forms, seminar materials, etc. Have an attorney review your disclaimer before you begin using it.
Related to disclaimers is consultant's/publisher's liability insurance. As an information marketer, you need to consider specific coverage for the types of claims that could come from your coaching, teaching or product-publishing activities. For example, someone who implements a business practice based in part on your recommendations through coaching or products and is unhappy with the results or loses money could sue you, even if he didn't correctly implement your advice.
A big earthquake like the monster we've just witnessed in Japan gets smart entrepreneurs thinking: What if a big quake hit my business? As a survivor of three major quakes -- San Fernando, Northridge and Nisqually up in Seattle -- I can tell you it really pays to think ahead about quake preparedness.
And don't think you aren't susceptible if you live outside California, either. There are quake zones throughout the U.S.
Here are seven tips for improving your odds of coming through an earthquake with little or no business interruption:
1. Get insured. Even in quake-prone California, statewide insurer the California Earthquake Authority reports only 10 percent of properties are insured. Right after a major quake -- like now -- it may be harder to get, so be prepared to knock on a few doors. There's a popular myth that earthquake insurance doesn't matter because if a big quake hits, the Federal Emergency Management Agency, or FEMA, will ride to the rescue. Although FEMA can offer low-interest loans, it won't hand you cash. And it could take a while. Having earthquake insurance can help your business rebuild quickly.
An umbrella policy or standard business insurance that includes business-interruption insurance can be valuable here, too. Earthquake insurance only covers the cost of rebuilding, not the lost sales during the days -- or months -- you can't do business.
2. Have a disaster plan. Make sure employees can work on the business remotely, and then run practice drills every so often. Have everyone stay home, or meet at an agreed-upon alternate site. Also, make sure your data is accessible remotely and everyone has the necessary passwords. Set up a phone tree, complete with non-work numbers and email addresses, as well.
3. Secure your facility. Everyone in your company should know where the water and gas shutoffs are in your building and how to use them. Multiple people should know where keys are and how to set security alarms. They should also learn how the fire extinguishers work.
4. Locate an alternate site. If you have a home office and it was knocked out in a quake, consider where else you could set up shop. You could secure a nearby co-working location or possibly use the computer terminals at a hotel business center. Similarly, if you manufacture products, establish an alternate production site.
5. Call in a pro. Get your home evaluated by a contractor with a specialty in earthquake mitigation. Ask a local builders association for referrals.
6. Do it yourself. Of course, their recommendations could get pricey. But there are some low-cost measures you can take to secure your building and prevent further damage. Among other things, secure tall bookcases to the walls or consider buying a $40 kit at a hardware store.
7. Stock up. You never know when a disaster will strike. Keep plenty of water and food on hand -- even at the office.
Aside from these two very important things, my dad did little in the way of estate planning.
Now my mother is experiencing a health crisis, and was recently admitted to an assisted-living facility. My brothers and I have been urging Mom to get her financial affairs in order, and over the past few months the family has had a crash course in estate planning.
Here's what we've learned about some of the tools available to us:
A will provides clear, legally binding instructions about what happens with your money and possessions after you die. Simply telling relatives what you want to happen isn't enough. Without a valid will or living trust, your state's laws determine where your property goes after you die.
A living trust (or revocable living trust) helps your survivors avoid probate, the court process used to pay debts and distribute property to heirs. Some living trusts reduce taxes or protect financial privacy. A living trust doesn't replace a will, but is worth considering (in addition to a will) if your estate is valuable.
A living will (or advance medical directive) tells your family what to do if you're incapacitated or terminally ill. This is the document you need if you don't want to be kept on life support.
Lawyer up or DIY?
If you're the do-it-yourself type, you can create part of your estate plan yourself using books, software and the web
With LegalZoom.com and LawDepot.com, you fill out an online questionnaire and the company uses the info you provide to create the documents you need.
Quicken WillMaker is desktop software that guides you through the process of creating an estate plan.
Nolo.com is an excellent source for books and software about legal topics, including estate planning. (Many public libraries have a good selection of Nolo books and other resources to help you prepare an estate plan.)
Using resources like these, you can put together a simple will in less than an hour. But be warned: These tools are aimed at folks with basic needs. The documents they produce are better than nothing, but your best bet is to contact an attorney. --J.D.R.
With a durable power of attorney, you can appoint somebody you trust to take care of your financial affairs when you can't. Because my mother granted me power of attorney, I'm now able to pay her bills, cancel unused credit cards and more. Without, the family would be powerless.
Life insurance is important if anyone (such as your spouse or children) depends on your income. For most, term life insurance is best. How much? There's no hard and fast rule, but your policy should provide enough for your survivors to cover immediate expenses and meet financial goals.
Though often overlooked, disability insurance is also vital. You're far more likely to become disabled than to die prematurely, and the loss of income is just as real. If you and your family need your salary to live on, you should have disability insurance.
If we'd done research earlier, long-term care insurance would have been useful for my mother. A policy would have defrayed the costs of a nursing home or assisted-living facility. But because we waited, Mom's not eligible.
Lastly, it's vital to have a master document with all the info your family will need to take care of your affairs. This should include account locations, numbers and passwords; a list of emergency contacts; final arrangements; and so on. (You can download a set of free planning documents at EmergencyBinder.com.)
Estate planning isn't over once you create the initial documents. When you experience any major life change--you get married or divorced, have children, move to another state or change careers--review your will and other documents to be sure they're still valid and reflect your intentions.
Driving to clients' homes always made Brandi Greygor nervous. As the owner of Sassy Mama Boutique, Greygor often drove as much as $10,000 in women-and-kids' clothing and accessories to home parties and exhibition halls. She would set up merchandise, which then sat overnight unattended before an event took place.
Greygor wasn't so worried about a dismal sale. She had no business insurance, and if a child were injured using one of her toys or a shopper was hurt, she could be sued for health-care costs. Also, if anything went wrong – if, say, merchandise were damaged, lost or stolen -- Sassy Mama would face a big loss.
ADVERTISING
"That $10,000 of wholesale merchandise is $20,000 to $30,000 of income, if I were to lose that," says Greygor, who is based in Union, Ky. Her 1-year-old home-based business was uninsured for more than nine months until April, when her worries about her risks led her to purchase insurance coverage.
Sassy Mama's story is a common one. Sixty percent of home-based businesses lack adequate business insurance, according to the Independent Insurance Agents & Brokers of America, based in Alexandria, Va.
Related: How to Create a Productive Home Office Space
One reason owners forgo insurance is confusion over what may be already covered by a homeowner's or a renter's policy. But most home-business owners have little or no coverage from their homeowner's policy. What's more, if you file a homeowner's (or renter's) claim for losses sustained by a previously undisclosed home-based business, your insurer may refuse to cover it or cancel your policy, says Ryan Hanley, an insurance agent at Murray Group Insurance Services in Albany, N.Y. At best, you might receive a small reimbursement.
"People do not realize that if the UPS guy comes to your door with a business package in his hand and slips and hurts himself, there is no coverage for that injury in their homeowner's policy," Hanley says.
If you’re doing business at home, you’re smart to have insurance. The amount of your sales doesn’t matter. The amount of loss you could face should something go wrong is what counts.
So how can an entrepreneur protect a home-based business? Start by insuring your business right away. You can choose from one or more of these three basic types of insurance, depending on your business's complexity and type.
1. Rider to a homeowner's or renter's insurance policy
The most inexpensive home-based business insurance is an add-on or rider that expands a homeowner's or renter's policy to cover the company. The cost of such a rider is minimal -- perhaps $100 a year -- but it generally provides about $2,500 of additional coverage, says Loretta Worters, vice president of the Insurance Information Institute in New York City, an industry trade group and information clearinghouse.
This type of insurance may be appropriate for a one-person business without a lot of valuable equipment or many business-related visitors, and unlikely to suffer a major loss if unable to operate for a while as a result of fire or another disaster. Such coverage may work, for example, for an accountant who works at home preparing customers' taxes and delivers the returns via email, Hanley says. But it could leave a home-based business owner on the hook for costs such as a large medical bill for that injured UPS man.
2. In-home business policy
An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the bank for deposit. An in-home policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering as many as three employees, Worters says. Rates typically run from $250 to $500 and the plans can cover as much as $10,000 in losses.
Most serious home-based business owners may want to consider picking up at least an in-home policy, says Rebekah Marshall, multiproduct insurance manager at the National Federation of Independent Business. "This covers business equipment and liability [for injury]," she says. "That's important if people are coming in and out."
If you've got an expertise and a way with words, you may be in the perfect position to launch a business teaching others about your expertise. This business is called information marketing and your products can take the form of books, audio programs, DVDs, newsletters, seminars and other content vehicles. What is essential is the actual information: the unique knowledge that you are taking from your brain and putting on paper or screen or into a video or seminar script.
The most exciting part of launching an information marketing business can be researching your market and creating your products. However, you also need to put protections in place before you launch. Paperwork and legal protections may not seem as sexy as writing your first book or making a seminar sale, but this work can be vital.
As you grow and make money, your success may make you a target, which can make you vulnerable. The following legal protections will help you protect your assets, products, customers and yourself.
Copyright
Copyright can protect your words in whatever form from people stealing them. It creates a protection under federal law for your products and sales materials. You need to include copyright notices in your products and sales letters, and have documented agreements with all your writers and content providers.
Related: How to Stake and Protect Your Claim on Intellectual Property
Registering your products with the U.S. Copyright Office is the only way for you to fully protect them. It's a quick and easy process. Most importantly, it provides you with the right to statutory damages and attorney's fees should someone copy your original works. These penalties and fees can be a terrific deterrent when you are pursuing people who are stealing your work. Even if you never recover those damages, the threat can often be enough to stop continued infringement.
Registration is voluntary but if you ever want to bring a lawsuit against an infringer, registration is key. You register a work with the U.S. Copyright Office with a simple form, copies of your work, and a $30 fee.
Fair Use and Permissions for Copyright-Protected Work
Did you come across a killer sales letter you want to adapt to your business or an order form you want to edit into your own? It's always better to ask for permission. That letter or form is likely copyright protected, exposing you to legal liability should you use it without express permission.
Even if something is protected under intellectual property laws, your unauthorized use may still be legal. There are exceptions to each of the laws protecting creative work--situations where authorization is not required. For example, under copyright law, a principle known as "fair use" permits you to copy small portions of a work for certain purposes such as scholarship or commentary. Under the fair use doctrine, you can reproduce a few lines of a sales letter without getting permission. However, to prevent hard feelings or threats of lawsuits, it's always best to ask.
Related: How to Make Money As an Expert
Always get permissions in writing. Relying on an oral or implied agreement is almost always a mistake. You and the rights owner may have misunderstood each other or may remember the terms of your agreement differently. This can lead to disputes. If you have to go to court to enforce your unwritten agreement, you'll have difficulty proving exactly what the terms were.
Trademarks
Trademarks protect distinctive words, phrases, logos, symbols, slogans, and any other devices used to identify and distinguish products or services in the marketplace.
There are, however, areas where both trademark and copyright law may be used to protect different aspects of the same product. For example, copyright laws may protect the artistic aspects of a graphic or a logo used by a business to identify its goods or services, while a trademark may protect the graphic or logo from use by others in a confusing manner in the marketplace. Similarly, trademark laws are often used in conjunction with copyright laws to protect advertising copy. Trademark law protects a product or service name and any slogans used in the ad, while copyright law protects the additional creative written expression contained in the ad.
Product Disclaimers and Insurance
To protect yourself fully and to properly educate your customers, you should always include publisher's legal notices and disclaimers in your information products and publications, literature, order forms, seminar materials, etc. Have an attorney review your disclaimer before you begin using it.
Related to disclaimers is consultant's/publisher's liability insurance. As an information marketer, you need to consider specific coverage for the types of claims that could come from your coaching, teaching or product-publishing activities. For example, someone who implements a business practice based in part on your recommendations through coaching or products and is unhappy with the results or loses money could sue you, even if he didn't correctly implement your advice.
A big earthquake like the monster we've just witnessed in Japan gets smart entrepreneurs thinking: What if a big quake hit my business? As a survivor of three major quakes -- San Fernando, Northridge and Nisqually up in Seattle -- I can tell you it really pays to think ahead about quake preparedness.
And don't think you aren't susceptible if you live outside California, either. There are quake zones throughout the U.S.
Here are seven tips for improving your odds of coming through an earthquake with little or no business interruption:
1. Get insured. Even in quake-prone California, statewide insurer the California Earthquake Authority reports only 10 percent of properties are insured. Right after a major quake -- like now -- it may be harder to get, so be prepared to knock on a few doors. There's a popular myth that earthquake insurance doesn't matter because if a big quake hits, the Federal Emergency Management Agency, or FEMA, will ride to the rescue. Although FEMA can offer low-interest loans, it won't hand you cash. And it could take a while. Having earthquake insurance can help your business rebuild quickly.
An umbrella policy or standard business insurance that includes business-interruption insurance can be valuable here, too. Earthquake insurance only covers the cost of rebuilding, not the lost sales during the days -- or months -- you can't do business.
2. Have a disaster plan. Make sure employees can work on the business remotely, and then run practice drills every so often. Have everyone stay home, or meet at an agreed-upon alternate site. Also, make sure your data is accessible remotely and everyone has the necessary passwords. Set up a phone tree, complete with non-work numbers and email addresses, as well.
3. Secure your facility. Everyone in your company should know where the water and gas shutoffs are in your building and how to use them. Multiple people should know where keys are and how to set security alarms. They should also learn how the fire extinguishers work.
4. Locate an alternate site. If you have a home office and it was knocked out in a quake, consider where else you could set up shop. You could secure a nearby co-working location or possibly use the computer terminals at a hotel business center. Similarly, if you manufacture products, establish an alternate production site.
5. Call in a pro. Get your home evaluated by a contractor with a specialty in earthquake mitigation. Ask a local builders association for referrals.
6. Do it yourself. Of course, their recommendations could get pricey. But there are some low-cost measures you can take to secure your building and prevent further damage. Among other things, secure tall bookcases to the walls or consider buying a $40 kit at a hardware store.
7. Stock up. You never know when a disaster will strike. Keep plenty of water and food on hand -- even at the office.
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