Category: Uncategorized

Preparing for Your Cyber Attack

Your business is likely to become the target of a cyber attack if the recent past is any guide to the near future.  In 2020, at least 2,354 local governments, health-care facilities and schools in the United States were affected by ransomware attacks, and since 2016, an average of 4,000 ransomware attacks have occurred each day in the United States, according to a U.S. Government report.  New York State’s Department of Financial Services estimates that such attacks increased by 300 percent last year. 

An attack typically occurs when perpetrators find a way into a network system often by taking advantage of a human vulnerability like getting an employee to click on a link that enables malware to enter a corporate network. Once inside the system, the intruder gains access to administrator privileges, and then goes on to hijack or cause other disruptions to a network’s data and infrastructure. The costs to a business, not to mention the associated damage done to reputation and client relationships can be fatal. The National Security Institute Reports that the average ransom demanded in an attack rose from $5,000 to $200,000 between 2018 and 2020. 

While not entirely eliminating the chances that a cyber attack can occur there are precautions that you can take today that will significantly decrease the odds of you becoming a victim tomorrow. 

• Initiate Employee Training: Engage an online or in-person training program that will make everyone in your company aware of the risks associated with cyber attacks and teach the precautions that they should take. This should include regular training with the embedding of “phishing” emails and follow up. 

• Conduct a Network Audit and Implement Patches: Have your computer network evaluated for vulnerabilities and weaknesses and then have patches applied to the system. This will strengthen your company’s computer network against cyber attacks. In order to remain up to date audits should be conducted on a quarterly or even a monthly basis. 

• Use Multi-Factor Authentication and Strong Passwords: Ensure that all of your employees use strong passwords (i.e. not “123456”) and introduce two-factor authentication. The protection afforded by a slight delay in signing on is more than compensated for by the enhanced security afforded. 

• Implement a Backup System: Make sure that your entire system is backed up, online and off. This will enable you to restore your network infrastructure and data in the event that cyber attackers hold your system hostage. 

• Create and Test a Robust Incident Response Plan: Do not wait until your system is attacked to figure out what to do. Create a plan and test it to make sure that you are able to respond efficiently and effectively in the event of an attack or system failure. And make sure you test that system. The best incident response plan is worthless if it just collects dust on a book shelf. 

• Obtain Cyber Insurance: While insurance does not prevent an attack from occurring it can certainly diminish the financial impact that a cyber attack can cause. 

Creating a global protection and response plan can be overwhelming and is often beyond the scope of a company’s in-house capabilities. Although some tasks may be handled by various vendors, especially technical audits, it is advisable to have the overall process coordinated by a single team. The ideal solution is often to engage an attorney to coordinate and to handle many of the tasks. A law firm can ensure that you are legally protected and also that the work being done under its auspices is covered by the attorney-client privilege in case a lawsuit is filed at some point down the road. 

The threat to cyber security is constantly evolving and authorities are constantly playing defense to criminals highly motivated by financial rewards. For that reason the process of protection must be ongoing. What worked yesterday may well be outdated by tomorrow. While the threat cannot be eliminated entirely the risk and accompanying financial and legal liability can be dramatically reduced by implementing a dynamic cyber security plan. 

Most of us don’t live the complex life of a legendary music icon, and in many respects that’s a good thing. Indeed, the legal wrangling over James Brown’s will and estate was just resolved after nearly 14 years of litigation and family infighting. That’s a long time for family members and wanna be family members to hang in limbo. Nonetheless, there are lessons that the rest of us can draw from the James Brown saga. It didn’t have to go down this way.

One of the most controversial aspects of the settlement process was the woman claiming to be Brown’s widow, Tommie Rae Hynie, a one-time backup singer for Mr. Brown. It turned out that Ms. Hynie was already married at the time of her wedding to Mr. Brown. Mr. Brown began proceedings to have the marriage annulled but never completed the process. Thus at the time of his death the status of that relationship was somewhat unclear. That uncertain status was responsible for much of the ensuing legal battle.

The lesson that the rest of us can take from that, aside from avoiding bigamy, is to keep on top of our estate documents. The documents should be up to date and reflect the current status of our relationships. Frequently, parents will create wills in order to ensure that their children are cared for in the event that they both die. Then, those documents are stowed away never to be looked at again for the ensuing decades. The kids eventually grow up and no longer require guardians, but other things do happen. Families and finances do change, and these changes should be accounted for in our estate documents.

In the Brown case provisions seem not to have been made for how future profits from copyrights would be distributed, putting the distribution of millions of dollars at risk. This again, is a lack of planning, and is a development that could cost Mr. Brown’s heirs on the hook for millions in taxes. With some forethought and planning many of those taxes could have been avoided. Again, future copyrights may not be an issue that many of us will face, but there may be ways to protect assets from present and future taxes with some smart planning. We can create trusts and arrange for tax-free gifts that protect assets from taxes now and in the future.

Much of James Brown’s life – and death – seem to have been custom designed for tabloid coverage. Yet while the facts and perhaps the sums involved might seem to have originated in a galaxy far from our own, there are familiar fact patterns. We all have family disputes and to some degree or another are afflicted by a lack of organization. With just a little bit of thought and planning, it will be possible to avoid our own estate debacle.

It is easy for me to say that right now is a good time for you to write your will. It is, after all, one of the things that I get paid to do. If my personal welfare is not a compelling factor, there are other reasons to create a will that are certain to put it at the top of your to-do list.

1. Control Your Property: Writing your will provides an opportunity to arrange for the distribution of your assets. These include personal items as well as larger assets like property, businesses and other valuable belongings. If you don’t do it, the courts will. In the absence of a will there are strictly defined procedures for the handling and management of your estate that might not accord with your preferences.
2. Prevent Family Disputes: Creating a will provides an opportunity for you to have the last word. If you think that family disputes won’t arise if you aren’t specific, you’re taking a big gamble. A few moments on your part could prevent a lifetime of disagreements.
3. Organize the Process of Distribution: By appointing an executor of your estate, you organize the distribution of your estate. You appoint a trusted representative to handle all of your affairs. 
4. Name Parental Guardians: This is perhaps the most important motivation for many people to create their wills. It enables parents to select who will be responsible for the welfare of their children in the event of their untimely demise. 
5. Preserve Digital Assets: In an age when many of our most important assets, including documents and photographs, are stored online, it’s important to establish who has access to and control of them. There may, in addition, be cases where you don’t want access to your digital assets to be generally available. The process of creating this record will also force you to place all of those accounts and passwords in one place. 
6. Maximize Tax Efficiencies: The process of creating a will also presents an opportunity for you to review all of your estate planning. The estate planning process is complex, but it does present many opportunities to protect your assets and to decrease your exposure to estate and other taxes. Your estate planning process may also present opportunities to save on taxes and to benefit during your own lifetime. 
7. Create Power of Attorney and Living Will: There are other documents that are often created along with a will. These include power of attorney which enables a family member or trusted friend to exercise control over your affairs in the event of your incapacitation. A living will enables a family member or trusted friend to direct your medical care in the event that you’re not able to do so. 

A  will and related documents enable you to retain control over your affairs beyond your lifetime. These are issues that may be difficult or uncomfortable to contemplate. They may, however, have the effect of saving your family and friends from confronting an even more difficult situation. Like death and taxes, one thing that you can be sure of – if you don’t take care of these issues, the government will, and it’s quite possible that they may not be settled according to your wishes.

For those interested and able to invest in hedge funds or other alternatives, another option exists that can yield the same results with much less of the pain imposed by taxes. Private Placement Life Insurance (PPLI) is an asset protection solution used most effectively by individuals with a net worth of more than $20 million, income of several million dollars per year and/or owners of businesses generating significant income.  Investors, in addition, must be comfortable relinquishing direct control over a portion of their assets to a financial manager, a strict and time tested requirement of PPLI. An investment of $500,000 is considered a minimum to realize a significant return and, in fact, is often required as a minimum investment. 

PPLI is especially attractive because it avoids many of the taxes associated with other investment options (i.e. capital gains distributions or taxable income). The investment combines the potential upside of a hedge fund with the tax advantages of life insurance. (Of course, that same formula holds downside exposure.). The money that is invested inside of the insurance policy grows tax-free. 

PPLIs continue to grow in popularity but remain an investment still off the beaten path. Their popularity is likely to grow even more in the near term as Congress rethinks estate and gift tax exclusions. In recent years, insurance companies, both on and off-shore, have expanded their PPLI offerings. Institutions offering PPLIs and insurance dedicated funds include: BlackRock, Wells Fargo Private Banking, John Hancock, Zurich, Crown Global and Pacific Life. 

Here’s how it works:

An individual or trust buys a variable universal life insurance policy on the life of the investor. The premiums are generally flexible (often $!M – $3M per year) and usually front loaded to ensure that the investment generates maximum bang for the buck. An important caveat is that the policy owner cannot pay more than the total of premiums owed on the policy in less than seven years or the investment will no longer be treated as an insurance policy. 

The money invested in the policy is held by the insurance company in a dedicated, separate account. In time, the policy should become self-funding using the money in the account to pay the premiums. The money is invested either in funds managed by the insurance company or may be managed by an independent investment manager. The owner of the policy, whether it is a trust or the insured, does not and must not directly influence the specific investments. They may, however, select very general investment parameters. 

The death benefit and thus the actual cost of the insurance policy itself is kept low and the owner of the policy works with an insurance advisor to pay the maximum allowed premium to maximize the amount available for investment and growth. As a result the money invested in the policy grows tax free and the investor’s heirs ultimately receive a tax free death benefit. In addition, whatever is invested in the policy is not subject to estate taxes. 

Here’s what makes PPLI an especially appealing proposition:

The policy owner or insured may withdraw from or borrow against the amount in the separate account without penalty. Loans have the advantage of being tax free and may be repaid by the heirs from the policy’s death benefit. 

The benefits of PPLI investment can be extraordinary, but there are several cautionary notes that must be taken into account: 

• Investor Control: As stated previously, the insured and/or the owner of the policy must not be involved in the investment decision-making process. The IRS means what it says here, and this requirement has been extensively litigated and opined on. 

• Insurance Dedicated Funds (IDF’s): Funds that may be offered by insurers and others may not be open to the general public. They can mirror funds that are available more generally, but these funds must be dedicated to insurance investors. 

• Diversification: There are specific rules on how money invested in policy must be invested. It’s clearly not acceptable to use a PPLI as a vehicle to simple investment in a single investment. Here are the rules:

• No single investment may make up more than 55% of the insurance subaccount portfolio.
• No two investments may constitute more than 70% of the portfolio.
• No three investments may constitute more than 80% of the portfolio.
• No four investments may constitute more than 90% of the total assets of the account.

Taken together, this means that there must be at least five investments. 

That said, there are other, technical requirements that are required of PPLIs and must be adhered to in order for investments to qualify for favorable tax treatment. 

For the right investors PPLI’s offer a tax efficient means to protect assets and to promote growth. If invested wisely there is the potential to realize significant growth. The one, most significant caveat is that the investor must be willing to cede direct control over how and where his or her funds are invested. 

You’ve just been asked to sit down for an on-camera interview. Whether your immediate reaction is joy, fear or panic there are several factors that you’ll want to take into account to make the experience a success. It’s obviously a little bit more complicated than the five considerations I outline below, but these are enough to get you started.

1) Assess The Opportunity: The first and most important question you’ll want to ask yourself is whether the interview is a good idea. What’s in it for you and your company, and, more importantly, are there risks? It’s critical to know what the interview will cover and whether there are any sensitive issues that might come up. If your intention is just to defend yourself you might want to reconsider. Remember you’re not asking the questions and you don’t edit the resulting interview. If you do decide to go ahead….

2) Preparation is Essential: Prepare for an interview like you would for a final exam. Find out what will be covered in the interview and have answers for any questions that might come up. Remember you were called because you’re the expert, and you don’t want to be caught by surprise. The interviewer probably will not provide the exact questions in advance, but he or she should be able to tell you what subjects they would like to cover. If the reporter won’t provide the general areas he or she would like to cover, that’s a red flag.

3) Practice, Practice and More Practice: It’s not enough just to have the answers in your head. You have to say them out loud, ideally in response to real questions. Sit down with a colleague and practice questions and answers. Ideally, you’d like to do as little thinking as possible during the actual interview. That means developing possible answers, to the extent possible, in advance and practicing your delivery. Remember, an interview is not a casual conversation with a friend, so try to speak in complete and succinct sentences.

4) Go With The Flow: There’s really no substitute for the real thing. When the lights are on and the camera is rolling, it’s going to feel different despite how much practice you put into it. You’re going to be anxious. Take a deep breath and slow down. It’s difficult, but try to think of the interview as a conversation. I know. It’s not really a conversation, but thinking of it this way will help you to relax just a little bit and to appear more natural. Speak to the reporter and try to forget about the camera. That’s a tough one, but try at least to focus on the person asking the questions.

5) Control The Agenda: You aren’t the one asking the questions, but you’re not powerless in an interview situation. If there is a message you want to convey or points you want to make, work them into your answers. You don’t have to respond to questions that you don’t want to answer. If you don’t have an answer, don’t make something up on the spot or guess. Say simply that you’ll have to get back to them on that one. If a question comes up that is outside of the parameters of what you had agreed to speak about, politely say that this is an area that you had not agreed to speak about or that you’ll need to respond later. Whatever you do, don’t lose your cool and/or walk out of the interview while the camera is rolling. If that happens, you know for sure what you’re going to see later on.

6) Have Fun: This is a bonus step, and an important one. We’ve discussed some of the things that can go wrong, but most of the time they won’t. Try to stay loose, live in the moment and enjoy the experience. It might be difficult actually to have fun in a stressful moment, but even if you can convince yourself that it is, you will look better, feel better and the resulting interview will show it.

The front page of a major newspaper or a magazine cover is the holy grail for many businesses. The allure of notoriety, big business and untold riches is all there, not to mention that teeth gnashing envy of their competitors.

In reality it’s time to ask whether you’ll really get what you want with that coveted coverage, and maybe, just maybe, you’re better off without it. Here are several reasons to think twice about spending time and money going after front page coverage:

1) You Lose Control of the Story: Remember, it’s the reporter’s story, not yours. You may want to talk about your new product, but the reporter’s story might be about how your new product doesn’t work. Once you’ve begun the process you can’t just hit the reset button.

2) Good News Doesn’t Sell: Ever heard the saying, “You bleed, you lead.” There’s truth in that old newspaper chestnut that bad news is sensational, and that’s exactly why people buy newspapers. The people and companies that make the front pages are often the ones that have f*&ked up big time. You might not want to be there.

3) You’re Not As Smart As You Think: The moment you think that you can craft a story is the moment that you’ve proven that you’re not as smart as you think you are. Most journalists didn’t choose their because they couldn’t get your job. It was a conscious choice. They write more stories than you do, and do a lot more interviews too. Many if not most of them are pretty good at it, and you’re probably not going to fool them.

4) Is Anybody Out There? Newspaper and magazine circulations have been declining for years. Who’s actually going to see the story, and, assuming it’s a good story, are those really the people that you need or want to see it?

5) Reaching Your Audience Directly: Social media has made it possible for businesses to reach out directly to the people they need to reach. When you create your own content, you control the news, the story and the angle. You’re not filtering it through a reporter. What’s more, many social media platforms make it possible for you to identify and target the demographic most amenable to receiving your message. If you’re really interested in selling your product or service those are the people you need to reach.

If you’re goal in getting on the front page is to fill that spot on your trophy wall, by all means, go for it. Assuming the story is ultimately the one you’re hoping to see, it will fit right in there. If instead, your goal is to do more business and make more money, you might want to think again. Use your own content to reach out directly to people you’d like to engage.

I have a close friend, a CEO, who gets so many pitches and unsolicited emails for business that he doesn’t have time, or the inclination, to open them. And for that matter, neither does his assistant. She hits delete, sight unseen. That’s a pretty discouraging anecdote, but also a telling one. The fact is that as we live an breathe in the 21st Century, nobody cares about your business, except for you.

That’s the bad news. The good news is that it doesn’t have to be that way. You have the ability and the capability to make others care about what you do, what you sell and how you do it. I’m not saying that it’s easy, but you can do it, and we’ll get to all of it in this series of posts. First, it’s important to take a look and to understand the reasons why nobody cares about your business.

1. Do You Like Drinking From a Fire Hose? Whenever I open my emails first thing in the morning it’s like I’m trying to drink from a fire hose. The flow of solicitations, news and just plain garbage is unrelenting and continues all day long. I realize that I may be missing something, but I have no choice other than to tune out.
2. Do I KnowYou? If you’re sending me an unsolicited pitch or email the chances are that I don’t know you. I may not even have heard of you. I’ve probably also received 14 other emails from people just like you. What are you doing to break through the clutter?
3. Why You? If I do open an email or click on an ad, there’s often something missing. Why are you or why is your company different from everything else out there? Why should I care? Why do I need what you’re selling? It’s not enough just to let me know that you exist. Everybody exists online.
4. Are You Looking At the Bigger Picture? You may be certain that you are the best in the business and that you deserve to be noticed and hired. The chances are that all of your competitors think pretty much the same thing. You’re also assuming that I’m actively seeking what you’re selling. In an age of highly targeted advertising that may be the case, but it just as well may not be. More about that later.
5. Do You Have a Plan? You may be spending a lot of time and money playing the law of averages. If you put enough stuff out there some of it will stick, people will notice, right? Yes, they might notice, but they also might be annoyed and irritated. The result could be worse than not caring about your business. They might actively go out of their way not to hire you.

In the days ahead we’ll look at some of the ways that you can get people not only to care about your business, but to take the next step and to actually hire you. Stay tuned!

I get it, BBQs,the beach fireworks and wills don’t seem to be an automatic fit (i.e. Which of these things doesn’t belong?), but a relatively quiet time might be just the right time to think about your family’s future. Now that things may be slowing down for the summer and at least some of the feelings of crisis surrounding the Pandemic have subsided, it may be a good idea to check up on the status of your trusts and estates documents. 

Granted, it doesn’t sound like a lot of fun, but it is a good time to think about the state of your documents. By most estimates, 50-60% percent of Americans don’t even have a will. That’s asking for trouble. On most days, it won’t be a problem, but one day it may be the cause of confusion and conflict within your family. A well crafted trusts and estates strategy can even help you to preserve and even to acquire wealth during your lifetime. 

Here are a few things to think about when you contemplate creating or updating your estate:

1. You need a will. Just the process of creating a will, will cause you to organize your paperwork, and that in itself is valuable. Also, you can make sure that your estate will be properly distributed. 
2. You need to update your will. Many young parents create wills soon after they have children in order to sort out guardianship issues, and then never pick them up again. Many things happen over the course of a lifetime. Your documents should be uptodate. 
3. New families require new estate planning. Second, or later, marriages, introduce a new level of complexity into estate planning. New relationships and new family members change the legal landscape. If you want to ensure that children and others from earlier marriages or relationships are provided for, it should be specified in your will and/or associated trust documents. 
4. Build on your estate. Trust and estate planning is not just for what happens after you pass away. There are numerous strategies that can help to create income during your lifetime and you can also create ways to provide for your most meaningful charities and non-profit organizations. We won’t go into the details in this post, but starting a discussion will quickly make it apparent how a little bit of advance planning can go a long way. 
5. Determine business priorities. Estate planning also presents an opportunity for you to think about the future of your career and any businesses you may own. How will you ensure the future operation and success of your business after you’re no longer involved? A little bit of thought can stave off what often prove to be the bitterest of family feuds and breakdowns. 

Once you get all of this hard thinking out of the way, you’ll truly be able to get some rest and relaxation into your summer, not to mention, peace of mind. 

I’m a fan of ProPublica. As a former investigative reporter I admire the valuable work that the non-profit organization produces on a daily basis. Yet, as an attorney who does a great deal of work in asset protection and trusts and estates, as well as a former journalist, I have a problem with ProPublica’s recent “blockbuster” exposing how the wealthiest Americans avoid paying income taxes.

First, there’s the almost breathless coverage. Yes, the wealthiest Americans avoid paying income taxes. But that’s not new. It’s something that has been known for a long time. The second, and more important issue is that the article treats its subjects like villains and speaks of them “gaming” the system. The fact is that the people profiled in the article, from Jeff Bezos to Warren Buffett are not doing anything illegal, and that’s acknowledged by ProPublica. They are using well-known, at least to many, techniques, many of which are actually incorporated into the tax code. As an aside, I believe that anyone who is breaking the law to avoid paying taxes should be appropriately punished.

We all try to minimize paying taxes. That’s why we take deductions. That’s the incentive for many to donate to charity, rightly or wrongly. Articles appear in mainstream publications every December about just how to lessen your tax burden. It’s just that the tax code allows the wealthiest to do it on a larger scale. The problem is with the law as enacted by Congress, and ProPublica’s self-righteous anger should be directed at those who enact the laws rather than at those who follow what the government enables them to do. Do you know anyone who looks for ways to pay more taxes?

What’s more, I believe that it’s an egregious violation of privacy to expose the protected information of those profiled in the article. ProPublica states that it’s in the public interest to publish this information. I fail to see how the public interest outweighs the private, and legal activities, of private individuals.

If I’ve got it right, the headline of ProPublica’s article is essentially something like “Very Rich People are Legally Lowering Their Tax Burdens.” The numbers are indeed stunning, but that’s the sizzle. Those taxpayers are not doing anything that was not envisioned by those who created the law. The actual story is much less sexy. And it’s about tax policy and how, whether and why our elected officials enact it.