Latest News

Last week, we discussed three potential scenarios in which poor estate planning can cripple your business. However, the damage described in those three hypotheticals pales in comparison to what recently happened in real life to the owner of one of Canada’s hottest new startups.

Gerald Cotten launched the cryptocurrency exchange QuardigaCX a little more than five years ago while in his mid-20s. Since then, the business has grown into one of Canada’s most successful online hubs for trading and storing digital currency, valued at roughly $190 million.

But upon Cotten’s sudden death, more than $145 million of QuardigaCX’s digital currency effectively vanished into cyberspace. This massive sum, representing the vast majority of the company’s holdings, was lost after Cotten died without leaving the password to his encrypted laptop, where the crypto’s security keys are stored.

This tragic misstep demonstrates one of the most basic, yet often-overlooked, tenets of effective estate planning:

In the event of your incapacity or death if your heirs don’t know how to find or access your assets, those assets are as good as gone. Indeed, it’s as if those assets never existed at all.

According to an affidavit filed in a Canadian court, Cotten, age 30, died suddenly of complications related to Crohn’s disease while traveling in India during December 2018. In January 2019, QuardigaCX filed for bankruptcy to protect itself from creditors, including all of the customers with crypto stored in the company’s electronic vault.

Ironically, the digital assets were lost in part because Cotten followed a security practice designed to safeguard the funds. Most of the company’s cryptocurrency holdings were stored in a “cold wallet,” or one that isn’t connected to the Internet. The use of a cold wallet is a common practice, since “hot wallets,” or those connected to the internet, are a frequent target of hackers.

Such a practice typically would’ve been a prudent measure, but Cotten reportedly stored the cold wallet on an encrypted laptop that only he knew how to get into.

According to Cotten’s widow, Jennifer Roberston, after multiple searches, she’s been unable to find the passwords that will open the laptop and provide access to the company’s cold wallet. QuadrigaCX even brought in computer security experts to get into Cotten’s laptop, but so far all of their attempts have been unsuccessful.

Canadian financial authorities and independent auditors are currently investigating the case, with some even speculating that Cotten’s death was faked as part of a nefarious scheme connected to QuadrigaCX. Whether it ultimately turns out to be a simple case of carelessness or something more malicious, the lesson remains the same:

From cryptocurrency to safety deposit boxes and everything in between, your family must know how to find and access every asset you own, otherwise it could be lost forever.

In fact, there’s a total of more than $58 billion of unclaimed assets from across the country held by the State Department of Unclaimed Property. Much of that massive sum got there because someone died and their family didn’t know they owned the asset.

In another bizarre twist, Cotten was actually quite diligent in his estate planning. He named Roberston as his estate’s executor and left her instructions for the complete distribution of his assets, including a private jet and multiple properties in Canada.

He even left behind $100,000 for the care of his two dogs—yet he managed to forget to include the passcodes that would unlock his company’s vast crypto assets. We believe that most people holding crypto assets haven’t taken the proper steps to ensure their family would know how to access those assets upon their incapacity or death.

Given this, if you own any digital currency like Bitcoin, be sure to call us to make certain these assets have been correctly included in your estate plan. Indeed, if you have any assets that might potentially be overlooked in the event of your incapacity or death, contact us now.

What makes this loss so tragic is that it could have been so easily avoided. Whether your estate is worth millions or far less, it’s absolutely vital that your plan include a comprehensive inventory of your assets. And as Cotten’s case shows, this inventory must also include a detailed instructions for how your heirs can find and access all of those assets.

These components are a standard part of every estate plan we create. We’ll build a detailed inventory of your wealth and property—including your business—that includes the exact location of every asset. And whether it’s cryptocurrency, social media accounts, or an online payment platform like PayPal, we’ll also include detailed instructions for locating and accessing all of your company’s digital assets and their passcodes.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

Rather than putting it off until you’re near retirement, succession planning should be a fundamental part of your business strategy from the start. Indeed, a comprehensive succession plan shouldn’t be considered an end at all—it’s simply the beginning of your company’s next phase.

It takes an average of five years from start to finish to execute a succession plan, so you’ll need to get a jump on the process in order to ensure a transition of leadership goes smoothly, and your business, clients, and team have enough time to adjust.

Not to mention, things don’t always unfold in the way we imagined, and your untimely death, incapacity, or decision to pursue another opportunity could jeopardize the company’s survival. Effective succession planning, like estate planning, creates stability and security, ensuring your business will continue to grow and serve, no matter what.

Just like any other element of business strategy, your succession plan should be formally documented, well-structured, and legally binding.

By putting the plan in writing and having it drafted as a legal document (or most likely, a set of legal documents), you’ll not only ensure that everyone is aware of your objectives and goals for succession, you’ll create a roadmap for the company’s future success.

Such thorough documentation is especially vital when it comes to ownership transfers. By carefully laying out the terms and conditions surrounding the transfer of ownership, you can be confident that a new owner—and everyone else on your team—clearly understands the plan’s scope, expectations, and mandate.

As your Creative Business Lawyer®, we can help you prepare a comprehensive succession plan that will shield your business from risks and conflict, while sustaining your legacy.

Handing over the reins of your business to someone else is bound to ruffle some feathers, especially if it’s a family business with multiple children involved. Given that, it’s a good idea to open up a dialogue with all of the stakeholders affected by succession.

Obviously, if there are partners involved, succession should be a joint decision. But beyond that, you may want to consider including your company’s leadership team in the decision-making. If your top-level staff aren’t considered or allowed input, the succession is likely to be mired in conflict, with little chance for success.

While the final decisions regarding succession are up to you, if any of your top staff don’t agree with your plan or simply aren’t interested in continuing on without you, you might offer them options for leaving the company that honor their tenure.

Whether this is offering to buy back their shares or giving them some form of severance, the goal should be to show everyone involved that you respect their contribution to the business and want them to enjoy continued success, even if it’s not with your company.

Because succession will undoubtedly have a major impact on your business, potentially involving reorganization, changing the legal entity, and/or even selling the business, it’s important to consult with a trusted advisor, who can offer you professional advice about how to best proceed.

Since nearly every succession plan will entail detailed legal and financial actions, you should select an advisor who has expertise in those fields and can bring in a whole succession team (when appropriate) to work with you. Not to mention, if it’s a family business, it can be extremely difficult for you to choose which of your children, if any, should take the helm.

Having an unbiased advisor who’s outside of the business—and family—can allow you to

objectively base your decision on what’s best for the business and not be swayed by emotion. As your Creative Business Lawyer®, we can be that trusted advisor, guiding you step-by-step through the entire process of developing and implementing a comprehensive business succession plan.

We also have the expertise and experience to help you navigate all of the legal, financial, tax, and insurance complexities surrounding succession planning. Contact us today to ensure that the business legacy you worked so hard to build will continue to thrive even when you’re no longer running the show.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. Or schedule online.

In the first part of this series we discussed the vital importance of having updated advance directives in place in light of COVID-19. Here, we’ll look at several additional provisions you should consider adding to your directives to address potential contingencies related to the pandemic.

With new cases of COVID-19 currently surging in dozens of states, doctors across the country are joining lawyers in urging Americans to create the proper estate planning documents, so medical providers can better coordinate their treatment and care should they become hospitalized with the virus.

The most crucial planning tools for this purpose are medical power of attorney and a living will, advance healthcare directives that work together to help describe your wishes for medical treatment and end-of-life care should you become unable to express your own wishes. While all adults over age 18 should put these documents in place as soon as possible, if you are over age 60 or have a chronic underlying health condition, the urgency is paramount.

What’s more, in light of COVID-19, even if you’ve already created these documents, you should revisit them to ensure they are up-to-date and address specific scenarios related to the coronavirus. In the first part of this series, we discussed some unique circumstances related to COVID-19 and its treatment that you should be aware of when creating or updating your directives.

Here, we offer several more provisions you should consider adding to your directives to ensure the documents address as many potential contingencies as possible during the ongoing pandemic.

Since there is currently no proven vaccine or other effective treatment for COVID-19, you may consider adding provisions to your directives authorizing your agent to consent to—or withhold consent for—any experimental treatments or procedures that may be developed. Seeing that it could be years before an effective vaccine or cure will be available on a widespread basis, such a provision could be particularly important if you contract the virus while such treatments are still in the trial phase.

In severe COVID-19 cases, patients often require intubation, which involves putting you into a medically induced coma and inserting a tube into your windpipe, allowing oxygen to be pumped directly to your lungs using a ventilator. However, some directives specifically prohibit intubation, since such measures are often a last resort and used primarily for life-support purposes. Indeed, some people’s greatest fear is being hooked up to a machine just to keep them alive.

That said, some coronavirus patients have successfully recovered after being on a ventilator, so you might not want a blanket prohibition of intubation in all cases. While the exact survival rates are still unknown, early reports from New York City health officials found fewer than 20% of COVID-19 patients ultimately survived after being placed on a ventilator. Reports from China and the U.K. found similar rates.

You’ll also need to weigh the fact that even if you survive after being placed on a ventilator, you’re likely to require months, or even years, of rehabilitation and may never regain the full quality of life you previously enjoyed. And if you’re elderly or have an underlying condition, the prognosis for full recovery is especially slim.

For these reasons, you should carefully review your directives’ provisions regarding intubation and ventilators with us and your doctor to be certain your documents accurately reflect your wishes. There is no right or wrong answer here, so it’s critical your loved ones and medical professionals know what you would want.

To help you make more informed decisions, read What You Should Know Before You Need a Ventilator, a doctor’s perspective about intubation’s potential health consequences for COVID-19 patients. Additionally, you can find a more comprehensive discussion of coronavirus treatment decisions at the non-profit Compassion & Choices resource page, COVID-19: Understanding Your Options.

Due to fear of getting sued, some doctors and medical facilities are hesitant to honor living wills and work with healthcare agents. To deal with this, consider including language in your directives that “indemnifies” medical providers, facilities, and your agent from any liability incurred as a result of following your directions. People and institutions will be much more likely to fully honor your wishes if they understand they likely won’t get hit with a lawsuit for doing so.

Even if you have the most well thought-out and professionally prepared directives around, they won’t be worth the paper they’re printed on if nobody knows about them. Both medical power of attorney and living wills go into effect the second you sign them, so you should immediately deliver copies to your agent(s), your alternate agents, your primary care physician, and any other medical specialists you’re seeing.

And don’t forget to give those folks new versions whenever you update the documents and have them tear up the old documents. This is a standard part of our practice when serving clients, so when you work with us on your legal documents, we’ll ensure that everyone who needs to have your documents always has the latest version.

The tragic reality of the pandemic is that far too many Americans are at risk of becoming seriously ill and even dying from COVID-19. In light of this dire situation, it’s vital that you and your loved ones take all possible precautions to not only mitigate your chances of catching the virus, but also having the best possible chance of surviving if you should become infected.

In the event you become hospitalized with COVID-19, having updated advance directives in place can make the medical decision-making process for both your healthcare providers and family much safer and easier, while helping ensure your treatment is carried out based on your personal wishes and values. Given the overloaded state of our healthcare system right now, facilitating your medical care in this way could ultimately save your life.

Whether you have yet to create these documents or need yours updated to address COVID-19, meet with us, as your Personal Family Lawyer®, right away to take care of this urgent planning task.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.