Noncompetes are now banned, nation-wide

Courts, especially Virginia courts, have long disfavored noncompetes, often ruling them unenforceable, especially when overbroad in terms of duration, scope and geographic reach.  But now the Federal Trade Comission (FTC) has one-upped the courts by banning noncompetes nation-wide, with retroactive effect. 

The final rule provides that it is an, "unfair method of competition—and therefore a violation of section 5 (of the FTC Act)—for persons to, among other things, enter into non-compete clauses (“non-competes”) with workers on or after the final rule’s effective date. With respect to existing non-competes—i.e., non-competes entered into before the effective date—the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing non-competes can remain in force, while existing non-competes with other workers are not enforceable after the effective date." (FTC Rule Summary, 23 April 2024)

Let's unpack this a bit. 

The Noncompete Ban Applies to More than just Noncompetes

The term "noncompete" is defined more broadly than you think, and even encompasses poorly constructed NDAs and other restrictive covenants, "The term non-compete includes...a non-disclosure agreement between an employer and a worker that is written so broadly that it effectively precludes the worker from working in the same field after the conclusion of the worker’s employment with the employer." (Section 910.1).

Business owners need be wary of the restrictions they place in their contracts.  And employees/ICs should have their offer letters, employment contracts, and IC agreements reviewed by GuideOn Legal Services, prior to execution.

It's Retroactive - Except for "Senior Executives"

Except for a very limited "senior executive" exception, the FTC rule applies retroactively, i.e., your existing noncompete will be deemed null and void once the rule takes effect.  

And the exception only applies to a very small subset of "senior" executives. Under Section 910.1, a "senior executive" is a person who was (1) in a policy-making position, and (2) had total annualized compensation of $151,164 or more. "Policy making position" is more narrowly defined than you might guess and applies only to, "a business entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has policy-making authority."  That's pretty limited. 

Making it even more narrow in scope,  "Policy-making authority" means, "final authority to make policy decisions that control significant aspects of a business entity or common enterprise and does not include authority limited to advising or exerting influence over such policy decisions or having final authority to make policy decisions for only a subsidiary of or affiliate of a common  enterprise." Simply put, it only applies to those with the authority to make the big decisions at the company.

So if you are a division manager or VP who is not an officer, the exeption to the ban does not apply to you, and your existing noncompete will be void.

Don't forget, the "senior executive" exception only applies to existing noncompetes.  Newly hired senior executives are not subject to noncompetes.

Doesn't Apply to Sale of Business Noncompetes

If you sold your business and accepted a non-compete in exchange, the ban doesn't apply and your noncompete restriction remains valid.

"(a) Bona fide sales of business. The requirements of this part 910 shall not apply to a noncompete clause that is entered into by a person pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets." (Section 910.3).  In the originally proposed rule, there were thresholds for this exception, e.g. it only applies if you had a 25% or greater ownership interest in the sold entity, but those caveats were knocked out by industry during the public comment period and will not apply.  So, bottom line, noncompetes still apply to sellers of business interests.

Not all hope is lost if you are in this situation (see "Take Action Now" below)

Companies Must Notify Those Subject to Noncompetes

Under the new rule, employers must provide notice to those affected by noncompetes that they are no longer enforceable.  To facilitate employer compliance, the final rule includes model language that satisfies this notice requirement (Section 910.2(b)(4)),

"A new rule by the FTC makes it unlawful for us to enforce a non-compete cluase.  As of (est. 1 Sep 2024) we will not enforce any non-copet clause against you.  This means you may accept a job with any company or any person - even if they compete with us; you may run your own business - even if it competes with us; and you may compete with us following your employment...." 

It doesn't get clearer than that...in case you were wondering whether this rule had teeth or not.

Effective August 2024 

The final rule goes into effect 120 days after it is recorded in the Federal Register.  So expect it to go into effect in late August or early September 2024.

Take Action Now!

If your are business owner, your NDAs and non-solicitation agreements must be carefully re-crafted to avoid being deemed non-competes, so that the baby doesn't get thrown out with the bathwater (even if you don't like babies).  And, perhaps more importantly, you will have to look for alternate methods of protecting your business interests and property outside of these traditional means.  So, before you send out that next employment agreement, IC Agreement, NDA, non-solicitation, or offer letter, call me for a review (703-397-7490; jack.grimes@gls.law).  We'll take care of your legal needs while you focus on growing the business.

If you are subject to an existing noncompete and do not fall under one of the exceptions ("senior executive" or sale of a business interest), contact me at (703) 397-7490 or jack.grimes@gls.law to review your employment or IC agreement.  Over the years, I've been very successful in pushing back on noncompetes for my clients, making them as limited and as narrowly tailored as possible.  It would now be my great pleasure to assist you in the removal and voidance of your noncompete, giving you the peace of mind to pursue whatever career path you choose, without restriction.

And even if you do fall under the "senior executive" or business sale exceptions to the ban (i.e., your noncompete stands), there is still hope.  See my article on the unenforceability of noncompetes that are overbroad in duration, scope, or reach here ("Noncompetes May Be on the Way Out" by Jack Grimes, May 2023).  After you read this article, contact me so I can review your noncompete for enforceability.

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The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran, former Intelligence Community executive, small business owner, and JAG Corps Reserve Officer with over 20 years of experience. He is among a limited number of attorneys in the country with both an LL.M. (Master of Laws) and first-hand experience running small and large businesses.  GLS also provides estate planning services through its Live Long, End Strong®  full life-cycle approach.  It starts with the end in mind, and then builds a lifetime and legacy plan,  culminating in the peace of mind that comes with protecting your family's future by  preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk. 

I know, I know – the words “separate” and “marriage” seem at odds, don’t they? Not true in the world of revocable trusts where “separate” protects us from one another’s risks in order to buttress the marriage from the ugliness of the outside world (lawsuits, creditors, conniving family members, to name a few). Let’s jump in.

Separate Trusts are the more common approach as they provide additional asset protection and allow for variance in the spouses’ distribution scheme, beneficiaries, and trustee selections.  They also allow for more sophisticated options like protecting assets for the surviving spouse and preserving assets for the children.

Pros

1. Asset protection can be a significant advantage as the assets in each spouse's separate trust are often protected from the creditors and claims of the other spouse. This provides broader protection than a joint trust.

2. Preserves the deceased spouse’s ability to control his/her assets after death; For example, the deceased spouse’s assets can remain in trust, providing access to the surviving spouse while simultaneously being protected from gold-digging second spouses, lawsuits, creditors, and other risks.  This has the added benefit of preserving some of the assets for the kids when the surviving spouse passes.

3. Maintains the surviving spouse’s ability to control the assets in his/her trust. By contrast, a joint trust becomes irrevocable upon the death of the first spouse and the agreed-upon plan is set at that point.

4. Management flexibility – during their joint lives, each spouse can manage his/her own trust assets while serving as co-trustee on their spouse’s trust for simultaneous joint management of the entire marital estate.

5. Ease of administration upon the death of the first spouse. Unlike a joint trust, there is no segregation work to be done on the assets when the first spouse passes.

6. Each spouse has the complete freedom to designate their own distribution scheme, beneficiaries, and trustees. As mentioned above, each can provide for the surviving spouse while leaving something for the kids/friends/charity. This can also be done in a joint trust but it’s more complicated.
7. Separate trusts protect each spouse’s assets from access by a surviving spouse’s (possible) future spouse (and that future spouse’s kids/family).
8. Easier to do estate tax planning in separate trusts (but can be achieved in joint trusts too).

Cons

1. There’s a bit more of an administrative burden upfront unless the spouses are already used to operating out of separate accounts/finances.

The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran, former Intelligence Community executive, and JAG Corps Reserve Officer with over 20 years of experience in estate planning. He is among a limited number of attorneys in the country with an LL.M. (Master of Laws) in Estate Planning and Elder Law. The GLS motto  Live Long, End Strong® epitomizes the full life-cycle approach Jack and the GLS team take to estate planning. It starts with the end in mind, and then builds a lifetime and legacy plan, culminating in the peace of mind that comes with protecting your family's future by preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk. 

The End of the Non Compete Era?

Whenever I talk with my small business clients (business owners, independent contractors, employees) about non-competes, I give them the same speech.  In order for a non-compete to be effective or even enforceable, it needs to pass the reasonableness test.  First, it must be reasonable in scope (e.g., you can't ban someone from an entire industry, but you can restrict them from a specific business segment, customer space, or other narrowly defined area). Second, the duration must be reasonable (six months to one year is reasonable for an employee, a little longer for an IC, and even longer for a business entity subcontractor). Last, the geographical reach must be reasonable (U.S.-wide bans are a no-go, while restriction within a certain milage radius can make sense). And guess what?  If any one of these factors is unreasonable, courts in Virginia will rule the entire non-compete unenforceable.  That's right, it won't get revised to make it workable - and the restricted employee/IC is now freer than Andy Dufresne in Shawshank Redemption.

In any case, my days of speech-making on this topic may be coming to an end. This past January, the FTC proferred a rule banning non-competes, and the period for public comment has ended. We now await the final rule, in either its original or public comment-modified form. 

And don't take this lightly.  Section 910.2(b)(1) of the rule reads, ".....it is an unfair method of competition for an employer to maintain with a worker a non-compete clause, (therefore) an employer that entered into a non-compete clause with a worker prior to the compliance date must rescind the non-compete clause no later than the compliance date.  No, that's not a misprint. If this rule goes live, it won't just prohibit future non-competes, it will also rescind existing non-competes.  But wait, it gets even better.  The term "non-compete" will be defined more broadly than you think, and may even encompass poorly constructed NDAs, "The term non-compete includes...a non-disclosure agreement between an employer and a worker that is written so broadly that it effectively precludes the worker from working in the same field after the conclusion of the worker’s employment with the employer." (910.1(b)(2)(i)).

I suspect an impetus for the FTC's proposed ban is our nation's ever-expanding digital landscape. In such a world, it becomes increasingly difficult to craft reasonable non-competes when so many workers and employers have nation-wide, online business models. Not to mention that the post-COVID, work-from-home, labor force extends the reach of business and employment opportunities even further.

Where Do We Go From Here?

Now I know what you're thinking, "Jack, this is a blog, not a legal treatise, so get to the point." Okay, okay, here it is: Now is the time to start planning for the post non-compete world.  Remember, this is going to affect both new and existing non-competes.  NDAs and non-solicitation agreements will have to be carefully re-crafted to avoid being deemed non-competes, so that the baby doesn't get thrown out with the bathwater (even if you don't like babies).  And, perhaps more importantly, we will have to look for alternate methods of protecting business interests and property outside of these traditional means.  So, before you send out that next IC Agreement, NDA, non-solicitation, or offer letter, call me for a review (703-397-7490; jack.grimes@gls.law) so we can take care of your legal needs while you focus on growing the business.

________________________________

The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran, former Intelligence Community executive, small business owner, and JAG Corps Reserve Officer with over 20 years of experience in estate planning. He is among a limited number of attorneys in the country with an LL.M. (Master of Laws) in Estate Planning and Elder Law.  The GLS motto  Live Long, End Strong® epitomizes the full life-cycle approach our firm takes to estate planning.  It starts with the end in mind, and then builds a lifetime and legacy plan,  culminating in the peace of mind that comes with protecting your family's future by  preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk. 

(1) Do I Really Need a Will?

In almost every circumstance you do need a will. It is essential if you have kids as a will is necessary to appoint guardians for them, as well as the property you leave them. If you have a positive net worth exceeding $50,000, you need a will to decide who inherits from you. If you do not have a will, a state statute will decide for you and, if you are like me, you’re not excited about the government deciding who gets your stuff.

(2) Is a Do It Yourself (DIY) will right for me? 

In a few cases, yes, a DIY will is the right answer. If you are single, with no kids, and just starting off on your capitalist journey toward the middle class, you can get away with a simple will from an online provider, or maybe even no will at all. However, if you are married or have been married, if you have kids, own a home, or have retirement savings, you would be wise to avoid the DIY will.

(3) Can any old lawyer do my will for me?

Sure, and I bet a veterinarian could remove your appendix in a pinch, but you probably wouldn’t feel your best afterward, and you’d likely have unanticipated complications down the road. At GuideOn Legal Services, we have more than two decades of specialization in estate planning, probate administration, and trust administration. Our attorneys have worked in large bank trust departments and/or hold advanced degrees in estate planning and elder law. More important than any of that, estate planning is our main practice area and specialty. We also practice in small business law and cryptocurrency law, both of which are closely related to estate planning. If you want top-quality estate and business succession planning that aligns with your lifetime and legacy goals, contact us now to protect and preserve your family’s future.

(4) Are trusts just for rich people? 

There are two compelling reasons to get a trust. The first reason is to preserve your hard-earned life savings for your children (and/or spouse) while, at the same time, protecting them from creditors, claimants, divorce, addiction, or other personal problems. The second reason is to avoid the estate tax. The first reason applies to anyone with kids (and/or a spouse); the second is for rich people as the estate tax only applies at high levels of net worth. There are a few other specialized types of trust that can be necessary in certain circumstances, but what what I said above applies to most people. Be warry of lawyers who try to sell you on trusts for reasons like “avoiding probate” or “gaining privacy.” These are more icing-on-the-cake reasons to get a trust, not reasons in and of themselves. If you’d like an assessment as to whether you should have a will-centered plan or a trust-centered plan, contact us for a consultation and we’ll be happy to walk you through the analysis.

(5) What is a Medical Power-of-Attorney and is it really necessary to have one?

Absolutely, yes. A medical power of attorney (MPOA) appoints someone (i.e., an agent) to act on your behalf if you are temporarily or permanently incapacitated.  It will only take effect if you can’t make decisions for yourself (BTW, if you can blink or tap a finger, you can make decisions for yourself). While it’s important for everyone to have this document in place, it is especially important for our seniors and aging parents.  Why? To execute this document, you must have the legal and physical capacity to do so. If the MPOA is not in place before the onset of dementia or Alzheimer’s, it could be too late. And when it’s too late, you must go through a lengthy court proceeding called a guardianship to have someone appointed to care for your loved one. This process costs thousands of dollars and involves multiple attorneys who are all paid for by your estate (isn’t that great? No, it's not).  Instead, you could spend a few hundred bucks on a MPOA and you’re all set. At GuideOn Legal Services, we’ve designed an Advance Medical Directive, which combines both a medical power of attorney (MPOA) and a living will into one document.  Expert planning at its best!

(6)  What about a Durable Financial Power-of-Attorney?  Need One?

The difference between a medical power of attorney (MPOA) and a durable financial power of attorney (DPOA) is that under the DPOA you are appointing someone to take care of your financial affairs, rather than your medical decisions. If you do not have one in place, you will have to spend thousands of dollars for a conservatorship: a legal arrangement where a judge appoints a person to take legal responsibility for someone else’s financial affairs. Don’t let this happen to you. Keep in mind, though, that a DPOA provides your agent with enormous power over your financial affairs, which can also be dangerous. '

In one example, the wife of a military member used a financial power of attorney to sell everything he owned while he was deployed overseas, took out a new mortgage in his name, piled up credit card debt, and ran off with his best friend (power of attorney not needed for that last part). To avoid being “cancelled,” I suppose I should point out that men can be gold-diggers too.  In any case, crafting an appropriate durable financial power of attorney requires expertise. Proper tailoring/limiting of the powers within the instrument, selecting the right agent, and controlling access to the document can go a long way toward avoiding this kind of risk.

Let us help you put this document in place in the safest way possible. Click here to schedule your appointment.

The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran and JAG Corps Reserve Officer with over 20 years of experience in estate planning. He is among a limited number of attorneys in the country with an LL.M. (Master of Laws) in Estate Planning and Elder Law. The firm has developed unique estate planning products (wills, trusts, powers-of-attorney, advanced medical directives) tailored to address the great diversity of American family makeups and personal life situations. The GuideOn Legal Services motto Live Long, End Strong® epitomizes the full life-cycle approach our firm takes to estate planning. It starts with the end in mind, and then builds a lifetime and legacy plan, culminating in the peace of mind that comes with protecting your family's future by preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk.

Digital Assets and Estate Planning

The law of wills, trusts, and estates is slow to change. That’s why most estate planners will advise you to review your plan every 3-5 years, or upon a significant life event like getting married or having kids.  One glaring exception to this rule is the area of digital assets and cryptocurrency planning. Here, change is occurring so rapidly it can be hard to keep up!  And the impacts of NOT keeping up can be significant (and not in a good way).

Fear not! Your favorite estate planning attorney (and I say that because I’m probably the only one you know) has a practical digital asset tip to share today that will either beef up your existing estate plan, or encourage you to get the ball rolling on one (here’s why you shouldn’t wait).

But first, let’s get a grip on what we are talking about here.

What the heck are digital assets anyway?

The term “digital assets” is a misnomer of sorts as we tend to think of assets as things of value.  But digital assets are quite the opposite. They have little-to-no value and are either administrative, data-based or sentimental. Examples include digital pictures (think iPhoto albums), family videos, social media accounts and posts, email, username/password information for online financial and other accounts, and even private keys for your cryptocurrency investments or NFTs (i.e., non-fungible tokens, often in the form of digital artwork),

Why would I want to grant access to my digital assets?

First, you may want certain family members, friends, or other loved ones to inherit or have access to digital items of sentimental value like your online digital photos/family videos, emails, and social media posts.

Second, in 40 years, when you kick the can, your lady bird deed michigan executor is going to need access to your online accounts in order to marshal your assets so they can be distributed to your loved ones. By having access to your online banking, investment, and email accounts, life will be much easier for your executor (who, remember, you blessed with this thankless job).

Third, digital life providers like Google, Facebook, and especially Apple are extremely resistant to granting access to a deceased user’s account, even to a spouse or children. There have been many cases of executors and/or loved ones trying to gain access to family pictures or other sentimental items only to be denied by these providers.  When such cases go to court, the digital life providers win because user privacy is protected in the Terms of Service (TOS). What are TOS? It's that contract no one reads, but everyone signs by checking a box when opening an iCloud, Facebook, Google, and other accounts.

Yeah, but my spouse (or whoever) has all my passwords anyway, am I good to go?

Nope. Without having your explicit, written, legal permission to access these accounts (and no, writing it on a napkin isn’t good enough), anyone who does so, even if they have your passwords, is committing a crime (see the Computer Fraud and Abuse Act of 1986, 18 USC §1030).  Are they going to get caught and go to jail? Probably not, but I wouldn’t want to risk it – especially when it’s easy to avoid.

This sounds complicated, is it?

Yes and no. 

How to fully integrate digital asset planning and protection is a bit complicated and is covered in my article “CYA – Cover Your (Digital) Assets,” which I encourage you to read with a nice cup of coffee to keep you awake.

But there is an easy, non-complicated, part, and that’s what I want to share with you today. No need for a lawyer, and you can get this part done in under 10 minutes.

Okay, Here it is: the Practical Tip I promised in the first paragraph

Under a pretty boring law called the Revised Uniform Fiduciary Access to Digital Assets Act – RUFADAA, the use of “online tools” by a testator to grant a fiduciary access to digital assets/accounts, trumps any conflicting statutory provisions, and even anything in the Testator’s will or other estate planning documents! An online tool is defined as any mechanism by which a digital life provider (Apple, Google, Facebook, etc) allows a user to grant access to a named person in the event of the user’s incapacity or death.

Many digital providers have implemented these online tools over the last few years, and the rest are planning to do so in the near future.

Please take advantage of this powerful tool right now. Take the next 10 minutes, log in to each of your major digital life provider accounts, and follow the instructions to name your legacy agent. 

I can’t provide the instructions here because they’ll just change over time, and then you’ll get mad at me when it doesn’t work. However, a simple Google search for the following online tools will get you where you need to go:

• Apple Legacy Contact
• Google Inactive Account Manager
• FaceBook Memorialization Settings
• Twitter and Instagram (still in the works – no online tool available yet)

Failing these “online tools”, the next best line of defense is to have digital asset clauses in your estate planning documents (wills, trusts, powers-of-attorney). 

If you don’t do any of this, your executor might still be able to rely on standard executor powers and tangible personal property clauses in your estate planning documents to deal with digital assets, but this does not always work. As mentioned above, many providers, especially Apple, will fight such attempts in the name of protecting a deceased user’s privacy.

One last thing - Cryptocurrency and Digital Assets

Please understand that cryptocurrencies and NFTs are not digital assets, under estate planning parlance, because they are assets with real (monetary) value. However, the private keys, PINs, and passwords that grant access to the crypto most certainly ARE digital assets. And your executor will need access to them in order to eventually marshal and distribute them to your loved ones in accordance with your will/trust. Note: the topic of how to distribute cryptocurrency via a will or trust is beyond the scope of this BLOG, but see our cryptocurrency practice area for more information. You may also be interested in our award-winning article on how to buy cryptocurrency the smart and safe way (okay, I was kidding about the award-winning part, but it's pretty good).

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The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran, former Intelligence Community executive, small business owner, and JAG Corps Reserve Officer with over 20 years of experience in estate planning. He is among a limited number of attorneys in the country with an LL.M. (Master of Laws) in Estate Planning and Elder Law. The GLS motto  Live Long, End Strong® epitomizes the full life-cycle approach our firm takes to estate planning.  It starts with the end in mind, and then builds a lifetime and legacy plan, culminating in the peace of mind that comes with protecting your family's future by preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk.

Who can serve as my Executor?

The law tells us that in Virginia, the Executor must be an adult who is suitable and competent to perform the duties required of an Executor. The Executor cannot be someone under a disability, which, in short, means someone who is convicted of a felony (while the person is confined), someone under the age of 18, or someone who is incapacitated. Additionally, the court may require the Executor to post bond and obtain surety on the bond from an insurance company.  In order to obtain surety, the Executor would need to have an acceptable credit history. This is particularly applicable when an out-of-state Executor is named, which will also require the appointment of an in-state Agent.

Who might not be a good choice?

You may know a lot of people who are competent adults with good credit history. However, there’s a big difference between who can serve as your Executor and who is a good choice. Your Executor should be someone who you trust entirely, such as a close family member or friend – someone who is honest, organized, responsible, attentive to details, good with financial matters, and able to get along with all your beneficiaries. The job of serving as Executor is also a tough one. You will want to name someone who is up to the challenge.

When considering people who might fit the bill, it’s also important to take some other factors into consideration. You should think about the person’s personal situation with their family and profession. Someone who is incredibly busy with children, work, or otherwise, might not be the best choice, as it may be hard for them to find time to devote to the administration of your estate. Likewise, someone who is geographically distant from your home may find it difficult to handle your estate from such a distance. 

You should also think about the tasks you will be asking of your Executor and decide whether the person you are considering has the skills necessary to attend to these tasks. Someone lacking the requisite skills might not be the best choice. For example, if you are asking your Executor to make decisions about who gets certain items of tangible personal property, but some of the beneficiaries don’t get along, will your chosen Executor have the skills and ability to handle disagreements?

Finally, naming co-Executors may not be the best choice. Naming more than one person to serve increases the potential for disagreements that could ultimately land the co-Executors in front of a judge to make decisions regarding the estate, resulting in unnecessary costs and delays. You may think that naming both your children to serve as co-Executors of your estate will show that you are treating them equally and fairly.  However, you may be setting them up for failure if they are unable to agree on how things should be handled. It usually is best to name just one of them as the sole Executor, and perhaps name the other as a successor Executor or as another fiduciary in your estate plan, such as your Agent under your Power of Attorney. You also can have an open conversation with them to let them know why you are making this decision. Remember that settling an estate, regardless of the complexity of the assets and distribution scheme, can be an emotional experience, and emotions can exacerbate tensions. 

What if I don’t have any close family or friends who are able to serve as Executor?

This is a tough question but a very common scenario. If you can’t think of a close family member or friend who would be a good choice to administer your estate, you may want to consider naming a professional Executor. The biggest downside to naming a professional Executor is that they are often more expensive than a non-professional individual.  While all Executors are entitled to receive compensation for settling your estate, all professionals will do so, while close family members and friends often will not.  However, the fee is often worth it for the peace of mind. There are quite a few options here.

One place to start is to check with your bank, investment advisor, or broker to see if they are willing to serve and what fee they would charge.  It is important to share with them the size and complexity (asset make-up) of your estate, as they are sometimes limited in what they are allowed to handle. Another option is a trust company. Their fees may be a little lower than the banks, and they usually have more flexibility in the size/complexity of estates they can handle.  Plus, they are specialists in administration. Finally, you can name another trusted professional such as a CPA, lawyer, or law firm (e.g., GuideOn Legal Services).

Don’t let the decision hold up your progress

Choosing an Executor can seem like a huge decision, and it certainly is not one to take lightly.  However, you shouldn’t let this decision hold up your progress with getting your will drafted. As long as you have the capacity to make a will, you likely can change your decision regarding the Executor by executing a codicil to your will.  It’s far more important to get the will in place than to ensure you’ve made the perfect decision about your Executor. Additionally, if between the time you draft your will and the time you die, something happens to the person or institution you have named, Virginia law provides a hierarchy of people entitled to administer your estate.  While these people may not be your first choice, you can at least rest assured that your estate will not go unsettled. Finally, as circumstances change with your chosen Executors, don’t forget to revisit your estate plan to ensure the chosen Executor is still a good choice.

Let GuideOn be your guide

If you are struggling to figure out who to choose as your Executor, let us help. We can work through this decision with you as part of your comprehensive estate planning, and in most cases, GuideOn Legal Services also can be named in your will to serve as your Executor.

You’ve weighed the pros and cons and decided that you want to invest in cryptocurrency - an emerging and exciting asset class.  After digging in you realize that unlike other established asset classes like stocks and bonds, buying crypto requires some technical savvy and you begin to worry, "If I screw this up, I might lose my investment!"

Well, fear not – I am going to walk you through the safest possible way to buy and hold cryptocurrencies directly. My methods may seem like overkill in some ways, but trust me, this approach significantly reduces the chance losing your investment through user error, hacking, or even poor estate planning.

Note: If you are serious about investing in crypto, please call  GuideOn Legal Services so we can help you through the process I am about to explain: 703-397-7490. Our on-staff technical and legal crypto experts are standing by to assist. 

Preliminary steps:

• Before buying any crypto, I want you to establish a separate and secure email account that you will only use for your cryptocurrency accounts and transactions. 
• I highly recommend Protonmail – a secure email service with built-in end-to-end encryption and state-of-the-art security features.
• When setting up your Protonmail (or other secure email) account, create a completely random email address like "65STG34TS@protonmail.com"  I made that up by hitting random keys on my keyboard but you get the idea, no personally identifiable information.

Establish an Exchange Account:

• Just like buying stocks or bonds, you have to choose an exchange account through which you will buy your crypto
• Use only large, established exchanges such as Coinbase, Kraken, or Binance.US. I personally prefer Coinbase as the most secure option. However, I often use Kraken (excellent security features) and Binance (broad offerings) if I can’t find the crypto I’m looking for on Coinbase.
• Important: Do not use brokerage accounts to buy your cryptocurrency (unless you are fabulously wealthy and trading in large amounts).  Brokerage accounts often will not allow you to transfer your crypto outside of their insular ecosystem, which means you will not be able to send your crypto to other people, or to safer storage options (which we will get to in a minute).  Examples of brokerage providers include Robinhood and Sofi, among others. I would also avoid using peer-to-peer (P2P) payment transfer apps like Paypal or Cash App to buy crypto for the similar reasons. Of course, there are pros and cons to each approach, but for the average user, exchanges are the way to go.
• When setting up your account, you’ll be asked to provide personal information to verify your identity.  Just like a bank, a crypto exchange must know who its customers are to comply with government regulations and to dissuade the use of its accounts for criminal purposes.  It is normal to provide this verification information. Just be sure that you go to the crypto exchange site directly (not through a link or email....not even the ones I just provided) to avoid being scammed.

Secure and Fund Your New Account:

• Once your new account is established, you will need to secure it with two factor authentication (TFA) and then fund it in order to make your first crypto purchase.
• Secure it: In your account's security settings, turn on TFA/MFA. I highly recommend using a physical security key like a Yubico device instead of SMS (text code) or other "soft" options.  A Yubico security key (or similar device) requires that you insert it into your mobile device or computer to verify identy, often with a biometric component. Yubico claims that using a security key brings your chance of account takeover down to  ZERO, versus SMS (24%), email (21%), or phone call verification (50%).  It's certainly the most secure TFA available today. In fact, you should be using this technique for any account you have that supports it (e.g., Google, 1Password, etc., etc.) Tip: I bought two in case I lose one - just be sure to register both on every account and keep the spare in your safe or other secure location.
• Fund it: The most common way to fund your crypto exchange account is by linking a bank account to your exchange account for ease of transfer. 
• Important: Do not link your primary checking or savings account to your crypto exchange account. Instead, open another free checking account which you will use for crypto funding only. This allows you to keep that account empty until you are ready to buy some crypto.  When the time comes for your purchase, you simply transfer the needed amount from your main checking account to this crypto checking account, and then transfer that amount to the crypto exchange for the purchase. This turns a one-step process into a two- or three- step process, but it takes just minutes to execute and it’s worth the additional security. Just be sure to open the crypto checking account at the same bank as your primary accounts to allow for instantaneous transfers.

Buy Some Cryptocurrency

• Once your exchange account is funded, you can make your first crypto purchase.
• Upon completion, you will see your newly purchased crypto sitting in your exchange account or exchange account wallet.
• Be sure to immediately enter the purchase information into a spreadsheet (or favorite accounting software) for tax purposes   Keep very careful records of each and every crypto transaction and transfer you make, including date, quantity, type, fees, purchase price, etc. – the more detail the better.
  • Come tax time, if you fail to maintain proper records, the IRS likes to pretend you received your crypto for free (price = zero) and you will be taxed on the entire amount. Don’t skip this step. And don't put it off till later.  Some exchanges do not carry your order information for more than 30 or 60 days, some not at all!

Secure your investment

• The number one security error people make is leaving their crypto sitting on the exchange account after purchase. Exchanges are good at helping you buy your crypto, but many are not good at protecting it from hackers.
• Instead, I recommend transferring your crypto assets to either cold (preferred) or hot storage. 
• Cold storage means transferring your crypto to an encrypted device that is not connected to the internet in any way. This massively reduces the chance that your crypto will be stolen by hackers. There are a number of cold storage devices on the market, the two most popular being Ledger and Trezor.
• Hot storage means transferring your crypto to a web or mobile-based wallet. This is (sometimes) more secure than leaving your crypto on an exchange but less secure than the cold storage option noted above. There are more hot wallet options out there than there are stars in the sky, so tread carefully in making your choice. Exodus and Metamask are popular choices.
• Whichever option you choose, when you set up your device/wallet, you will be asked to generate your private keys, which will be the sole means of accessing your crypto device/wallet. The keys are comprised of 12 to 24 words that you will jot down on a piece of paper.  These words represent an encrypted number that is so large that it is truly unfathomable. While nearly impossible to hack (unless you ignore the next two bullets), whoever has it, has access to your crypto.
• For this reason, you will never enter your private keys (the 12-24 words) into your computer, mobile phone, or any other device that ever touches the internet in any way. Nor will you ever take a picture of your private keys (pictures often go right to the cloud). 
• This where things get a little old school but necessary to protect and preserve your keys. First write your private keys on paper and store them in your safe. Then, immediately purchase a metal wallet or punch tablet (check out Keystone, formerly Cobo), which provides a fireproof/nearly indestructible option. Again, keep your keys in your safe or other secure location.
• If you lose your keys, you lose your crypto. Don’t lose your keys. No one will save you.
• Depending on the wallet/device you choose, you may also be asked to generate a PIN to access the wallet device. Treat the PIN in the same way as your private keys (as described above)
• Once you've done all this, your ready to transfer your crypto from the exchange where you bought it to your newly established cold or hot wallet.  You must be careful here -- make sure that you are transferring your crypto to the right wallet address. Your wallet will have different receiving addresses for each type of crypto and if you send crypto to the wrong address (e.g. trying to send Bitcoin to a Bitcoin Cash address), you could lose it forever. Check, double check and triple check the address before you hit the send button.  The first time you do this, your heart will pound in your chest as you wait for the transaction to go through. It doesn't take long but it's nerve-racking.  However, once you do it successfully, you will be impressed with the speed, control, and efficiency of these decentralized transactions and, like everything else, you'll gain mastery with usage. Tip: On my first transfer, I sent a small amount of crypto from the exchange to my wallet just make sure it worked. This was wasteful in terms of fees, but it may give you some peace of mind on your first transaction (I do not recommend transferring larger sums until you know what you are doing....and maybe not even then).

Cryptocurrency and Estate Planning

• Cryptocurrency and NFTs (non-fungible tokens) are a new and evolving asset class. As such they must be uniquely handled in your estate planning documents in order to preserve them during incapacity, or pass them along to your loved ones as you head through the pearly gates.
• While user error and hacking/theft are two of the biggest risks to your crypto assets, poor crypto asset estate planning is next on the list.  Why? Because, if you become incapacitated or pass away, it is unlikely that your loved ones will know how to locate and access your crypto assets. If that occurs, your assets will go forever unclaimed.
• The estate planning aspect of protecting your crypto is too complex for this article, so please reach out to a GuideOn Legal Services attorney (www.gls.law) once you own any crypto or NFTs. We can immediately assist in integrating these assets into your estate plan (will, trust, power-of-attorney). And we will provide a unique and safe mechanism through which your executor/trustee can access your crypto assets in accordance with your estate plan.

Bonus Advice

• If you wish to own crypto but avoid all the complexity of direct ownership that I’ve described above, there are indirect, but more costly, investment options available in the market place. Some popular examples are Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), Bitwise 10 Crypto Index Funt (BITW), Valkyrie Bitcoin Strategy (BTF), among others. Many additional options are pending SEC approval, but it could take a while. 
• Another common indirect investment strategy is to buy stock in companies involved in the infrastruture of the cryptocurrency industry, such as crypto exchanges, mining, chipmakers, banking, security, and blockchain analysis. 
• Disclaimer:  I am a lawyer, not an investment advisor. These are just examples for those who wish to look into this industry further.  That being said, I am wholly committed to the legal and technical protection of your assets. By providing top quality, modern estate planning and tax strategies, I can help you pass these unique assets along to your loved ones if you become incapacitated or kick the can (or just feel like giving it away). Whether or not you should invest in crypto in the first place is something you have to decide for yourself, or with the help of a financial advisor.
• Lastly, if you are already into crypto and love talking about it online with other laser-eyes, please use good OPSEC and do not discuss your personal holdings, wallets, private keys, PINs, or security methods in these forums. This attracts attention from hackers and should be avoided.  In direct comms with friends, use an encrypted messaging service like Signal, as it is open source and encrypted (and has applications for both desktop and mobile)

Call GuideOn Legal Services today!

If you need any help with this process or with ensuring your crypto assets are properly integrated into your estate plan, call or email GuideOn Legal Services at 703-397-7490 or use the contact form on this page.

Recommended additional reading: “CYA -- Cover Your Digital Assets!”

The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran, former Intelligence Community executive, and JAG Corps Reserve Officer with over 18 years of experience. He is among a limited number of attorneys in the country with an LL.M. (Master of Laws) in Estate Planning. The GLS motto  Live Long, End Strong® epitomizes the full life-cycle approach Jack takes to estate planning and asset protection. It starts with the end in mind, and then builds a lifetime and legacy plan, culminating in the peace of mind that comes with protecting your family's future by preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk.