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

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

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

Building Bob Ross

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

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

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

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

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

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

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

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

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

In the amendment to the Bob Ross Trust, Bob added a clause that specified

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

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

Grand Theft Bob

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

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

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

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

Bob Ross Reboot

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

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

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

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

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

Steve Sues BRI

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

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

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

In other words, it didn’t matter that the Bob Ross Trust left Steve his father’s intellectual property rights because the Trust never owned those rights. Instead, the court found

Bob had transferred all of his intellectual property to BRI during his lifetime via oral contracts. Therefore, the amendment to Bob’s trust was irrelevant, since Bob Ross had already given all of the rights to his intellectual property to BRI.

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

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

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

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

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

This article is a service of Sahmra A. Stevenson, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Whether it’s your very first or your fifth company, if you’re looking to start a new business venture, you have two options: 1) build your own from scratch or 2) buy an existing one. And while many entrepreneurs dream of building their own company from the ground up, the reality is, launching a brand-new business can be incredibly difficult.

Building a business from scratch can involve years of working long hours for little to no financial reward. In fact, whether your company is ever able to generate a profit or not, starting your own business can consume your life like few other activities. What’s more, no matter how much you sacrifice, there’s no guarantee the venture still won’t fail miserably.

On the other hand, buying an existing business and successfully making it your own can be somewhat less stressful. After all, you’re buying an operation that has already proven successful, with an existing customer base, brand recognition, and cash flow.

That said, buying an existing business isn’t without its own challenges. It will also require hard work and sacrifice, and no matter how successful the company was under its former owner, there’s no guarantee you will experience the same prosperity. When buying an existing business, the difference between success and failure often comes down to your first major decision: purchasing the right company.

With so much riding on your decision, here are three big mistakes to avoid when shopping for and purchasing an existing business.

1. Not Doing Proper Research Before Buying
When purchasing an existing business, you need to go into the process with your eyes wide open to ensure that what you’re investing in is everything it’s claimed to be. Just because a business appears to be successful on the surface doesn’t mean there aren’t fatal flaws just below the waterline.

One of the first things you need to learn is why the business is being sold in the first place. The owner may claim to be retiring to spend more time with the family, but he or she might know that a competing operation is opening a megastore just down the street in a few months. You’ve got to gauge not only the company’s current success, but also its potential for future success and growth. To this end, you’ll need to get straight answers to a few essential questions:

• What assets does the business own?
• What debts or liabilities are associated with these assets?
• Is the company involved in any ongoing or pending lawsuits?
• Are there any liens against the business?
• Are there any unpaid vendors, suppliers, and/or contractors?
• Is the company’s particular industry thriving or in decline?

Such due diligence should be done well before you begin negotiations with the seller, not a few weeks before closing. The more you know about the operation, the stronger your position will be as a buyer. When it comes to investigating the company’s legal framework and liabilities, a Family Business Lawyer™ can help you learn everything you need to know to have the strongest position possible.

2. Buying a business using the wrong entity structure
Many budding entrepreneurs get so excited to own their own company, they fail to put the proper liability protections in place. For instance, if all of the contracts you’re signing when you buy the operation are in your own name as a sole proprietor, you’re putting everything you own at risk.

In fact, without the proper business entity in place to shield you from personal liability, you could end up losing your home, car, and savings to the company’s creditors if the venture suffers a major loss or gets hit with a lawsuit. To prevent this, you need to have the appropriate legal structure in place before buying.

Business entities, such as limited liability companies (LLCs) and corporations, often provide the best protection, so even if the company totally fails, its creditors will be legally unable to come after your personal assets. To figure out what’s best for your situation, you should meet with an experienced lawyer like us to help you select, put in place, and maintain the proper entity structure for the specific operation you’re purchasing.

3. Not Properly Valuing The Business
Although improperly valuing a company is technically a lack of due diligence, business valuation is such a complex and nuanced part of the purchasing process, it deserves its own category. Indeed, every single other factor about the business can be totally perfect, but if you pay the wrong price for it, you could be setting yourself up for disaster.

Besides, even if the business you buy doesn’t actually fail because of improper valuation, it makes zero sense to waste tens of thousands of dollars that could be used for much more valuable purposes over a simple mistake that’s fairly easy to avoid.

Many times, a seller will come up with a totally unsubstantiated sales price just to test the waters. Other sellers base the price on a hidden motive: to pay off their own debts, to pay for their kids’ college education, or as part of an upcoming divorce settlement. All of these factors have no bearing on the true value of the business.

Keep in mind that the seller’s initial asking price has nothing to do with a proper valuation—that’s on you. We can help you figure out how the company’s tax and legal liabilities fit into the value equation, and then we can refer you to valuation experts we know and trust to help with the other areas.

Get Professional Support
Owning a business is a huge responsibility no matter how you look at it. And when buying an existing operation, your first—and often most critical—responsibility is to make sure the company you purchase is actually worth the money, time, and energy you’ll be investing. With so much on the line, you shouldn’t try to do everything on your own.

If you want to do things the right way, we recommend that you hire a team of experts to help with the purchase of the business. As your Family Business Lawyer, we can assist you with all of the legal issues related to purchasing the business, and we can put you in touch with other professionals we trust to help round out the rest of your support team. Schedule an appointment with us today to get started.

This article is a service of Sahmra A. Stevenson, Family Business Lawyer™. 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.

Employers should be on the lookout for a new email phishing scam that targets employee paychecks. The latest wave of attacks is a new version of wire fraud scams, which have recently hit businesses across the country.

Known as “business email compromise” or “business email spoofing” (BEC/BES), these scams target businesses of all industry types and sizes, according to the IRS. And the fraud is growing quickly, as it bypasses many existing security protocols, and the amount of funds stolen are often small enough that many companies chalk the loss up to the cost of doing business, which allows the scammers to stay under the radar of authorities.

How The Scam Works

The emails typically impersonate a high-level company employee, like the CFO or CEO, and the messages are sent to payroll or human resources (HR) staff. The email from the scammer asks the payroll or HR staff to change his or her direct deposit information for payroll. The scammer then provides a new bank account and routing number used to have paychecks direct-deposited, but the account is actually controlled by the scammer.

Once the funds are routed to the criminal’s account, the company is on the hook for replacing the stolen funds, and the employee whose email was impersonated faces the inconvenience of a late paycheck. The scam is generally discovered fairly quickly, but not before the victim misses one or two direct deposits.

In another version of the scam, the emails impersonate a company executive and are sent to the employee in charge of making wire transfers. The email asks for a wire transfer to be made to an account controlled by the scammer. Companies that are hit with this scam have lost tens of thousands of dollars.

In addition to having to replace the stolen funds, the scam creates a data breach for the employer, which sets in motion a legal requirement for the company to notify all affected parties. If the employer fails to respond quickly enough, the business can be hit with fines and other penalties.

Flying Under The Radar

According to reporting from CNBC, this latest scam appears to be growing in part because it bypasses some email control protocols, and also because it gets around the usual warnings companies have issued to employees about traditional wire fraud, since the scammers aren’t actually asking for money or an invoice transfer—they are simply asking to change their bank account information for direct deposit.

What’s more, the scam doesn’t require the criminal to hack into an employee’s email account; scammers generate fake email accounts with free services like Gmail and Yahoo. To create a fake email account, the scammer uses the employee’s real name, which lets the scammer avoid security measures designed to detect hacked employee email.

The email messages are typically quite short, polite, and free from the spelling and grammar errors typical of past phishing scams. The emails often start with something innocuous-sounding, such as “‘Hey, do you have a second? I need to update my direct deposit information,” and if that target responds, the scammer will reply in real-time and go from there.

The emails can also sound urgent, often requesting that the HR staff change the bank account information quickly, many times asking to switch the account “before the next paycheck.” Other times, the email will try to discourage the HR staff from calling them back by noting, “I’m going into a meeting now.”

While the funds stolen in the scam are typically relatively low—thousands of dollars versus hundreds of thousands involved with a typical wire fraud case—because the scam is so simple and inexpensive to pull off, it’s becoming more popular with fraudsters. Plus, CNBC noted that criminals have found ways to automate the scam, so the scheme can be scaled, and a single company may get dozens or more hits at the time, which makes the scam even more lucrative—and attractive.

How Employers Can Safeguard Their Operation
According to the IT security firm KnowBe4, employers can combat this new scam and others like it by immediately taking the following actions:

• Alert your workforce to the new scam and explain how it works.
• Direct employees to forward any suspicious requests to the IT or HR departments, rather than replying to the email.
• Instruct employees to refrain from supplying log-in credentials or personally-identifying information in response to any email.
• Ensure that log-in credentials used for payroll purposes differ from those used for other purposes, such as employee surveys.
• Enforce (or, where necessary, establish) multi-factor authentication requirements.
• Review and update the physical, technical, and personnel-related measures taken to protect your sensitive information and data.

If your company does get hit by this email scam or another internet related-scam, you should report the incident to the FBI’s Internet Crime Complaint Center (IC3) by going to www.ic3.gov.

Defend Your Digital Domain
This latest phishing scam is just one of numerous threats that your company faces when it comes to digital security. In addition to scams involving stolen funds, your business is also susceptible to data breaches, hacking, network failures, and other malicious actions targeting your sensitive client and business data.

What’s more, you are also required to stay in strict compliance with an ever-evolving set of federal and state laws governing data privacy. If you fail to comply with these mandates, your business risks fines and other penalties that can seriously impact your bottom line. On top of all that, there is also the risk of getting hit with a costly lawsuit from a client whose data was stolen from your business.

From installing the proper digital security systems and working with the most secure web hosting service to investing in cyber insurance, there are a number of steps you can take to protect your company’s digital domain. That said, the safeguards your company requires will depend on a number of different factors, including the size of your business, the type of data you collect, the market sector your business serves, among other factors, so there’s no one-size-fits-all cybersecurity strategy that works for all businesses.

With this in mind, your best bet is to consult with us, as your Family Business Lawyer™, to implement a comprehensive digital protection plan. As your Family Business Lawyer™, we can advise you on the specific protections you should have in place and keep you updated on the ever-changing legal landscape governing data privacy. And if you’re ever hacked, we can defend you in court against any lawsuits or other liabilities that might result. Contact us, your Family Business Lawyer™ today to learn more.

This article is a service of Sahmra A. Stevenson, Family Business Lawyer™. 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.

If you are a single parent, life for you right now probably couldn’t get any busier. You are likely being pulled between work, school activities, and home – and the inevitable emergencies that fill the lives of single parents everywhere.

Being a single parent is a huge responsibility, even if you do share time with a parenting partner, and especially so if you don’t. Regardless, as a single parent, your children’s lives are now largely in your hands.  So what would happen to them if something happened to you?  Who would take care of them?  Who would pay for their housing and food?  Who would pay for their education?  These are questions you need to get answered, and the best way to do that is through estate planning.

Having an estate plan that covers the care of your children in case you should be in a severe accident, fall ill, or die welcomes peace of mind for the single parent knowing everything and everyone they love is taken care of.  Here are the must-haves that can protect your children if something were to ever happen to you:

Will

A will lets you name the person responsible for your estate and belongings as well as who will inherit your assets. Most importantly this is the legal vehicle you use to name a guardian for your children,  without a will, the state will decide their fate. The greatest risk you leave behind when ignoring this piece of your estate plan is that your children could be taken into the care of strangers at any time.

Revocable Living Trust

There are so many benefits of a living trust for single parents.  First, a trust enables you to still control your money and property while you’re able, but if you die or become incapacitated, it transitions that decision-making authority immediately to the person you have named as your trustee (obviously someone you can trust and count on to do what you would have wanted).  If your children are still minors or even young adults their inheritance can be handled for them until the time comes when they are capable (and you decide that time).  Plus, if you have a trust, your estate doesn’t have to go through probate, which can be costly and time-consuming. Without trust, you risk draining your hard-earned money on probate costs. This is not ideal if your children need to continue living in their homes and having their expenses paid. 

Durable Power of Attorney

As a single parent, you are likely the only signatory on your mortgage, your bank accounts, and other financial instruments.  What would happen if you became incapacitated and there was no one to pay the mortgage or the bills?  That is why it is important to have a durable power of attorney in place. When choosing your power of attorney, it should be someone you trust managing your financial affairs, while also make legal decisions on your behalf if you are unable to do so.

Advance Medical Directive 

An advanced medical directive gives you the legal power to the person you choose to make your health care decisions in case you are not capable of doing so yourself.  This is especially important if you are not remarried or do not have immediate family members nearby.

Beneficiary Forms

Your life insurance policy, retirement accounts, and brokerage accounts all require beneficiary designations.  Those you designate to receive the assets in these accounts will only receive them if you execute the proper beneficiary forms!  They cannot pass to your heirs via a will or trust. And minor children should never be named as beneficiaries as they are not legally able to own assets. Talk with us today, your Personal Family Lawyer® about strategies to leave these assets to your children without court intervention.

Kids Protection Planning Kit®

Developed by a nationally recognized attorney who is a single mom herself, the Kids Protection Planning Kit® provides single parents with the legal planning tools they need to make sure there is never a question about who will take care of your kids if you are in an accident. The kit includes legal documents to name short- and long-term guardians, instructions for those guardians, medical powers of attorney for your minor children, and more.  

You can name your guardians right now with my Kids Protection Plan Tool, It only takes minutes, and it’s absolutely free. 

One of the main goals of our law practice is to help families like yours plan for the protection of yourself and your family through thoughtful estate planning. Call our office or schedule online today to schedule your free Family Wealth Planning Session™  for us to review how to protect what matters most, during this time together we can identify the best strategies for you and your family.

This article is a service of Sahmra A. Stevenson, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.