Family Law
How to Divide Retirement Accounts During Divorce Amid Market Fluctuations
Dividing retirement accounts during a divorce is already complex, but the process becomes even more complicated when you factor in market volatility.. Stock market fluctuations can dramatically change the value of retirement accounts, which makes equitable distribution a moving target. Understanding the impact of these fluctuations—and planning accordingly—can help divorcing couples avoid unnecessary losses and ensure a fair outcome. Understanding the Basics: Types of Retirement Accounts Before discussing market impact, it’s important to recognize the common types of retirement accounts: Defined Contribution Plans (e.g., 401(k), 403(b), IRAs): These fluctuate based on the performance of the investments within them. Defined Benefit Plans (pensions): These are typically based on years of service and salary, with less direct impact from market swings. Roth vs. Traditional Accounts: Roth accounts are funded with after-tax dollars; traditional accounts grow tax-deferred and are taxed upon distribution. Each account type has different rules for division and tax implications, which need to be considered in light of market performance. The Challenge: Market Volatility Retirement accounts tied to stocks, mutual funds, or exchange-traded funds (ETFs) can experience wide swings in value. If assets are divided based on a snapshot in time—say, the date of separation or a particular court hearing—the actual value distributed could be significantly different by the time the account is divided. Example: If a 401(k) is worth $200,000 on the separation date but drops to $180,000 before it’s divided, the spouse receiving their share may end up with less than intended unless safeguards are in place. Options for Dividing Accounts Amid Fluctuations Use Percentage-Based Division Instead of awarding a fixed dollar amount, divide the account by a percentage. For instance, awarding one spouse 50% of a 401(k) ensures they receive half of the value at the time of division, regardless of market changes. Use Qualified Domestic Relations Orders (QDROs) Wisely For employer-sponsored plans like 401(k)s and pensions, a QDRO is necessary. This legal document outlines how the plan should be divided and allows for the transfer without taxes or penalties. The QDRO must specify division as a percentage, not a flat dollar amount, especially in volatile markets. Consider Timing Carefully If markets are highly unstable, it may be worth pausing division until some stability returns. Alternatively, couples can agree to an average value over a specific period (e.g., last 30 days) to avoid basing the division on a market peak or trough. Account for Investment Type Some investments within retirement accounts may be riskier than others. If one spouse receives mostly equities while the other gets more stable bond funds, it could create an imbalance in future value—even if the division looks fair on paper at the time. A financial advisor can help rebalance the allocations for fairness. Tax Consequences Matter Traditional accounts will be taxed upon distribution. If both spouses receive different account types (e.g., one gets Roth, the other gets Traditional), the net value could be very different. These tax effects should be a factor in negotiations. Post-Division Market Movement Once retirement assets are divided, each party is typically responsible for gains or losses moving forward. It’s essential to clarify the “cut-off” date for shared responsibility in the divorce agreement. Dividing retirement accounts in a fluctuating market is as much about strategy as it is about fairness. Consulting a divorce financial planner or an attorney with experience in high-asset divorces can help ensure the division is equitable, tax-efficient, and insulated from unnecessary market risk. In the end, clear communication, well-drafted legal documents, and smart timing can all help protect your financial future during an emotionally charged and financially complex time.
April 11, 2025
Labor and Employment
Key Trends in PAGA Arbitration Decisions: Insights for Employers and Legal Counsel
The proliferation of wage and hour litigation in California and recent significant changes to the law have created uncertainty for employers and their lawyers alike. Both recent PAGA (Private Attorneys General Act of 2004) reform legislation and critical court decisionsi have changed the landscape for employers seeking to prevent and defend these wage and hour claims. Generally speaking, PAGA allows employees who have suffered Labor Code violations (such as the failure to provide minimum wage, overtime, accurate wage statements, and proper meal and rest breaks) to sue their employers on behalf of the state for Labor Code violations—even for violations that affect other employees. In essence, the California Attorney General has deputized employees to pursue Labor Code violations on their behalf in an effort to enforce wage and hour laws. While most employers are familiar with the risk associated with wage and hour class actions, the companion PAGA claims are on the rise and being pursued by employees at a rapidly increasing rate. While recent PAGA reform law has arguably helped to limit aspects of the law, including requiring employees to suffer violations and have standing to do so, before bringing lawsuits, reducing certain repetitive damages, and allowing for the potential early cure or resolution of claims in some instances, ultimately the reforms have not slowed the momentum of these lawsuits against employers. More precisely, the reform has provided additional tools and defenses to employers to address the lawsuits. With this in mind, it becomes even more apparent that the goal of every employer should be to take steps to prevent or minimize the chances of large representative wage and hour lawsuits against their business. The drafting and implementing arbitration clauses and class action/PAGA waivers can accomplish this. Many employers seek to use arbitration agreements to keep these kinds of claims out of court. However, recent legal decisions threaten to make it much more difficult to use these measures to avoid legal claims unless the agreements are carefully drafted. More recently, California courts have been active in issuing decisions that clarify the effectiveness of arbitration provisions in subsequent lawsuits to force employees into less dangerous and less expensive individual arbitrations versus full-blown representative actions. Three very recent decisions issued in 2025 from California’s Second District Court of Appeal underscore the importance of well-crafted arbitration and class action and PAGA waivers.ii Key Legal Decisions Shaping Arbitration Agreements Ballesteros v. FormFactor, Inciii In a clear example of courts nitpicking imprecise arbitration clause language to allow employee representative claims to proceed to court, the Court of Appeal in Ballesteros interpreted the employer arbitration agreement, to exclude all PAGA claims from the scope of the arbitration agreement. The court based its decision on some imprecisely drafted language in an arbitration clause that failed to accurately list PAGA claims as claims pursued on behalf of the state of California. As a result, rather than the arbitration agreement being interpreted to send claims to arbitration, the Court found that the arbitration agreement specifically allowed representative PAGA claims to be pursued in court.iv The Court determined that the arbitration agreement excluded from arbitration PAGA “representative actions” without distinguishing between claims brought on an individual or nonindividual basis. This decision is instructive because the Court chose a very favorable interpretation of the arbitration clause for the employee and went to great lengths to justify its position. The decision serves as a warning that arbitration clauses must be regularly updated to avoid these types of consequences. Cusimano v. Brilliant Earth, LLCv In the Cusimano decision, the Court of Appeal ruled that the entire arbitration agreement was unenforceable because the agreement to arbitrate contained an unenforceable waiver of nonindividual PAGA claims. Initially, the Court concluded that the arbitration agreement was flawed because it improperly barred employees from bringing representative actions against their employers. The Court found that the arbitration agreement contained a nonseverability clause that tied the validity of the agreement as a whole to the validity of the defective waiver of nonindividual PAGA claims and found the full agreement to be invalid, directing the entire matter for resolution in court.vi Much of the Court’s decision was premised on the flawed and unenforceable draft language in the employer documents. The Court was even more assertive in Cusimano in declaring that imprecise drafting and defects will result in employers being forced to litigate class action and PAGA claims in court. Cusimano reinforces the trend of courts strictly scrutinizing employer-drafted arbitration clauses, allowing costly representative litigation to proceed for employees against their employers. Arzate v. ACE American Insurance Companyvii In Arzate, a costly appeal was won, at least in part due to effective (while imperfect) drafting of their arbitration language. The Court of Appeal’s analysis in Arzate centered on the interpretation of arbitration agreements and which party was required to initiate arbitration. The arbitration language at issue required that any party who sought to initiate arbitration must do so within thirty days. The Court determined that the only party who would seek to initiate a claim would be a party seeking relief or, in other words, an employee. As a result, the Court of Appeal found that the employer was not required to initiate arbitration and, as a result, did not breach the arbitration agreements or waive its right to arbitrate. Tellingly, the Court made clear that while the employer “arguably could have used different language in the arbitration rules and procedures to underscore this point, [] the document appear[ed] to be written with a minimal amount of legalese for the benefit of employees without legal training. Read in the context of the entire agreement, the colloquial language shows that the plaintiffs were the party that “want[ed] ... [a]rbitration,” and that they were required to file a demand to initiate the process given their agreement that they would “submit” their employment-related claims to arbitration.” While, ultimately, this decision favored the employer, the trend is clear: Employers must seek regular guidance from their attorneys who monitor these decisions and can provide cutting-edge advice to avoid these types of legal issues. Implications for Employers These cases illustrate a trend in Second District jurisprudence regarding the importance of precision in drafting arbitration provision language. While the law has an underlying strong public policy favoring arbitration, these decisions establish a recurring pattern of the refusal to enforce unclear arbitration provisions in a variety of contexts. Poorly drafted provisions can result in significant litigation, which likely would have been avoided if carefully considered language was utilized. These problems are clearly demonstrated through the various interpretations of the arbitration clauses invalidity and the Court’s unwillingness to enforce them in various scenarios. A carefully crafted arbitration provision and class action/PAGA waiver should be clearly worded, voluntary in nature, fair, and mutual, and include adequate notice to the employee. The provisions should also take into consideration recent decisions which, provide more specific guidance as to pitfalls that must be avoided. These recent decisions serve as a warning: employers who fail to seek regular review may find themselves embroiled in costly and unnecessary litigation without defenses that were otherwise available to them. Action Plan: Steps Employers Should Take Every employer should take this opportunity to seek a review of existing forms provided to their employees or put in place new forms that will ensure adequate protection and insulate them from costly wage and hour litigation in the future.
April 8, 2025
Estates and Trusts
Building Adaptive Trusts: Ensuring Tax Efficiency in an Evolving Tax Landscape
The lifetime estate tax exemption amount is as high as ever. The estate tax exemption amount rose from $1,000,000 in 2002 to $5,000,000 in 2011. Then, Congress doubled the amount of the estate tax exemption in 2018. As of this writing, the current lifetime exemption amount is nearly $14,000,000 per individual. With such high exemption amounts, there are few estates subject to federal estate tax. The focus of estate planning has, therefore, shifted from removing assets from a decedent’s estate to minimize or eliminate estate taxes, to ensuring that assets remain in the estate for estate tax purposes so that the assets receive a step-up in capital tax basis at the time of death. The “step-up” in the capital tax basis of assets means that for capital gains tax purposes, assets in a decedent’s estate will reset to the fair market value of these assets at the time of their death. By way of illustration, if a stock were bought for $100 and appreciated to $1,000 at the time of the account holder’s death, the beneficiary would only pay capital taxes on any further appreciation above $1,000. If the beneficiary sold the stock for exactly $1,000, no taxes would be owed. On the other hand, assets gifted during lifetime or held in an irrevocable trust do not receive a step up in capital tax basis. With the ever-shifting tax landscape, the estate planner must carefully balance the likelihood that their client will have a taxable estate at the time of their death with the desire to include appreciated assets (especially assets with a low capital tax basis) in the Decedent’s estate so that they will enjoy the step-up. But what happens if that calculation seems imprudent or unwise based on facts and circumstances in the future? For example, suppose Peter wishes to provide all his assets to his wife, Mary. Peter’s assets, when combined with Mary’s assets, will be close to or exceed the lifetime estate tax exclusion amount. When Peter passes away, assets received by Mary will not generate any estate tax liability because spouses enjoy an unlimited marital tax deduction. However, it is possible that Mary may now have a taxable estate upon her death, especially if her assets continue to appreciate over her lifetime. Thus, the beneficiaries of Mary’s estate will pay estate taxes on the assets they receive in excess of the lifetime exemption amount in effect at the time of Mary’s death. There are several ways to address these concerns and minimize or eliminate any estate taxes that may be owed in the future. Peter could remove some of his assets from his estate by establishing an irrevocable trust. This trust could be established either during his lifetime or via the use of testamentary trusts (i.e., a trust established at the time of Peter’s death). However, Peter may want to avoid the costs and inconvenience of trust administration if it is possible that he and Mary will never have estate tax issues. Another option is the “wait and see” approach using a “disclaimer trust” that may or may not be funded after Peter’s death. Peter could direct in his will or revocable trust that his assets will pass outright to Mary. Mary may then make a qualified disclaimer, effectively refusing to accept some or all of Peter’s assets. Any disclaimed assets will bypass Mary’s estate and go into the disclaimer trust, which can be used to support Mary for the remainder of her lifetime. The assets that pass to the disclaimer trust, and any subsequent appreciation in these assets, will remain outside of Mary’s estate and will pass estate tax-free to her future beneficiaries. Suppose after funding the disclaimer trust that Mary’s assets are significantly spent down and exhausted during her lifetime. Perhaps a future Congress will increase the estate tax exclusion amount further or completely eliminate the estate tax. In any of these scenarios, the disclaimer trust will serve no tax purpose for Mary. Worse, the assets in the disclaimer trust will not receive the “step-up” in the capital tax basis at the time of Mary’s death. Is there a way to unwind the disclaimer trust and ensure that these assets are includable in Mary’s estate at the time of her death? With careful planning, the answer is “yes”. One powerful technique to resolve this issue is by appointing a trust protector for the disclaimer trust. A “trust protector” is a disinterested party with specific enumerated powers. The trust protector could be given the power to confer upon Mary a general power of appointment to choose any beneficiary she wishes to receive her estate assets, even her own estate. Pursuant to IRC § 2041, assets subject to a general power of appointment are includable in the power holder’s estate for estate tax purposes. Now, whether Mary exercises her general power of appointment or not, the assets will be included in her taxable estate and receive a step-up in capital tax basis. While this planning technique can provide significant tax benefits, it is not always the right choice in every situation. For instance, if Mary were to face creditor issues, granting her a general power of appointment would subject the entire disclaimer trust’s assets to creditor claims. However, when implemented thoughtfully, incorporating a trust protector with the ability to grant a general power of appointment adds valuable flexibility, allowing the estate plan to adapt to the ever-evolving tax laws and optimize tax outcomes.
April 3, 2025
Estates and Trusts
Trustee's Standing in Estate Distribution: A Legal Analysis of Estate of Barry Tarlow
In a groundbreaking decision that could reshape the landscape of California estate law, the Court of Appeal in the Second District Division Four has ruled in favor of trustee David Henry Simon, affirming his right to seek a judicial determination of trust assets under Probate Code section 11700. The court's ruling clarifies the legal framework under which trustees can seek judicial determination of their rights to trust assets, emphasizing the application of Probate Code section 11700. This pivotal ruling is a must-read for estate law practitioners, trustees, and beneficiaries as it navigates the complexities of estate administration with unprecedented clarity and precision. Factual Background Barry Tarlow, a prominent criminal law attorney, executed a will in 2005, with minor modifications in 2006, which held terms for a testamentary trust. The will divided his estate between his siblings, Barbara and Gerald. Gerald was to receive his share outright, while Barbara's share was to be placed in the "Barbara Tarlow Trust," with David Henry Simon named as trustee. Following Barry's death in April 2021, Barbara and Gerald became executors of the estate, and Simon retained his role as trustee. The Barbara Tarlow Trust was a spendthrift trust, which provided that upon Barbara’s passing, the residue would go entirely to Gerald, if living, or otherwise, to a donor-advised fund at Fidelity Charitable Gift Fund. The estate administration process revealed that Barbara's share, intended for the trust, was valued at over $20 million. Barbara disagreed with the use of the spendthrift trust and purchased from the contingent remaining beneficiary, donor-advised fund at Fidelity Charitable Gift Fund, the interest that might go to them to have a power of appointment. Further, to gain control over the trust assets, Barbara and Gerald filed an ex parte petition to replace Simon as trustee and modify the trust terms. After a denial of the ex parte petition, Barbara then disclaimed her entire interest in testamentary trust and Gerlad disclaimed his interest in the estate's personal property. As the joint executors, Barbara and Gerald filed a petition for final distribution, which would remove any distribution to the testamentary trust based on the disclaimers. This led to a series of legal disputes over the final distribution of the estate, including Simon filing a petition to determine beneficiaries of the estate under Probate Code section 11700. Legal Issues and Court's Analysis The central legal issue was whether Simon, as the named trustee, had standing to file a petition under Probate Code section 11700. This section allows any person claiming to be entitled to a share of the estate to seek a court determination of their rights. Simon argued that his role as trustee entitled him to such standing, while Barbara held that her disclaimer prevented such an interest to Simon as there was, therefore, no testamentary trust for him to administer. The court first analyzed the language of the code section as far as standing, providing that "any person claiming to be a beneficiary or otherwise entitled to distribution." In rendering their ruling, the court stated that this phrase, as included by the legislature, was broad and inclusive, allowing a wide range of individuals to file a petition for court determination. As such, it encompasses not only direct beneficiaries but also trustees and others who may have a claim to the estate assets. The Court of Appeals held that trustees are indeed "persons claiming to be entitled to distribution of a share of the estate" under Probate Code section 11700, reasoning that trustees are "persons entitled to distribution" because they are responsible for managing and distributing trust assets according to the terms of the will. This decision underscores the trustee's legal title to trust property, which vests as of the decedent's death, giving them a legitimate claim to the estate's distribution. The court's interpretation of section 11700 provides a clear precedent for future cases involving trustee standing in probate matters. Although Barbara argued that her disclaimer presumptive prevented Simon’s standing, the court highlighted that the presumption of the validity of disclaimers is not conclusive and can be challenged, which was contrary to the trial court’s assumption in these proceedings. This aspect of the ruling emphasized the need for a thorough judicial review of disclaimers and other estate-related documents. Ultimately, the Court of Appeals remanded the case for further proceedings to determine the validity of Simon's claims and Barbara's disclaimer, indicating that factual disputes should be resolved through evidentiary hearings. Conclusion and Implications The Estate of Barry Tarlow marks a pivotal moment in estate law, reinforcing the vital role of trustees and the necessity of procedural rigor in probate proceedings. By affirming the trustee's standing and emphasizing the importance of judicial review, this ruling ensures that the administration of estates is conducted with fairness and transparency. Legal practitioners, trustees, and beneficiaries can look to this case as a guiding beacon, illuminating the path to equitable and just estate distribution. This ruling has significant implications for drafting attorneys, trustees and beneficiaries alike. For drafting attorneys, the decision underscores the need for precise and detailed trust provisions to account for potential court involvement, which could complicate the estate planning process and necessitate more extensive legal advice. Trustees gain enhanced authority to manage and distribute trust assets, but they must be vigilant against potential misuse of their standing and be prepared for increased litigation risks. Beneficiaries benefit from greater protection, as trustees can now more confidently seek court intervention to safeguard their interests. However, this ruling may also lead to more frequent challenges to trustee actions, potentially straining relationships and increasing disputes. Overall, while the ruling strengthens the legal framework for trustees, it introduces complexities that all parties must navigate carefully. As the legal community absorbs the implications of this landmark decision, it is clear that the principles established here will resonate through future probate and trust law cases, shaping the landscape of estate administration for years to come.
April 2, 2025
Intellectual Property
Trademark Registration Misconceptions: What Brand Owners Should Know
Many business owners view trademark registration as a smart investment—and they’re right. A federal registration gives you valuable legal advantages, including nationwide priority, a presumption of ownership, and stronger tools to protect your brand. But registering a trademark doesn’t give you absolute control. Whether you can prevent someone else from using a similar name or logo often depends on a few key questions: Who used the trademark first? If another party has prior rights, their use may be protected. Are they using it for the same or related goods/services? If you're operating in unrelated industries, another party’s use may not be infringing. Understanding these factors can help you protect your brand more effectively and avoid common trademark misconceptions. Trademark Protection Is Limited to Specific Goods and Services A trademark registration does not prevent others from using a similar or identical name, logo, or slogan in unrelated industries. Trademark law is designed to prevent consumer confusion—not to grant brand owners exclusive control over a word or phrase in all contexts. Your trademark rights are fundamentally tied to the goods and services that you sell under your brand name, logo, or other source indicator (i.e., trademark). You can register a trademark to use in connection with the sale of specific goods and services, not for everything. A perfect, real-world example of this can be found at the corner of Broadway and W 68th Street in New York City, where for several years, a LOWE’S® hardware store sat directly across from a LOEWS® movie theater. Despite the nearly identical pronunciation and similar spelling, both brands coexisted peacefully—and legally—because they operate in entirely different industries. Even though the names are similar, consumers are not likely to confuse a home improvement store with a movie theater or think that there is any shared ownership. The goods and services they offer are so different that consumers would not likely assume the two businesses are affiliated. (The Lowe’s eventually closed, but it was likely due to the lack of need for a big-box home improvement store in the heart of Manhattan rather than any trademark conflict.) If two businesses operate in distinct industries with different audiences and purposes, similar names can often legally coexist. “I Had It First”: Why First Use Still Matters When two companies are trading in related commercial spaces (i.e., selling similar goods or services to one another) under the same or similar trademarks, U.S. trademark law will generally favor the party that was using it first. That’s why, before applying for federal registration, your trademark attorney will typically conduct a search to identify existing registrations, pending applications for registration, and unregistered (or “common law”) uses of the mark. The term "common law" refers to trademark rights that arise through the actual use of the mark in commerce, even without formal registration. Suppose you're opening a bakery in North Carolina called “Maple & Bean.” A common law search reveals a small café in Vermont that has used that name locally for years but never registered it. If you and your trademark attorney agree that the reward outweighs the risk and there are no other conflicts, the USPTO may grant you a trademark registration. But even with that registration, the Vermont café would retain the right to use the name in its existing geographic area because it used it first. Your registration would, however, generally allow you to prevent others from using the same or a confusingly similar name for related goods or services going forward. However, it wouldn’t give you the right to stop someone from using “Bean & Maple” for products in unrelated industries, like glassblowing tools or HVAC systems. In short, trademark protection is both industry-specific and use-based. Registration strengthens your rights but doesn’t erase earlier uses—or give you absolute authority over all uses. Conclusion A federal trademark registration is a valuable asset, but its scope is not unlimited. Trademark rights are determined by both first use and the specific goods and services involved, making enforcement a fact-specific analysis. Understanding these nuances can help businesses manage their trademark rights effectively and avoid common misconceptions about registration.
April 2, 2025
Mergers and Acquisitions
Tariffs and DOGE: The Impact on Mergers and Acquisitions in 2025
While many felt that 2025 might finally be the year of the rebound for mergers and acquisitions (M&A), the M&A landscape has hit turbulence as we take off into the new year. In just the first few months, the new administration has imposed 25% tariffs on Mexican and Canadian imports, with a limit of 10% on Canadian energy, as well as a 20% tariff on products from China. These countries have already announced retaliatory efforts, including 15% tariffs from China on a variety of US farm exports and an announcement from Canada that they would “plaster tariffs” on more than $100 billion of American products over 21 days. There has also been a flurry of activity from the Department of Government Efficiency (DOGE), cutting funding and staffing across a variety of government agencies. According to a recent article in M&A Alerts, “The department’s influence could significantly impact industries reliant on government contracts, regulatory approvals, and cross-border investments, raising critical concerns for dealmakers in this evolving economic and political environment.” These efforts also raise regulatory concerns and are already running into legal challenges. Needless to say, the combination of tariffs and actions by DOGE has and will continue to have an impact on M&A activity this year. In fact, PitchBook is reporting that Morningstar DBRS stated they do not anticipate the substantial rise in M&A that was expected to arrive this year. So, why are these efforts poised to have such an impact on the M&A market? A lot of it has to do with uncertainty. Bloomberg points out that “the worst enemy of a booming market for mergers and acquisitions has always been uncertainty.” Their data shows that just over $470 billion in global transactions have been announced so far in 2025. That number is down 17% from the same period last year. If history proves to repeat itself, that is not a good sign for an M&A rebound in 2025, as Bloomberg also notes that “not once in the past two decades has dealmaking rebounded from a negative first quarter to beat the previous year’s tally.” In addition to uncertainty, tariffs have a real impact on businesses who import or export goods and can negatively impact profitability and valuations. Supply chains can also be subject to tariff-related risks, which makes the due diligence process in transactions more complicated. Additionally, tariffs have implications for deal structure and timing, and some deals that were in the works might have to be restructured to account for the impact of new tariffs. However, there could be some silver lining in all the doom and gloom. M&A Alerts also notes that DOGE’s efforts could have positive impacts on the business community, and “the push for efficiency and deregulation may accelerate approvals and boost deal flow.” So, while there is very real concern about the market volatility all of this is creating, there could be some pro-business efforts taking place that will have long-term benefits. No matter your opinion on the tariffs or the work DOGE is doing, these are very important areas to monitor for dealmakers as they will no doubt impact deal structure, target selection, valuations, supply chain issues, regulatory compliance, and a host of other factors at least for the foreseeable future. Legal advisors will be working to find ways to mitigate the impact and risks amid this period of uncertainty.
March 31, 2025
Labor and Employment
The Future of DEI in the Private Sector: Navigating a Changing Legal Landscape
The private sector's Diversity, Equity, and Inclusion (DEI) landscape is undergoing significant transformation in response to evolving federal policies and legal challenges. Two executive orders from President Donald Trump in early 2025—Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” and Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”—mark a clear shift in the federal government’s stance on DEI initiatives. These orders eliminate DEI programs within federal agencies, revoke affirmative action requirements for federal contractors, and impose new compliance obligations. As a result, private employers—especially federal contractors and grant recipients—should reassess their DEI strategies, considering increased scrutiny and potential legal risks. Executive Orders and Policy Shifts The Trump administration has ramped up its scrutiny of DEI initiatives across both the federal government and the private sector, treating employment practices that take protected characteristics into account as potentially unlawful. While the Administration has not explicitly defined "illegal DEI," public statements suggest that policies tying compensation to diversity targets, factoring protected characteristics into hiring, or requiring diverse interview slates are high-risk. However, initiatives such as open employee resource groups and broader candidate pools may face less scrutiny. Companies should align internal policies with disclosures and prepare for potential government investigations. Executive Order 14151, issued on January 20, 2025, mandates the termination of all federal DEI-related offices, grants, and programs, asserting that such initiatives violate civil rights laws. The following day, Executive Order 14173 rescinded affirmative action requirements for federal contractors, directing the Office of Federal Contract Compliance Program to halt diversity-related enforcement. Contractors must now certify compliance with anti-discrimination laws, with noncompliance potentially leading to False Claims Act liability. On February 5, 2025, the Department of Justice (DOJ) Civil Rights Division announced plans to investigate and penalize illegal DEI mandates in the private sector and federally funded institutions. Simultaneously, the Office of Personnel Management (OPM) instructed federal agencies to remove unlawful diversity requirements from hiring and selection processes, reinforcing a shift toward merit-based employment policies. Expanded Enforcement Landscape: What Employers Must Do Now—and Why Private businesses must take immediate and deliberate steps to evaluate their DEI policies and practices and craft a strategic response. That response may involve revising existing policies, reaffirming a commitment to DEI (whether amended or intact), or preparing to pause, pivot, or defend current practices. In today’s fast-moving and high-stakes enforcement environment, inaction is not a neutral stance. It is a strategic decision—one that could expose an organization to government scrutiny, private litigation, reputational backlash, internal tension, or all of the above. Executive Order 14173 signals a dramatic expansion in the federal government’s oversight of diversity-related initiatives, extending well beyond public institutions and federal contractors. The order explicitly instructs all agencies to investigate what it terms “illegal” DEI preferences in the private sector and to issue formal enforcement recommendations within 120 days. These directives apply not only to publicly traded corporations but also to large nonprofits, philanthropic foundations, professional associations, and major universities—broadening the scope of potential enforcement targets across virtually every major sector of the economy. The Equal Employment Opportunity Commission (EEOC) is taking active steps to implement the administration’s vision. EEOC Chair Andrea R. Lucas has publicly committed to rooting out what she describes as unlawful DEI-driven discrimination, particularly those policies based on race or sex. The agency has removed language related to gender identity from its internal and public-facing platforms and has emphasized a shift toward a strictly merit-based framework in alignment with the administration’s priorities. In parallel, other federal agencies have been tasked with developing litigation strategies and potential regulatory actions to deter identity-based preferences, creating an increasingly complex legal landscape for employers. What makes this moment particularly challenging is the legal ambiguity that now surrounds many DEI practices. Although Executive Order 14173 stops short of banning all DEI initiatives, it targets those that include quotas, demographic set-asides, or explicit preferences based on protected characteristics—practices the administration has signaled are incompatible with federal civil rights law. These categories of DEI programming now carry heightened legal risk, even if they were once considered industry best practices. This presents a difficult paradox for private employers. Continuing with DEI programs may trigger reverse discrimination lawsuits, internal employee complaints, or direct federal investigation. At the same time, rolling back or eliminating those programs altogether may lead to claims of disparate impact, undermine employee morale, damage recruitment and retention efforts, and erode hard-won reputational goodwill. In short, the stakes are high, and the risks exist on both sides of the equation. Employers cannot afford to take a passive or reactive posture. Whether your organization has a well-established DEI framework or is in the early stages of building one, now is the time to conduct a thorough review, understand your exposure, and make intentional decisions that balance legal compliance with business goals and organizational values. The key is to act—not out of fear but with clarity, strategy, and purpose. Judicial Challenges and the Ongoing Legal Debate These actions have triggered a wave of litigation, contributing to a rapidly evolving and uncertain legal landscape for private employers and institutions navigating DEI compliance. On February 3, 2025, several advocacy and academic organizations—including the National Association of Diversity Officers in Higher Education and the American Association of University Professors—filed suit in the U.S. District Court for the District of Maryland, seeking to block key provisions of Executive Orders 14151 and 14173. In National Association of Diversity Officers in Higher Education et al. v. Trump et al., the plaintiffs argued that the orders violated the First and Fifth Amendments by imposing vague and overbroad restrictions on speech and association, and by chilling lawful DEI-related activities. On February 21, 2025, Judge Adam B. Abelson issued a nationwide preliminary injunction enjoining federal agencies from enforcing the Termination, Certification, and Enforcement Threat Provisions of the executive orders. However, the court allowed federal investigations into alleged “illegal DEI discrimination” to proceed, emphasizing that while certain aspects of the orders could be constitutionally enforced, others lacked clarity and posed significant risks to protected constitutional rights. Judge Abelson denied the Trump administration’s motion for a stay of the injunction on March 3, 2025, finding that the plaintiffs had demonstrated a likelihood of irreparable harm and that the challenged provisions raised serious constitutional concerns. The court also declined to limit the relief to the named plaintiffs, citing the broad implications of the orders across multiple sectors and jurisdictions. On March 10, 2025, the court reaffirmed that the preliminary injunction applied nationwide to all federal executive agencies, departments, and officials—excluding only the President—underscoring that executive authority must still operate within constitutional boundaries. However, on March 14, 2025, the U.S. Court of Appeals for the Fourth Circuit granted the government’s motion to stay the preliminary injunction, effectively restoring full enforcement of Executive Orders 14151 and 14173 pending appeal. The unanimous ruling by a three-judge panel was issued shortly after the district court addressed plaintiffs’ concerns that the Department of Justice had failed to comply with the earlier injunction. In a rare move, each judge on the Fourth Circuit panel issued a separate concurring opinion. Chief Judge Albert Diaz acknowledged the controversy surrounding DEI and expressed support for those working to advance such initiatives, while also noting that neither executive order defined the term “DEI” or its components. Judge Pamela Harris concurred in the stay based on the limited scope of the executive orders but cautioned that overbroad enforcement could still raise significant First Amendment and Due Process concerns. Judge Allison Jones Rushing, in her concurrence, questioned the breadth of the district court’s injunction and emphasized judicial impartiality, pushing back on the normative statements in support of DEI expressed by her colleagues. On March 17, 2025, the Fourth Circuit requested the parties to respond to a proposed briefing schedule by March 24, which could extend the briefing into late May. While the stay allows the executive orders to remain in effect during the appeal, the ultimate legality of the orders remains unresolved and may ultimately be determined by the U.S. Supreme Court. For now, private employers and institutions should stay closely attuned to these legal developments as the balance between regulatory enforcement and constitutional protections continues to shift. The evolving litigation landscape may significantly impact compliance obligations, enforcement risks, and the future of DEI-related initiatives nationwide. Business Consideration and Strategic Adjustments for Employers Despite increased federal scrutiny, businesses must carefully balance compliance with broader DEI objectives, ensuring alignment with legal requirements and inclusivity goals. Actions to consider include: Conducting a Comprehensive Legal and Risk Assessment - Employers should evaluate their DEI programs for compliance with federal anti-discrimination laws. Initiatives involving quotas or preferential treatment based on protected characteristics should be reviewed and, if necessary, modified. Refining DEI Messaging and Training Programs - Businesses should reassess their public statements and training programs to emphasize equal opportunity principles while avoiding language that could be construed as endorsing unlawful preferences. Monitoring Legislative and Judicial Developments - Employers should stay informed about regulatory changes that may impact DEI initiatives. Consulting with legal counsel and industry groups can help businesses navigate this uncertain environment. Adapting DEI Strategies to Align with Legal and Business Goals - Companies should continue fostering inclusive workplaces through legally compliant initiatives, such as mentorship programs, leadership development efforts, and workplace culture assessments. Businesses can maintain their DEI commitments while minimizing legal by focusing on equity and opportunity rather than preferential treatment. Conclusion The private sector must navigate a complex and evolving DEI landscape shaped by federal policies, legal challenges and shifting public expectations. While government-mandated DEI programs face heightened scrutiny, corporate diversity initiatives remain a key business strategy. However, evolving executive actions introduce ambiguity in compliance obligations, requiring companies to balance federal court interpretations of Title VII, state and local anti-discrimination laws, and international regulations. By proactively adapting to these changes, businesses can continue to promote inclusivity while ensuring compliance and mitigating legal risks.
March 28, 2025
Landlord Representation
Navigating ICE and Law Enforcement: A Guide for Landlords and Property Managers
As immigration enforcement efforts evolve, landlords and property managers must prepare to respond appropriately when interacting with Immigration and Customs Enforcement (ICE) or other law enforcement agencies. Understanding legal obligations, protecting tenant privacy, and establishing clear policies are important to ensuring compliance while minimizing legal and operational risks. Establishing Policies and Procedures One of the most important steps property managers can take is to develop a written policy outlining how to respond to law enforcement during interactions. Having a clear plan in place ensures that all staff members—whether property managers, leasing professionals, or maintenance teams—understand their role in these situations. A well-documented policy helps: Protect tenant privacy and confidentiality. Ensure legal compliance with federal, state and local laws. Maintain consistency in responses to law enforcement inquiries. Because property management staff frequently changes, a written policy ensures continuity in handling these situations, reducing the likelihood of errors or inconsistencies. Understanding Law Enforcement Agencies and Documentation When law enforcement officers arrive at a property, they may be from different agencies, including ICE, the Department of Homeland Security (DHS) or the Department of Justice (DOJ). Each agency may present different types of legal documents, and it is critical to understand the distinctions: Criminal Warrants – Issued by a judge, these warrants may grant law enforcement the right to access a property or obtain specific information. Civil (Administrative) Warrants – Issued by immigration officers rather than a judge, these do not automatically grant access to private property. I-9 Audits – Requests for employment eligibility documentation; typically, businesses have three days to respond. It is essential not to assume that any document presented requires immediate action. Instead, property managers should take the time to review the warrant, confirm its validity and consult legal counsel as needed. Protecting Tenant Confidentiality and Managing Risk Tenant privacy must be safeguarded during interactions with law enforcement. Property managers should follow these steps when responding to a request for information or access: Request a Copy of the Warrant – Always obtain a physical or digital copy before taking any action. Verify the Warrant’s Scope – Determine whether it is a criminal or administrative warrant and whether it grants law enforcement the right to enter the property. Follow Internal Protocols – Staff should notify the designated corporate or legal contact before responding to the request. Minimize the Disclosure of Information – Only provide what is legally required. Avoid Immediate Compliance – Taking a moment to review the request and consult legal counsel can prevent unnecessary disclosures. Centralizing Decision-Making A key part of risk management is ensuring that decisions regarding law enforcement interactions are made at a corporate or senior management level rather than on-site. Best practices include: Designating a specific contact within corporate or ownership to handle law enforcement inquiries. Training staff to refer all law enforcement requests to the designated corporate/legal contact. Establishing a clear chain of command so that no one makes a rushed or uninformed decision under pressure. Fair Housing Considerations In some jurisdictions, immigration or citizenship status is a protected class under fair housing laws. Locations such as Washington, D.C., Montgomery County, MD, and Prince George’s County, MD, have legal protections prohibiting landlords from inquiring about a tenant’s immigration status during the leasing process. Property managers should be mindful of these laws when handling law enforcement requests related to immigration enforcement. What to Tell Tenants Property managers should be cautious about providing legal advice to tenants. If tenants ask what to do in the event of an ICE visit, the best response is to direct them to legal aid organizations or immigration attorneys. Providing legal guidance could lead to liability if tenants misinterpret the information. Key Takeaways A clear, written policy helps your team respond consistently and appropriately when law enforcement arrives. Centralizing decision-making ensures that requests are escalated to the correct legal or corporate representative, reducing the risk of rushed or uninformed decisions. It’s also important to distinguish between different types of warrants—criminal warrants typically require immediate action, while administrative ones do not. Taking time to verify documents can help prevent legal missteps. Property managers should also be mindful of fair housing laws, which may prohibit asking tenants about their immigration status. And instead of offering legal advice, direct tenants to reputable legal resources. With immigration enforcement policies constantly evolving, staying proactive is key. Property managers can comply with the law by setting clear guidelines, training staff, and consulting legal counsel when necessary while protecting their businesses and tenants.
March 27, 2025
Bankruptcy
Not All (Protection) is Lost After Purdue: Non-Debtor Owner Shielded by Bankruptcy Stay for Duration of Reorganization of His Company
Third-party releases may no longer provide a shield to owners and directors of a reorganized company. Still, a New York bankruptcy court recently paved the way for another constructive solution for the individual owner of a bankrupt company. Judge Mastando III confirmed the reorganization plan of the company and allowed the individual owner and president to stay under the company’s automatic stay umbrella for the life of the 5-year reorganization plan, drawing on precedents that allow bankruptcy courts to issue temporary injunctions staying actions against non-debtors. In re Hal Luftig Co., Inc., No. 22-11617 (JPM), 2025 WL 586757, (Bankr. S.D.N.Y. Feb. 24, 2025). Judge Mastando III noted that “[n]otwithstanding the wealth of precedents extending the automatic stay to non-debtors pursuant to Bankruptcy Code §§ 105 & 362(a), it appears to be an issue of first impression as to whether a non-debtor stay extension should remain in place for the life of a plan.” Id. at *15 (Bankr. S.D.N.Y. Feb. 24, 2025). With respect to debtors, Bankruptcy Code § 362(c)(2) provides that the automatic stay under Code § 362(a) “continues until the earliest of — (A) the time the case is closed; (B) the time the case is dismissed; or (C) if a case is under … chapter 11 … of this title, the time a discharge is granted or denied[.]” 11 U.S.C. § 362(c)(2). When bankruptcy courts extend the automatic stay to non-debtor parties as preliminary injunctive relief, the durational limits of such stays are often not clear.” Id. at *16. The court held that extending the automatic stay to the non-debtor for five years supported the reorganization purposes, as most of the debtor’s business depended on the owner’s efforts, and his ability to manage the debtor’s business was critical to generating revenue. The court agreed that the extension was essential to prevent Mr. Luftig from being distracted by litigation and to allow the debtor to focus on reorganization. The court rejected objections that the extension was unfair or inequitable, as it did not discharge a creditor's claim against Mr. Luftig but temporarily suspended enforcement of the judgment for the duration of the debtor’s reorganization plan. Hal Luftig Company Inc. (HLC) was a notable Broadway production company. An arbitration award against the company and its owner forced it to seek bankruptcy protection in December 2022[1]. The arbitration had awarded investor Warren Trepp’s company FCP $2.6 million, in addition to $2.7 million previously received. In response, HLC filed for bankruptcy protection. The reorganization plan anticipated that Trepp would receive approximately $720,000 over five years, about 25% of the arbitration award. Additionally, the plan included a non-consensual release, effectively shielding Hal Luftig personally from further liability related to Trepp's claims. Judge John P. Mastando III had previously approved in 2023 Hal Luftig Company, Inc.'s Chapter 11 reorganization plan, which included a non-consensual release of claims against non-debtor and owner Hal Luftig in exchange for a one-time cash contribution of $500,000 (the “Initial Confirmation Opinion”). This release effectively shielded Luftig from the arbitration award. The Initial Confirmation Opinion included proposed findings of fact and conclusions of law, subject to approval by the District Court. FCP and the U.S. Trustee objected, and in a decision dated March 19, 2024, the District Court sustained the objections and rejected the findings of fact and conclusion of law in the Initial Confirmation Opinion. Then, in June 2024, the United States Supreme Court issued its ruling in Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024). HLC was forced to revise its plan. In November 2024, HAP filed its Third Amended Plan that proposed a stay extension, which would terminate upon the earliest of this Chapter 11 case’s closure, dismissal, or the grant or denial of discharge and clarified that the scope of the only applied to FCP. In confirming the new plan, the court relied on the Second Circuit’s Queenie, Ltd. decision and a recent decision out of the Delaware bankruptcy court. Queenie, Ltd. v. Nygard Int'l., 321 F.3d 282 (2d Cir. 2003); In re Parlement Techs., Inc., 661 B.R. 722, 724 (Bankr. D. Del. 2024) (“cases have long recognized that bankruptcy courts may enter a preliminary injunction that operates to stay actions against non-debtors.”). The Second Circuit extends the automatic stay to non-debtors when a claim against them would have a direct negative financial impact on the debtor's estate, particularly in cases where the debtor and non-debtor are so closely connected that the debtor is essentially the real party being sued. Other courts have also acknowledged this exception, recognizing that bankruptcy courts can issue preliminary injunctions to stay actions against non-debtors. Queenie, Ltd., 321 F.3d at 287–88 (quoting A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986). The courts that have ruled on non-debtor stay extensions post-Purdue Pharma have reviewed such stay extensions as temporary injunctive relief to facilitate negotiations among the parties. Parlement Techs., Inc., 661 B.R. at 724–25 (debtor sought to extend the automatic stay to its former officers as co-defendants in certain state court litigations while the bankruptcy case proceeded); see also Purdue Pharma L.P. v. Massachusetts, 2024 Bankr. LEXIS 2916, at *6–11 (granting a three-week non-debtor stay extension to allow the debtor and the interested parties to continue negotiations towards a global settlement). In conclusion, the recent decision in In re Hal Luftig Co., Inc. highlights a constructive approach to balance the interests of creditors, the debtor, and non-debtor parties, helping to maintain the stability and success of reorganization efforts in complex bankruptcy cases. By allowing the individual owner to remain under the company’s protective umbrella for the full duration of the plan, the court recognized the critical role that the owner played in the business’s recovery. This decision aligns with precedents permitting bankruptcy courts to grant temporary injunctive relief for non-debtors, ensuring that litigation does not derail the reorganization process. While third-party releases may no longer serve as a shield for owners and directors of reorganized companies, the court's approval of a stay extension for Hal Luftig emphasizes the importance of safeguarding the debtor's reorganization efforts. Ultimately, this ruling offers guidance for future cases where non-debtors are integral to the debtor’s ability to emerge from bankruptcy, establishing that the automatic stay can, in certain circumstances, be extended beyond traditional limits to support the reorganization process. [1] On the date the company sought bankruptcy protection, it also commenced an adversary proceeding (the “Adversary Proceeding”) seeking to extend the automatic stay to non-debtor Mr. Luftig and seeking a preliminary injunction enjoining FCP from executing on the Judgment against Mr. Luftig. See Hal Luftig Company, Inc. v. FCP Entertainment Partners, LLC, Case No. 22–01176. In support of its request for relief, the Debtor argued that there were unusual circumstances warranting an extension of the automatic stay to Mr. Luftig. Specifically, the Debtor argued that it derives profits from the shows produced by Mr. Luftig and that if Mr. Luftig was not protected by the stay, “he [would] be forced on a daily basis to deal with [FCP’s enforcement collection efforts,]” which will “irreparably harm the Debtor’s chance of a successful reorganization…”. Mem. L. Supporting the Luftig Stay at 18, AP Docket No. 3. Moreover, the Debtor argued that the requisite elements for a preliminary injunction against FCP’s efforts to enforce the Judgment were satisfied. Id. at *6. on January 23, 2023, the Court entered an order extending the automatic stay to Mr. Luftig (such stay, the “Luftig Stay”) pursuant to Bankruptcy Code §§ 105 & 362, over FCP’s objection (such order, the “Luftig Stay Order”). FCP did not appeal the Court’s Luftig Stay Order.
March 26, 2025
Bankruptcy
AI Tidbits Watch; Regulatory Tracking
Currently, there is no comprehensive federal legislation or regulations in the US that govern the development of AI or restrict its use. There are state and local laws that will be highlighted here going forward. On May 17, 2024 Colorado Governor Polis signed into law Senate Bill 24-205 "Concerning Consumer Protections in Interactions with Artificial Intelligence Systems" (Colorado AI Act). This is the first comprehensive law targeting AI in the US. The Colorado AI Act is focused on high-risk AI systems, defined as AI that makes consequential decisions. Consequential decision in turn is defined as any decision that has a material or similar effect across a wide range of domains, including education and employment opportunities, financial and lending services, essential government services, health care services, housing, insurance and legal services. Developers and deployers of high-risk AI systems will have until February 1, 2026 to develop processes to comply with the law's requirements. both developers and deployers have a duty to use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination stemming from the intended uses of the AI system. While this duty is key to the law, it's also important to note that developers and deployers are entitled to a presumption that they used reasonable care if they satisfy some key obligations.
March 26, 2025
Estates and Trusts
Cultural Perspectives on End-of-Life Planning: Traditions, Taboos, and Practical Considerations
The United States is an ever-changing cultural landscape. As a nation of immigrants, we are a complex patchwork of individuals from diverse backgrounds, each bringing distinct ethnic, cultural and religious beliefs. Estate planning attorneys must recognize and respect these differences, as they are deeply embedded in our social structure. To be culturally competent attorneys, we must view each client as a unique individual whose background may influence decisions regarding estate distribution, end-of-life planning and burial arrangements. Cultural Influences on End-of-Life Planning End-of-life planning involves some of the most intimate decisions a person may make, often shaped by religious and cultural beliefs. Attorneys cannot assume a client’s preferences regarding burial, cremation or body donation. Additionally, alternative burial practices such as green burials or organic reduction are gaining popularity, though they may be restricted in certain states or prohibited by specific cultural or religious traditions. Despite the discomfort these discussions may bring, engaging in frank and honest conversations with clients is essential to ensure their final wishes are honored. Religious and Cultural Funeral Practices Islam Islamic law emphasizes minimizing harm. When making end-of-life medical decisions, Muslims are encouraged to pursue treatments that preserve life while avoiding those that may cause unnecessary suffering. As death approaches, a Muslim may lie on their right side, facing Mecca. Upon passing, the deceased’s eyes and mouth are closed, and family members recite a final prayer. Islamic funeral customs require that the body be washed, shrouded, and buried as soon as possible. Embalming is generally prohibited, and cremation is strictly forbidden. The deceased is placed on their right side in the grave, facing Mecca, often with a layer of rocks covering the gravesite to prevent direct contact with the soil. Judaism Judaism also emphasizes the sanctity of life and minimizing suffering. Aggressive medical intervention is encouraged only when it does not prolong suffering. After death, mourners traditionally tear their clothing as a sign of grief. The body is cleansed, groomed, and wrapped in a simple white shroud. A designated “shomer” (guardian) remains with the body until burial, which should occur within 24 hours. Traditional Jewish burials use plain wooden caskets with no metal fastenings. Embalming and cremation are discouraged, and mourners may take part in filling the grave with soil as a final act of respect. Buddhism Buddhist traditions focus on facilitating a peaceful transition to the next life. Burning incense during a person’s final moments may be customary. After death, the body is often left undisturbed for a period, typically up to a week, to allow the soul to transition peacefully. Buddhist funeral customs vary by region, but cremation is the preferred method of disposition, as it is believed to free the soul. In Tibetan Buddhist tradition, a high-altitude burial, where the body is offered to vultures, is customary, though this practice is not permitted in the United States. Catholicism Catholics receive three sacraments at the end of life: anointing of the sick, confession, and Holy Communion. These sacraments provide spiritual comfort, forgiveness, and preparation for the afterlife. The anointing of the sick involves a priest blessing the individual with sacred oil, confession allows for absolution, and Holy Communion serves as spiritual nourishment. A Catholic funeral typically includes a vigil, a Funeral Mass and a Rite of Committal. While cremation is allowed, traditional burial is preferred, and cremated remains must be buried rather than scattered or kept at home. Eastern Orthodox Christianity Eastern Orthodox Christians emphasize sacraments at the end of life. A priest administers the final confession and Holy Communion, and individuals are encouraged to avoid medications that may cloud their consciousness during these sacred moments. After death, the family washes and clothes the body in the presence of a priest. Embalming is optional. A wake is held before the funeral, and hymns, such as the Trisagion, are sung during the procession from the funeral home to the church and then to the cemetery. Cremation is not permitted, as the body is considered sacred even after the soul has departed. Chinese Funeral Customs Chinese funerals are deeply rooted in tradition, with customs varying based on geography and religious beliefs. However, certain elements remain consistent across different communities. Before the funeral, families often consult a feng shui master to determine an auspicious date and time for the funeral and burial. In some cases, the master may also select the grave’s location, which is traditionally on a hillside but never beneath a tree. The deceased is typically dressed in white, though individuals who lived to be 80 or older may be clothed in colorful garments to celebrate the long life. Family members customarily hold a three-day visitation period, during which they spend time with their loved ones before the funeral. When the casket is sealed, all family members turn their backs to avoid the belief that their souls could be trapped inside. Similarly, they avert their gaze when the casket is lowered into the grave. Incense is often burned throughout the funeral service and at the gravesite as a sign of respect. Families may also burn spirit money, known as “joss paper,” to ensure their loved one’s comfort in the afterlife. While cremation is permitted, it is customary for family members to witness their loved one being placed in the cremation chamber. Hindu Funeral Customs Hindu funeral rites are deeply intertwined with the belief in reincarnation. Since the physical body is no longer needed after death, cremation is considered the most effective way to release the soul and facilitate its journey toward rebirth. Before cremation, the body undergoes a sacred cleansing ritual, during which it is washed with ghee, honey, milk, and yogurt. The head is anointed with oil, the hands are placed in a prayer position, and the big toes are tied together. The deceased is traditionally wrapped in a white sheet, adorned with a garland of flowers and rice balls. A lamp is placed near the head as part of the ritual. Hindu tradition emphasizes a swift cremation, usually within 24 hours of death. Until then, the body remains at home, allowing family members to pay their respects and participate in final rites. Unique Cultural Funeral Practices South Korea: Burial Beads In 2000, South Korea enacted a law requiring the removal of remains from burial sites after 60 years due to limited space. As an alternative, many South Koreans now transform their loved ones cremated remains into colorful beads, which are displayed in homes. This practice has also gained popularity among South Koreans who live in the United States. Ghana: Fantasy Coffins In Ghana, elaborate, custom-made coffins celebrate the deceased’s personality, profession or passions. These artistic coffins, crafted in shapes such as animals, airplanes, or everyday objects, serve as tributes and works of art, ensuring a vibrant and meaningful send-off for loved ones. Conclusion These are only a short list of the different cultural and religious traditions influencing end-of-life planning. Estate planning professionals must be sensitive to these diverse perspectives to ensure that the clients’ wishes are properly honored. By fostering open discussions and respecting cultural practices, attorneys can provide thoughtful, personalized guidance that aligns with their clients’ values, beliefs and traditions.
March 21, 2025
Business
Succession Planning for Business Owners: Preparing for the Expected—and the Unexpected
Acquiring a business is an exciting and rewarding achievement, but it’s only the beginning of the journey. Many new business owners focus on growth, operations, and profitability, but one critical factor often gets overlooked: succession planning. What happens if you’re suddenly unable to lead? Have you prepared your business to survive and thrive beyond your direct involvement? According to industry insights, over two-thirds of small business owners plan to retire within the next decade, yet nearly two-thirds of family-owned businesses lack a documented succession plan. Without a solid contingency strategy, a business can face severe disruptions, loss of value, or even risk closure. Succession planning is not just about retirement—it’s about ensuring the business can withstand unexpected challenges, leadership transitions, and shifts in ownership dynamics. It must also take into account your financial legacy, meaning your estate plan is a critical piece of this process. Two Critical Aspects of Succession Planning Succession planning can be broken down into two key areas: management succession and ownership succession through estate planning. While management succession ensures the business continues to operate efficiently after leadership changes, ownership succession focuses on transitioning equity and control in a way that preserves family wealth and business continuity. Succession Planning for Management Purposes For search fund entrepreneurs and independent sponsors, acquiring a business often means stepping into an operation that has relied heavily on the prior owner’s relationships and institutional knowledge. If a crisis arises—whether due to illness, a sudden exit, or unforeseen personal events—having a structured plan ensures the company’s continuity and stability. A business should be able to function independently of its owner to maintain investment value, operational efficiency, and strategic direction. Investors such as family offices and other patient capital providers are increasingly focused on long-term business sustainability. They recognize that a company’s ability to transition leadership smoothly directly impacts its valuation, resilience, and growth potential. Businesses with strong management succession plans are inherently more attractive to investors, lenders, and strategic partners. Key Steps in Management Succession Planning Identifying Future Leadership – Develop a leadership pipeline and invest in training potential successors. Creating Governance Frameworks – Establish clear decision-making protocols, performance benchmarks, and board roles. Documenting Operational Processes – Maintain SOPs, financial reporting procedures, and relationship management protocols. Legal & Financial Structuring – Draft contingency plans, transition agreements, and updated leadership contracts. Employee & Stakeholder Communication – Foster transparency to maintain trust and engagement during transitions. Disney - A Succession Planning Failure: A well-known cautionary tale is Disney’s prolonged succession struggle. It offers a public case study in the risks of delayed or unclear leadership planning. Harvard Law’s analysis explores how missteps in succession planning can result in strategic confusion and shareholder concern. Succession Planning for Ownership & Estate Purposes While leadership succession supports operational continuity, ownership succession via estate planning ensures that equity transfers are executed in a tax-efficient, structured, and family-aligned way. Many business owners delay these conversations until it's too late, leading to conflict and financial inefficiencies. A recent article from J.P. Morgan Private Bank highlights the value of family meetings as tools for creating transparency, aligning generational goals, and easing the emotional weight of wealth transfer decisions. Clear communication and proactive planning are essential to avoiding misunderstandings and ensuring continuity. Key Considerations for Ownership & Estate Succession Planning Recapitalization & Equity Transfers – Gradually shift ownership to heirs, employees, or outside investors. Trust & Estate Structures – Use trusts, GRATs, or similar tools to reduce tax burden and streamline asset transition. Buy-Sell Agreements – Protect against disruption in the event of death, incapacity, or ownership disputes. Liquidity Planning – Ensure cash availability to meet estate taxes and avoid forced asset sales. Open Family Conversations – Define expectations, roles, and stewardship principles across generations. Estate Planning Beyond Business Ownership Estate planning must extend beyond business assets. All holdings—real estate, private equity, marketable securities, and personal property—should be included. A comprehensive plan reduces the risk of asset disputes, tax inefficiencies, and missed philanthropic goals. Key Components of a Comprehensive Estate Plan Multi-Generational Wealth Strategy – Articulate long-term objectives for family stewardship and legacy. Liquidity for Tax Obligations – Prepare for estate taxes without disturbing business operations. Asset Protection – Use legal mechanisms to guard against litigation and liability. Charitable Planning – Incorporate giving strategies that reflect family values and optimize tax outcomes. Building Your Estate Planning Team: Successful estate planning requires the coordinated efforts of legal, tax, and financial professionals. Business owners often work with corporate, tax, and estate attorneys. In addition to legal, family offices are increasingly emerging as a central resource for coordinating these efforts across generations. For example, Cresset Capital offers a holistic family office model that integrates investment, planning, and advisory services. The Role of Recapitalization in Succession Planning Recapitalization is a versatile strategy that supports both management transitions and estate planning. It allows business owners to restructure equity, generate liquidity, and introduce new ownership stakeholders while maintaining stability. Preserve Business Value – Transition ownership strategically to avoid disruption. Generate Liquidity – Create financial flexibility without an outright sale. Support Long-Term Sustainability – Bring in aligned investors who support the next generation of leadership. Final Thoughts: Don’t Leave the Future to Chance Whether you’re planning an exit, acquiring your first business, or simply organizing your affairs, succession planning is not optional. It’s a fundamental aspect of preserving the value you’ve built and ensuring your enterprise—and legacy—endures. A business without a succession plan is a business with an expiration date. Start now. Incorporate recapitalization, leadership development, and comprehensive estate planning into your long-term strategy.
March 21, 2025
Estates and Trusts
How to Have "The Talk" About Estate Planning with Your Parents
Estate planning is one of the most important conversations you’ll ever have with your parents. Discussing wills, trusts, and end-of-life wishes can feel uncomfortable, but having a clear plan in place can save your family from confusion, conflict, and stress down the road. If you’ve been putting off the conversation, you’re not alone. Many adult children hesitate to bring up estate planning for fear of upsetting their parents or appearing greedy. But the truth is, approaching the topic with care and respect can actually strengthen family bonds and ensure that everyone’s wishes are honored. Moreover, learning about your parents’ plan may lead to additional productive conversations—if you are independently wealthy or have creditor concerns, you may not want your parents to leave you assets outright—you can encourage your parents to optimize their planning through the use of trusts or other alternatives. Here’s a step-by-step guide to having "the talk" about estate planning with your parents — without awkwardness or tension. Find the Right Time and Setting Timing and environment matter when discussing sensitive topics. Choose a time when everyone is relaxed and not rushed. A calm and private setting will help everyone feel more comfortable and open. Tip: If you’ve done your own estate plan, then an easy way to start the conversation naturally could be: “I’ve been working on my own estate plan and realized how important it is. Have you thought about yours?” Approach It with Care and Empathy This isn’t about money — it’s about protecting your parents’ wishes and avoiding family disputes later. Make it clear that your goal is to understand and respect their choices, not to control or influence them. Instead of saying, “We need to talk about your will,” try: “I want to make sure we’re prepared as a family if anything happens.” “It’s important to me that your wishes are honored — can we talk about how you’d like things handled?” By framing it as a conversation about their legacy and peace of mind, you’ll help them feel more at ease. Ask Open-Ended Questions Rather than diving straight into the details of their will or assets, ease into the conversation by asking thoughtful, open-ended questions like: “Have you thought about how you’d like your estate handled?” “What matters most to you when it comes to your legacy?” “If something were to happen, how would you want us to handle things?” Give them time to process and respond without pressure. If they hesitate or seem uncomfortable, reassure them that you’re there to listen, not to push. If they don’t feel comfortable discussing the details with you, offer to help them find an experienced estate planning attorney. Discuss the Essentials Once the conversation is flowing, gently introduce key estate planning elements. If they permit you to do so, include an estate planning attorney in the dialogue: Will: Do they have a will? Is it up-to-date and legally sound? A will ensures that their assets are distributed according to their wishes and can prevent costly legal battles. Trusts: Trusts can offer more control over how and when assets are distributed while helping avoid probate and potentially reducing estate taxes. Ask questions like: “Have you considered setting up a trust to protect certain assets?” “Would you want to make sure certain funds are distributed over time rather than all at once?” “Would a revocable or irrevocable trust make sense for you?” Many people don’t realize how flexible and powerful trusts can be for protecting assets and reducing tax burdens. Estate Taxes: Depending on your parents' estate size, estate taxes could significantly reduce the amount passed on to heirs. Questions to consider: “Have you spoken with an advisor about strategies to minimize estate taxes?” “Would you like to explore options like gifting or charitable donations to reduce tax liability?” “Should we look at how setting up a trust could reduce taxes?” Understanding how estate taxes work can help you and your parents make more informed decisions about structuring their estate. Power of Attorney: Have they appointed someone to make financial or healthcare decisions if they’re unable to? A durable power of attorney can give someone authority to manage their financial affairs, while a healthcare power of attorney ensures their medical wishes are respected. Healthcare Directives: Do they have a living will or healthcare proxy to outline their medical wishes? These documents help guide medical decisions if they’re unable to communicate. Beneficiaries: Are their assets (e.g., life insurance, retirement accounts) designated correctly? Beneficiary designations can override what’s written in a will, so they need to be up to date. Executor/Trustee: Have they named someone to carry out their wishes? This person will handle closing accounts, distributing assets, and working with the courts if needed. This isn’t about getting into the nitty-gritty details; it’s about ensuring the basics are covered, and that someone knows where to find important documents. Offer to Help (But Respect Their Decisions) Your parents might not have all the answers. Offer to help them get organized by suggesting they meet with an estate planning attorney. You could say: “Would you like me to help you find an attorney?” “If you want to put together a list of accounts and documents, I’m happy to help.” Of course, their estate plan is ultimately their decision. Your role is to support, not control. Keep the Conversation Going Estate planning isn’t a one-and-done conversation. Circumstances change — marriages, divorces, births, deaths, and financial shifts all impact an estate plan. Check-in periodically with your parents to see if they need to make updates or have questions. Keeping an open line of communication will help avoid misunderstandings later. Thank Them for Their Trust Talking about estate planning requires vulnerability — from both sides. Thank your parents for opening up and trusting you with such personal matters. Let them know how much it means to you that they’re taking steps to protect their legacy and make things easier for the family. Follow Up with Next Steps Once the conversation is underway, help your parents take action: Encourage them to meet with an estate planning attorney. Suggest setting up a trust if it makes sense for their situation. Help them gather financial records, account details, and important documents. Work with them to create a list of assets and liabilities. Following up shows that you’re invested in helping them protect their legacy — without pushing them to make uncomfortable decisions. Final Thoughts Discussing estate planning with your parents isn’t easy — but it’s one of the most loving things you can do as a family. By approaching the conversation with empathy, patience, and respect, you’ll help ensure that your parents’ wishes are honored and that your family is prepared for whatever the future holds.
March 20, 2025
Labor and Employment
Adjusting Job Descriptions for Business Needs – What You Need to Know
Changing an employee's job description during business restructuring can be tricky, especially when balancing business needs with legal requirements. Can human resource managers change an employee’s job description to align with new business needs without the employee’s consent? From a legal perspective, the general answer is yes; in some cases, you can make these changes. Business Necessity and Employment At-Will Unless there is a specific clause in an employment contract or a collective bargaining agreement that dictates otherwise, employers generally have the right to adjust an employee’s job duties, schedule, or work location based on business needs. This flexibility is part of the principle of “at-will” employment, which allows employers to make changes to terms and conditions of employment as long as those changes don’t violate any specific laws or agreements. However, it’s important to note that some local and state regulations may impose additional requirements. For example, certain states and cities have predictive scheduling laws that require businesses to provide workers with advance notice of schedule changes. If the company fails to do so, it could face penalties. Additionally, in some places, if an employee’s scheduled hours are cut upon arrival to work, they may be entitled to what’s known as "reporting pay" or "show-up pay" — a set minimum amount for showing up, even if they aren’t needed to work their full shift. Considerations Under the FMLA If your employee is on Family and Medical Leave Act (FMLA) leave, you must proceed with caution. The FMLA protects employees from having their job duties, schedules, or work locations changed in a way that negatively impacts their ability to take leave. For example, an employer cannot reduce the employee’s hours to avoid their eligibility for FMLA or transfer the employee to a position that discourages the use of leave. Moreover, when the employee returns from FMLA leave, they must be reinstated to their same job or an equivalent one. An "equivalent" position is one that is virtually identical in terms of pay, benefits, working conditions, and responsibilities. While you can offer the employee a different shift, schedule, or position after they return from leave, you cannot pressure them to accept it if it is against their wishes. Retaliation and Discrimination Protections It’s also important to remember that changing an employee’s job duties or schedule in retaliation for exercising their legal rights can result in legal violations. For example, retaliating against an employee for filing a workers' compensation claim, taking FMLA leave, or engaging in other protected activities is illegal. Similarly, making changes based on discriminatory reasons (e.g., reducing hours or authority for only certain groups of employees, such as women) is also prohibited. Key Takeaways for HR Managers Check your company’s policies: Ensure there are no employment contracts or collective bargaining agreements that limit your ability to change the employee’s job description. Know the laws in your state and locality: Be mindful of predictive scheduling laws and reporting pay regulations that may impact your ability to make changes. FMLA considerations: If the employee is on FMLA leave, be careful not to make changes that interfere with their rights to take leave or return to a similar position. Avoid retaliation or discrimination: Ensure that any changes are not made in retaliation for an employee’s legal rights or based on unlawful discrimination. When changing an employee’s job description, balance business needs with legal compliance and clear communication. While you may have the authority to adjust roles, keep employees informed, consider their concerns, and comply with relevant laws to help prevent potential disputes. Thoughtful planning and transparency can go a long way in maintaining a positive workplace during change.
March 20, 2025
Family Law
The Dos and Don’ts of a High-Asset Divorce
Divorce is not easy, and when substantial assets are involved, the process becomes even more complex. High-asset divorces should be approached with the goal of fairness and financial security for the family. I’ve compiled some dos and don’ts to consider when going through a high-asset divorce. The Dos Hire an Experienced Attorney A lawyer with experience in high-asset divorces is important to protecting your financial interests. They will understand the complexities of asset division, tax implications and spousal support calculations. Assess and Document All Assets Work with your legal team to compile a thorough inventory of all assets, including real estate, investments, business interests, retirement accounts and valuable possessions. Comprehensive documentation can prevent disputes and ensure transparency. Consider Mediation or Collaborative Divorce Litigation is emotionally and financially costly and time-consuming. Discuss mediation or the collaborative process with your attorney to negotiate settlements more amicably and efficiently. Understand Tax Implications Property division and spousal support have significant tax consequences. You and your legal team should work with a financial advisor, accountant, or other tax expert to understand how different settlement options will impact your financial future. Protect Your Business Interests If you own a business, discuss ways to safeguard your interest with your attorney. Working with a business valuation expert and legal structuring can help mitigate financial damage and reach a resolution sooner. Think Long-Term Prioritize a settlement that ensures long-term financial stability rather than focusing on short-term gains. Consider future expenses, retirement, and the impact of market fluctuations. Maintain Financial Privacy High-asset divorces can attract unwanted attention. Work with professionals who can help keep your financial matters confidential and protect sensitive information. Discuss with your attorney whether Confidentiality Agreements or Non-Disclosure Agreements should be considered. The Don’ts Don’t Hide Assets Concealing or attempting to conceal assets can lead to legal penalties and a loss of credibility in court. Full financial disclosure is crucial to ensuring a fair division. Don’t Make Emotional Decisions Divorce is emotionally charged by nature, but making decisions based on anger or resentment can lead to financial regret. Approach negotiations with a clear and strategic mindset. Try to treat it more like a business deal. Don’t Rush the Process High-asset divorces take time. Both parties need time to gather and analyze data before negotiations begin. Rushing can result in unfavorable settlements, overlooked assets, and long-term financial issues. Don’t Overlook Prenuptial or Postnuptial Agreements Give a copy to your attorney if you have a prenuptial or postnuptial agreement. Such agreements can significantly impact asset division and protect individual wealth. Don’t Ignore Legal and Financial Advice Some individuals make the mistake of relying solely on their judgment or advice from friends. Professional legal and financial guidance is essential for making sound decisions. Don’t Neglect Estate Planning After divorce, update your estate plan, including wills, trusts, and beneficiaries, to reflect new financial and personal circumstances. Don’t Engage in Public Disputes Avoid airing grievances publicly, whether on social media or in social circles. This can harm negotiations and damage reputations. A high-asset divorce requires a strategic and informed approach to protect financial interests and ensure a fair settlement. By following these dos and don’ts, individuals can navigate the process effectively while minimizing unnecessary conflict and financial loss. Working with experienced professionals will provide clarity and help secure a stable financial future post-divorce.
March 19, 2025
Family Law
We Are Going to Trial! How Your Divorce Lawyer Will Prepare You for Court
Going to court can be a stressful and emotionally charged experience. Your divorce lawyer will play an important role in preparing you for court, ensuring that you understand the legal proceedings, and helping you present your case effectively. Here’s what you can expect during the preparation process: The Legal Process If necessary, your lawyer will explain the legal steps involved in your divorce case, including hearings, motions, and the trial. They will inform you about the judge’s role, courtroom etiquette, and any specific rules or procedures that apply in your jurisdiction. Gathering and Organizing Evidence To build a strong case, your lawyer will help you collect and organize all necessary documents, such as financial records, property deeds, tax returns, and any evidence relevant to child custody or spousal support. They will also guide you on how the evidence will be presented in court. Preparing Your Testimony Your attorney will work with you to develop a clear and compelling testimony. This includes: Reviewing key facts and potential questions you may be asked. Practicing responses to cross-examination by the opposing attorney. Coaching you on how to remain composed, honest, and confident while on the stand. Addressing Potential Challenges Every divorce case has challenges, whether it’s disputes over asset division, custody battles, or allegations made by your spouse. Your lawyer will anticipate potential arguments from the other side and prepare counterarguments to protect your interests. Mock Court Sessions To boost your confidence, some attorneys conduct mock court sessions where you can practice presenting your case in a simulated courtroom setting. This exercise helps you get comfortable speaking in front of a judge and responding to questioning. Guidance on Courtroom Behavior Your attorney will provide instructions on appropriate courtroom conduct, including: Dressing professionally to make a good impression. Speaking respectfully to everyone in the courthouse, including the judge, opposing counsel, bailiffs and security guards. Avoiding emotional outbursts or unnecessary conflicts. Maintaining a calm and composed demeanor throughout the proceedings. Final Review and Strategy Discussion Before your court date, your lawyer will review all aspects of your case with you, addressing any last-minute concerns and refining your legal strategy. They will ensure you feel ready and reassured about the upcoming proceedings.
March 19, 2025
Commercial Litigation
Creative Ways to Avoid Litigation
When disputes arise, parties very often go straight to filing a lawsuit. Sometimes, that tactic can be effective. However, it may not be so effective for those individuals or small businesses seeking to minimize costs. Costs can quickly pile up in litigation, and many of those costs can’t be avoided. There are creative—and effective—ways to avoid litigation, however. Many lawsuits center on contracts being breached and money being owed. When a party to a contract considering filing such a lawsuit, it is important to put in perspective how far away that party may be from getting repaid after winning the lawsuit. It may be months or, more likely, years of work by attorneys before getting paid back anything, assuming the breaching party will still be in operation by then. An often-overlooked option is to approach the party who breached and start a conversation about resolving it without a lawsuit. Lawsuits are public records; avoiding being named in a lawsuit may be valuable and add leverage to negotiate an agreement. This may be enough for some individuals and small businesses to bring them to the bargaining table. Many people opt to hire an attorney to send a letter to the breaching party to see if that starts a dialogue for resolving the dispute. Often, an informal email can have the same effect and elicit a more amiable response from the breaching party—which may be a segue into cooperating to resolve the dispute or even entering into a new agreement to resolve that dispute. If the other party is open to entering into a new agreement, that agreement becomes critically important. It’s an opportunity to add more favorable terms than were in the underlying contract. Those new terms may include that the other party starts making monthly payments, has to pay attorneys’ fees and costs of any lawsuit that comes from the contract, and agrees to a particular court or arbitration forum—all of which may be favorable to the other party. Additionally, this juncture might be the time for the non-breaching party to demand that someone associated with the breaching party sign a personal and unconditional guaranty. That type of guaranty helps reassure the non-breaching party that can be repaid—whether from the breaching party itself or the guarantor. Pursuing these options to avoid litigation may be helpful for individuals or small businesses who don’t want to wait to start being repaid or even would like to give a second chance to the breaching party while strengthening their own hand. It is a cost-effective tactic, and in some situations, it may be just as effective as filing a lawsuit, but without all the associated expenses from taking that more drastic step.
March 18, 2025
Labor and Employment
EEOC Investigates 20 Private Law Firms Questioning Their DEI-Related Employment Practices
On March 17, EEOC Acting Chair Andrea Lucas sent letters to 20 large law firms requesting information about their diversity, equity and inclusion (DEI) related employment practices. The letters express the EEOC’s suspicions that the firms’ employment practices, including those labeled or framed as DEI, are, in fact, discriminatory based on race, sex, or other protected characteristics, in violation of Title VII of the Civil Rights Act of 1964 (Title VII). The suggestion is that the firms are treating various groups in different ways regarding the terms, conditions, and privileges of employment, or that they may be limiting, segregating, and classifying employees according to a protected characteristic. Lucas wrote: “The EEOC is prepared to root out discrimination anywhere it may rear its head, including in our nation’s elite law firms.” Lucas continued, “No one is above the law—and certainly not the private bar.” You can read the letters here. Moreover, the EEOC has established an email where whistleblowers can submit information to the EEOC about potentially unlawful DEI practices at law firms: lawfirmDEI@eeoc.gov. Private employers should carefully re-examine their employment practices, including hiring practices, determining if they are allocating more resources to promote one group of employees, whether all employees are welcome to participate in all programming (for example, a women employees’ support group), and whether pay practices are consistently equal pay for equal work.
March 18, 2025
Construction
Future of Pennsylvania’s Construction Statute of Repose Hinges on Pennsylvania Supreme Court Ruling
The Pennsylvania Supreme Court will decide a pivotal case that could significantly impact the construction industry and the application of the state’s construction Statute of Repose. Aloia v. Diamant raises key questions about how the phrase “lawfully performing or furnishing” design or construction services should be interpreted within the statute. The ruling could have far-reaching consequences for architects, engineers, contractors, and property owners, potentially altering the way construction defect claims are litigated in Pennsylvania. In Aloia v. Diamant, the Superior Court of Pennsylvania upheld a trial court’s ruling that applied Pennsylvania’s Twelve-Year Statute of Repose to bar claims related to construction defects and deficiencies. The Pennsylvania Supreme Court has now accepted an appeal from the homeowners, seeking to clarify the statutory interpretation of the phrase “lawfully performing or furnishing” in the context of construction services under the Statute of Repose. Several prior appeals to the Pennsylvania Superior Court have challenged the application of the construction Statute of Repose, particularly in cases where plaintiffs allege that design or construction deficiencies violate the applicable building code. Notable cases include Johnson v. Toll Bros., 302 A.3d 1231 (Pa. Super. 2023), Tibbit v. Eagle Home Inspections, 305 A.3d 156 (Pa. Super. 2023) and Venema v. Moser Builders, 284 A.3d 208 (Pa. Super. 2023). The plaintiffs in Aloia argue that the Statute of Repose should not apply where there are allegations that the design or construction was not “lawfully performed” due to violations of the building code. This argument raises significant concerns for architects, engineers, and contractors, as it could allow plaintiffs to bypass the Statute of Repose merely by alleging a building code violation—potentially nullifying the statute’s protective function. Legislative Response: Senate Bill 336 Recognizing the ongoing disputes over the Statute of Repose, the legislative affairs committee of AIA-Pennsylvania introduced Senate Bill 336 on January 31, 2023. The bill sought to amend Pennsylvania’s construction Statute of Repose by reducing the period from twelve years to six years, bringing Pennsylvania in line with most states and providing a legislative definition for “lawfully.” However, the bill was not enacted, leaving Pennsylvania with one of the longest construction Statutes of Repose. Key Legal Issues in Aloia v. Diamant The plaintiffs contend that the trial and appellate courts erred in dismissing their claims based on the Statute of Repose before trial. The case facts reveal that building permits were issued for the home’s construction, and a certificate of occupancy was granted on March 30, 2006. Additional certificates of occupancy were issued on February 20, 2007, following the completion of an addition and basement improvements. The plaintiffs, who purchased the home in 2016, filed suit on March 5, 2021, alleging latent construction defects. The contractor invoked the twelve-year Statute of Repose as a defense. The Legal Implications of the Pennsylvania Supreme Court’s Decision Pennsylvania’s construction Statute of Repose provides an absolute bar to claims filed more than twelve years after the substantial completion of a construction project. Unlike a Statute of Limitations, which limits the timeframe in which a lawsuit may be filed but allows for exceptions under equitable doctrines (such as the repair doctrine or discovery rule for latent defects), the Statute of Repose is a strict cutoff for liability. The Pennsylvania Supreme Court’s decision in Aloia will have significant implications for the construction industry. If the court adopts the plaintiffs’ interpretation of “lawfully performed,” it could render the Statute of Repose ineffective by allowing plaintiffs to avoid its application through allegations of building code violations. Such a ruling could expose architects, engineers, and contractors to indefinite liability, fundamentally altering the legal landscape of construction defect claims in Pennsylvania. The outcome of Aloia v. Diamant is eagerly anticipated by construction professionals, developers and legal practitioners alike. A ruling in favor of the plaintiffs could reshape Pennsylvania’s construction litigation framework, potentially extending liability well beyond the current twelve-year period. Conversely, a decision upholding the Statute of Repose’s current interpretation would reinforce the finality intended by the statute, providing greater certainty for construction professionals. Until the Supreme Court renders its decision, the industry remains in a state of uncertainty regarding the long-term enforceability of Pennsylvania’s construction Statute of Repose.
March 17, 2025
Environmental and Sustainability
NYDEC Announces New Environmental Justice Requirements under SEQRA and UPA
Continuing its growing initiatives to protect environmental justice communities, the New York Department of Environmental Conservation (“NYDEC”) recently announced the release of proposed amendments to its State Environmental Quality Review Act (SEQRA) and Uniform Procedures Act (UPA) rules to incorporate provisions of the Environmental Justice Siting Law, which was signed by Governor Kathy Hochul in 2022. The draft regulations, which would impact various permits for projects across the state, seek to require consideration of potential existing burdens in “disadvantaged communities” (“DACs”) that already bear higher levels of pollution, effects of climate change and socioeconomic vulnerabilities. State Environmental Quality Review Act (SEQRA) The proposed rules would require all state agencies in New York to determine if any agency action “may cause or increase a disproportionate pollution burden on a disadvantaged community that is directly or significantly indirectly affected by such action” (6 NYCRR § 617.7(c)(1)(xiii)). Such agency actions include reviewing applications for permits, licenses, zoning changes, site plans, subdivisions, and funding grants by any local or state agency in New York.. Under the existing regulatory framework, government actions resulting in at least one significant adverse environmental impact warrant a determination of significance, triggering the preparation of an Environmental Impact Statement (EIS) on the proposed action. The proposed rules would now require state agencies to evaluate whether an agency action would result in an increased burden on DACs by considering “reasonably related long-term, short-term, direct, indirect, and cumulative impacts” (6 NYCRR § 617.7(c)(2)). To facilitate the implementation of cumulative impact assessments, DEC has introduced the Disadvantaged Community Assessment Tool (DACAT), intended to help permit applicants to identify areas that fall within the criteria of disadvantaged communities. The proposed rules also update DEC’s Environmental Assessment Forms (EAFs) to require permit applicants to analyze and disclose potential disproportionate pollution burdens on DACs (6 NYCRR § 617.2(l)). Thus, the question of what constitutes a “disproportionate burden” becomes a significant consideration for applicants seeking government funding or approvals subject to SEQRA. However, this rulemaking also amends actions that do not require further review under SEQRA to include certain multi-family housing with not more than 10,000 square feet of gross floor area. Uniform Procedures Act (UPA) The proposed rules would also amend DEC’s rules under the Uniform Procedures Act (UPA), which governs how DEC processes permit applications, to further incorporate environmental justice considerations into permitting reviews, including review of applications for projects affecting wetlands, wastewater discharge, solid waste and air facility permits. In effectuating the requirements of the EJ Siting Law, new permit applicants will be required to prepare an Existing Burden Report where the activity “may cause or contribute more than a de minimis amount of pollution to any disproportionate pollution burden on a disadvantaged community.” Permit renewal and modification applications are also required to prepare Existing Burden Reports. Yet NYDEC may provide exemptions if it determines that “the permit would serve an essential environmental, health, or safety need of the disadvantaged community for which there is no reasonable alternative.” NYDEC’s proposal would require project developers to create plans for meaningful community participation, ensuring that applicants demonstrate how they will engage with and involve affected communities. Should the proposed rules go into effect, applicants would now need to “provide opportunities for meaningful community engagement” and incorporate public feedback into project designs. Permit Application Strategy Considering NYDEC’s proposed amendments, permit applicants will likely face uncertainty regarding how the new requirements will impact the permitting process and their projects. To ensure a smooth and cost-effective permitting strategy, it is important that applicants consult with experienced professionals and legal counsel early in the process, as failure to meet these standards could result in permit denials and/or the assessment of penalties. The deadline to submit comments on the proposed SEQRA changes under the EJ Siting Law is May 7, 2025. To read more about the proposed changes to SEQRA under the EJ Siting Law or to comment on the proposal, you can visit NYDEC’s rulemaking page.
March 13, 2025
Estates and Trusts
Not Considering the Importance of Charitable Giving
This is Part 10 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. When a client’s family does not wish to inherit a collection or if its inclusion in the estate would create a significant tax burden, it is crucial to explore charitable giving options. Proper planning can help maximize the benefits of a donation while avoiding unintended legal and tax complications. Ensuring the Charity Will Accept the Gift While many clients may assume that institutions will welcome their generous donation, not every organization is willing or able to accept a collection. Before naming a charity as a beneficiary in estate planning documents or making a present gift, it is essential to confirm the charity’s willingness to accept the donation and any conditions the client wishes to impose on its use. Establishing this agreement in advance can prevent post-mortem disputes and ensure the estate qualifies for the intended tax deductions. Tax Benefits of Lifetime Charitable Giving Beyond philanthropy, charitable gifting can provide substantial tax benefits. Clients should be advised on the income tax advantages of donating all or part of their collection during their lifetime. A charitable income tax deduction is available for contributions of art and collectibles to a public charity, provided the property qualifies as capital gain property and meets the related-use rule (discussed below). If these conditions are met, the donor can deduct the full fair market value of the collection in the year of transfer, subject to a limit of 30% of their adjusted gross income (AGI). Any excess deduction may be carried forward for five years. Since the property must qualify as capital gain property, a lifetime charitable deduction for the donation of art or collectibles is only available to clients who qualify as collectors. As noted in Mistake #1 of this series, creators and dealers recognize ordinary income upon the sale of art and collectibles. Moreover, creators have little incentive to donate their work during their lifetime, as any charitable deduction would be limited to the cost of materials rather than the item’s fair market value. Under the related-use rule, the donee charity must use the donated property in a manner that aligns with its exempt purpose under Internal Revenue Code Section 501. If the charity’s use is unrelated to its mission, the donor’s deduction is limited to the property’s cost basis rather than its appreciated value. Additional limitations apply under the Pension Protection Act of 2006 if the charity sells the donated property within three years of receipt unless the organization certifies that the donation was used for its exempt purpose. For the creator and dealer, it usually makes more sense to consider selling the item and donating the proceeds to charity. Doing so avoids the related-use rule and the requirement that the item be capital gain property. In such a case, the charitable deduction may offset, most if not all of, the ordinary income realized on the sale. Public Charities vs. Private Foundations Clients should also understand the key differences between donating to a public charity versus a private foundation. Donations to public charities allow a deduction based on the collection's fair market value, provided the collection is capital gain property and the related-use rule is met. Donations to private foundations, however, only permit a deduction based on the donor’s cost basis, and the deduction is limited to 20% of AGI. Excess amounts may still be carried forward for five years. Fractional Gifts and Changes Under the Pension Protection Act One of the biggest challenges in lifetime charitable gifting is persuading clients to part with their collection while they are still alive to enjoy it. Before August 17, 2006, clients could donate a fractional interest in tangible personal property, allowing them to share ownership with a charity while retaining partial possession. However, the Pension Protection Act introduced stricter valuation, time, and use limitations that impact the deductibility of fractional gifts. Under IRC Section 170(o), the deduction for a fractional gift is now limited to the lesser of: The value used to determine the deduction for the initial fractional donation, or The fair market value at the time of subsequent contributions. Additionally, the donor must fully transfer their interest in the property within 10 years of the initial fractional gift or before their death—whichever comes first. The recipient charity must also take substantial physical possession of the item within one year of the initial gift (and within one year of any additional gifts) and satisfy the related-use rule. Failure to meet these conditions may result in the recapture of previous deductions, plus interest and an additional 10% penalty. Charitable Bequests and Estate Tax Benefits An outright donation of a collection upon death—whether to a public charity or a private foundation—qualifies for an estate tax charitable deduction based on the fair market value at the time of death. Importantly, bequests of tangible personal property generally do not trigger the related-use rule, making this a valuable option for clients seeking to preserve their collection’s full value for charitable purposes. However, clients planning to donate a collection upon their death should always consult with the intended recipient during life to confirm the organization’s willingness to accept the gift. A public charity’s acceptance of art and collectibles typically depends on whether the donation aligns with its mission and whether it has the necessary facilities and financial resources to store or display the collection.
March 12, 2025
Family Law
Examining the US Supreme Court’s “Reverse Discrimination” Case: Fueling the DEI Fight
On February 26, 2025, the U.S. Supreme Court heard oral arguments in Ames v. Ohio Department of Youth Servicesi . This case that could significantly impact the standards for proving employment discrimination claims under Title VII of the Civil Rights Act of 1964. The central issue is whether plaintiffs from majority groups, such as heterosexual individuals, must meet a higher evidentiary standard, showing that the background circumstances of the alleged discrimination support the suspicion that the defendant is that unusual employer who discriminates against the majority (the “background circumstances test”), in order to establish a prima facie case of discrimination. Background Marlean Ames ("Ames"), a heterosexual woman, began working for the Ohio Department of Youth Services in 2004 ("DYS"). In 2019, she applied for a promotion to a newly created bureau chief position but was passed over in favor of a gay woman who had not applied for the role. Subsequently, Ames was demoted to her previous secretarial position, resulting in a significant pay cut, and her former role was filled by a gay man. Ames filed a lawsuit alleging that these employment decisions were based on her sexual orientation, constituting discrimination under Title VII. The district court granted summary judgmentii in favor of the DYS applying the “background circumstances test;” and finding that there was no evidence that the DYS is among the unusual employers who discriminate against the majority. The U.S. Court of Appeals for the Sixth Circuit affirmed this decision, concluding that Ames had not met this heightened evidentiary standard. The Supreme Court Agrees to Hear the Ames Case The Supreme Court agreed to hear Ames’ appeal to address the disparate application of the “background circumstances test” across various circuitsiii. During oral arguments, several justices expressed skepticism about the validity of imposing a higher standard on a majority group. Justice Neil Gorsuch noted the “radical agreement” between both parties that federal employment laws should impose the same requirements on all plaintiffs, regardless of their majority or minority status. Justice Amy Coney Barrett raised concerns that ruling in Ames’ favor could potentially open the door to more employment discrimination lawsuits by making it easier to bring reverse discrimination cases. However, Ames’ counsel argued that eliminating the “background circumstances” rule would not lead to a flood of new cases, citing the experience of circuits that do not apply this heightened standard. Repercussions of the Decision A ruling in favor of Ames could have significant implications for employment discrimination litigation. It would eliminate the additional evidentiary burden currently placed on majority-group plaintiffs in certain circuits, thereby standardizing the requirements for establishing a prima facie case under Title VII. This could lead to an increase in reverse discrimination claims, particularly in contexts involving diversity, equity, and inclusion initiatives. Conversely, if the Court upholds the “background circumstances” requirement, majority-group plaintiffs would continue to face a higher threshold in proving discrimination claims, potentially discouraging such lawsuits. The Supreme Court’s decision is expected by early Summer 2025, and once handed down, has the potential to equalize the legal framework for all discrimination claims under Title VII, ensuring that the statute’s protections are uniformly applied, irrespective of the plaintiff’s majority or minority status.
March 10, 2025
Estates and Trusts
Not Discussing Collections with Heirs
This is Part 9 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. A collection may hold deep personal significance for a client but may not carry the same sentimental or financial value for their heirs. It is essential to encourage clients to have open conversations with their heirs, as appropriate, to understand their intentions and expectations. In many cases, heirs may see a collection primarily as a financial asset rather than a legacy to preserve. Clients should consider alternative disposition strategies beyond an outright bequest if they intend to sell the collection. For instance, donating the collection to a museum, establishing a trust, or selling select pieces during their lifetime may better align with their goals. Even if heirs wish to keep the collection, clients should clarify whether they intend to retain it in its entirety or only select pieces. This distinction is crucial, as valuation discrepancies can arise when certain items are allocated to specific individuals, potentially impacting the overall fairness of asset distribution. Many clients express a desire to donate their collections to museums. However, before proceeding with such a gift, it is essential to confirm that the museum is willing to accept the items. Many museums already have extensive collections in storage and may not be interested in acquiring additional pieces. Additionally, if a museum does agree to accept a collection, it often requires a financial contribution to cover ongoing maintenance and preservation costs. Contacting the museum or other recipient organization before making the gift – especially if the donation is planned through a will or other testamentary document – is essential to ensure its acceptance. Most importantly, clients should consult with an expert in art succession planning. A knowledgeable advisor can help structure a well-organized, tax-efficient plan during life or at death and ensures a smooth transfer of the collection while honoring the client’s wishes.
March 7, 2025
Immigration Law
Trump’s $5 Million “Gold Card” Visa: What it Means for EB-5 Investors
President Donald Trump recently announced a proposed “Gold Card” visa, sparking speculation about its potential impact on the EB-5 Immigrant Investor Program. While details remain unclear, this proposal raises important questions for current and prospective EB-5 investors. Here’s what you need to know. What is the “Gold Card” Visa? The Gold Card visa would offer U.S. permanent residency to individuals investing $5 million in the country. The proposed program is modeled after similar international investor visa initiatives, such as Dubai’s Golden Visa. Key details include: Investment Requirement: The program would require a $5 million investment—substantially higher than the EB-5 program’s minimum of $800,000. Pathway to Citizenship: This visa would offer high-net-worth individuals a streamlined route to U.S. citizenship. Potential Economic Impact: The Trump administration aims to attract a million investors, potentially raising $5 trillion in revenue. Geopolitical Considerations: Given that over 60% of EB-5 investors come from China, some speculate this is a strategic response to U.S.-China tensions. Can the “Gold Card” Replace EB-5? Initial reports suggested that the Gold Card visa might replace EB-5. The Commerce Secretary even indicated this intention, while the president hinted that companies could use the Gold Card to purchase legal permanent residence for employees. However, eliminating the EB-5 program is easier said than done: Congressional Authorization: The EB-5 program is authorized by Congress through at least September 30, 2027. Any attempt to dismantle it would require congressional approval, which is unlikely given past legislative support. 2022 EB-5 Reform & Integrity Act: This act reinforced protections for investors, ensuring that those who file before September 30, 2026, will be grandfathered into the current system. Legislative Hurdles: Introducing a new visa category requires congressional approval. Lawmakers benefiting from EB-5 investments in their states may resist any changes that could reduce economic contributions to their regions. Key Challenges and Concerns While the Gold Card visa has captured attention, several uncertainties remain: Realistic Demand: Expecting one million investors to each contribute $5 million seems highly optimistic, given that the EB-5 program has attracted only about 70,000 applicants over the past 30 years. Tax Implications: There is speculation that Gold Card holders might avoid U.S. global taxation, which could raise legal and policy concerns. Coexistence with EB-5: Rather than replacing EB-5, the Gold Card visa is more likely to exist alongside it, targeting a different investor demographic. What This Means for EB-5 Investors The key takeaways for those currently navigating the EB-5 process is that EB-5 remains intact and legally protected. Current EB-5 Investors: Your investment remains secure, and your path to a green card is unchanged. Thanks to legislative safeguards, your petition will continue to be processed. Prospective Investors: If you’re considering EB-5, filing before September 30, 2026, ensures your investment is protected under the program’s grandfathering provisions. The Bottom Line While Trump’s Gold Card proposal has generated interest, its viability is uncertain. The EB-5 program remains a structured and legally protected pathway to U.S. permanent residency. Investors should stay informed but proceed with confidence in EB-5’s stability. For those looking to secure U.S. residency, now is the time to act before the 2026 grandfathering deadline.
March 5, 2025
Construction
An Update on Federal and Pennsylvania Corporate Reporting Requirements
Much confusion has surrounded the Federal Corporate Transparency Act and the new Pennsylvania annual reporting requirement. Many have asked: what is the status (and deadlines) for compliance? Federal Corporate Transparency Act The Federal Corporate Transparency Act (CTA) was enacted in 2021 with the purpose of combatting money laundering, terrorism financing, and other financial crimes. The gist of the CTA is a requirement to submit a Beneficial Ownership Information Report (BOI Report) that identifies the owner(s) of the business. The CTA is administered and enforced by the newly created Financial Crimes Enforcement Network (FinCEN), which is a bureau within the U.S. Department of Treasury. In December 2024 the U.S. District Court for the Eastern District of Texas issued an injunction that paused the CTA. On January 23, 2025, the U.S. Supreme Court removed the pause. There is still ongoing litigation as to the constitutionality of the CTA, however, while that litigation unfolds, the CTA will be enforced, which means that the BOI Reports must now be filed. On February 18, 2025, FinCEN issued a Notice that BOI Reports must be filed by March 21, 2025. For more information on filing BOI Reports, please see the Offit Kurman informational webpage. Pennsylvania Annual Reporting Requirement In Pennsylvania, starting January 1, 2025, an annual report must be filed with the Pennsylvania Department of State for all domestic and foreign filing associations conducting business in Pennsylvania. This requirement replaces the “ten-year filing” with a yearly filing specific to Pennsylvania. Filing of the federal BOI Report under the CTA to meet federal requirements is not sufficient to meet this Pennsylvania Commonwealth requirement. The Annual Report filing fee is $7 (this fee is waived for non-profit organizations). For each calendar year, corporations must file by June 30; LLCs must file by September 30; and LPs, LLPs, business trusts, and professional associations must file by December 31. There are exceptions to this requirement, including fictitious names, general partnerships that are not LLPs, financial institutions, trademarks and insignias. All other entities conducting business in Pennsylvania must submit this annual report. A failure to report will result in dissolution, termination, or cancellation and a loss of the protection of the entity’s name. If a domestic entity, LLP or electing partnership is administratively dissolved, it will have the opportunity to be reinstated by filing an annual report, paying a reinstatement fee and paying any back fees for delinquent annual reports. If a registered foreign association has been terminated for failure to report, it will be required to submit a new Foreign Registration Statement and will receive a new entity number from the Department of State. Additionally, because a failure to report will result in a loss of protection of the entity’s name, an entity that fails to report may have its name appropriated during its delinquency. The annual reports will include general identifying information including the business name, office address, names and titles of principal officers, and the entity number issued by the Department of State. This information will be publicly available on the Department of State’s website. While these reports may be submitted by mail, it is strongly recommended that they be filed through the Pennsylvania Department of State website. First, the online form will populate any details currently on file with the state to avoid mistakes and delays. Second, and most importantly, an Annual Report that has been submitted online will be automatically approved. For further information on the Annual Report requirements, visit the Pennsylvania Department of State website.
March 4, 2025
Mergers and Acquisitions
The Gray Tsunami: How Retiring Business Owners Can Prepare for a Successful Sale
There is a significant demographic shift headed our way known as the “gray tsunami,” as a very large portion of the American population will reach retirement age and eventually exit the workforce. In fact, we are at a peak time for retirement in America, known as Peak 65 where an average of 4.1 million Americans are projected to turn 65 each year between 2024 and 2027. To put it in perspective, that is about 11,000 people per day. This wave of older adults leaving the workplace stands to have a great impact across the business world as owners pivot to fill these roles left by retiring employees. But it will also have great implications for family-owned businesses as owners reach retirement age and must decide the best course for the future of their company when it is time to step down. A recent Wells Fargo Wealth & Investment Management survey indicates that 52% of business owners do not want their children to run and inherit their business. So, for many, this will mean considering the sale of the business as they look to exit on their own terms. By engaging in advanced planning, entrepreneurs can capitalize on this generational shift, creating a strategic opportunity to ensure their financial security and preserve their life’s work and legacy. Below, we look at some key considerations for baby boomer business owners as they plan for the next chapter in their lives and the potential sale of their family-owned enterprise. Finding the Right Buyer When you have spent your life building your business from the ground up, finding the right buyer when it is time to sell is critical. This means not only finding a buyer that will offer the right price to establish financial security in retirement, but also a buyer who will preserve the values and culture you have established. Finding this perfect buyer means having clearly defined goals for the future of the company. Outline the non-negotiable aspects of the company you want to preserve. This could be anything from retaining your employees to protecting customer relationships. Some owners wish to remain in an advisory capacity during the transition period to ensure continuity, others might want to make sure their business stays family owned. There are numerous types of buyers to consider, each with their own implications for the sale and future of the company. Again, the type of buyer you choose will correlate directly with the goals laid out from the beginning. For those focused more on maximizing value and less on legacy preservation, a strategic buyer such as a competitor could be the best fit. This could involve the integration of the business into a larger organization, so preservation of the company’s employees or culture could be at risk. A sale to a private equity (PE) firm is also an option, noting that the goal here is likely not to hold the business long-term but rather to sell again in 5-7 years. A sale to a family office would likely be a longer-term play. For those focused more on preserving the legacy of the company, selling to key employees or company leadership through a management buyout could be an option, or an Employee Stock Ownership Plan (ESOP) might be a consideration. As both would keep the business with current employees or leadership, maintaining the company culture and vision would be a priority. These are all important points to consider as they help to identify what you are really looking for in a buyer. Owners must work closely with trusted advisors to thoroughly vet potential buyers to ensure they align with those goals, and then carefully craft a deal structure that will best protect their legacy. Maximizing Business Value and Financial Security Maximizing the value of your business well before any exit event is key to establishing financial security for retiring business owners. This means engaging in careful planning, financial optimization, and strategic positioning very early in the process. It will be important to make sure every aspect of the business is streamlined and strengthened including financials, operations, employees, and suppliers. Conduct a comprehensive examination to determine if there are any areas that might need improvement to make the business the most attractive to potential buyers. Making necessary adjustments early on will help to create the best valuation and a smoother due diligence process. Setting the company up for future success by decreasing owner dependency and making sure there is strong leadership firmly in place is also important here. Determining what you will need for your own financial security post-sale must also be top of mind. This should involve working with advisors on significant tax planning to ensure the sale will be structured in the most beneficial way to minimize your tax liabilities as the seller. It will also be important to have a strategy for wealth management to ensure the proceeds of the sale will work for you. Legal Considerations As with any transaction, the sale of a family-owned business also comes with many legal considerations that can have a lasting impact and must be addressed alongside your legal counsel to minimize risk. These can include but are not limited to the following issues: Structuring the sale in the manner that best reduces tax implications and minimizes liabilities for the seller. Planning to avoid excessive capital gains and estate taxes. Conducting due diligence preparation to verify that all information Is accessible and in place and to resolve any outstanding issues. Ensuring liability protection and minimizing risks through avenues such as indemnification clauses and reps and warranties. Compliance with all regulatory and compliance requirements, which can become more complex based on some industries. Conclusion When a business owner makes the significant decision to sell, it will have long-lasting implications for the owner and the family overall. By working with advisors early on to carefully plan and prepare, baby boomers can enter retirement knowing they have not only maximized the value of their life’s work, but also preserved the legacy they have established.
February 28, 2025
Business
Financing in the Independent Sponsor and Search Fund World: SBA vs. Conventional Lending
Financing is one of the most critical components of a successful search fund or independent sponsor acquisition, influencing not just deal structure and capital requirements but also long-term financial health and growth potential. Entrepreneurs and investors evaluating a business purchase must carefully weigh two primary financing options: Small Business Administration (SBA) loans and conventional bank loans. While both have their merits, the choice between SBA and conventional lending impacts everything from cash flow management and debt servicing to operational flexibility and future capital raises. Selecting the right option requires a clear understanding of short-term liquidity needs, financial reporting obligations, investor expectations, and the intended growth trajectory of the acquired company. SBA Loans: Flexible but Costly in Equity Terms The SBA 7(a) loan program is a widely used financing tool, particularly for first-time entrepreneurs and acquisitions of lower middle-market businesses. The program is designed to make small business ownership more accessible by offering low down payments, extended repayment terms, and fewer financial covenants compared to conventional loans. Key Advantages of SBA Loans: Lower Equity Requirements – SBA loans typically require only 10% equity, making them an attractive option for buyers with limited personal capital. In contrast, conventional loans often require 20-50% equity, significantly raising the cash burden. Longer Repayment Terms – The standard 10-year amortization schedule allows borrowers to maintain lower monthly payments, easing cash flow constraints. Limited Financial Covenants – Unlike conventional lenders, SBA-backed loans do not impose strict financial performance benchmarks, providing greater flexibility in early-stage business operations. Easier Qualification Process – Many first-time buyers may find it easier to secure an SBA loan compared to conventional financing due to the government-backed guarantee, reducing lender risk. Challenges of SBA Loans Despite their accessibility, SBA loans come with notable downsides, particularly for search funders and independent sponsors looking for long-term capital efficiency and equity retention: Personal Guarantee Requirements – SBA loans require personal liability from the borrower, meaning that if the business fails, personal assets may be at risk. Restrictions on Seller Notes & Subordinated Debt – The SBA often limits the use of seller financing and additional subordinate debt, making capital structuring more rigid. Prepayment Penalties & Financing Limitations – Borrowers looking to refinance into more favorable debt structures down the road may face prepayment penalties, increasing overall financing costs. Growth Limitations – The lack of institutional-style covenants can prevent businesses from building the structured financial discipline needed for future capital raises or attracting private equity investment. For sponsors and search fund entrepreneurs planning recapitalization, secondary financing rounds, or eventual exit strategies, the limitations associated with SBA loans should be carefully considered. Conventional Bank Lending: More Rigid, but (Maybe) a Stronger Long-Term Fit For experienced operators or businesses with strong existing cash flow, conventional loans can be a more sustainable long-term financing solution. These loans provide greater flexibility in structuring deals, but they also come with stricter requirements. Key Advantages of Conventional Loans: Higher Loan Amounts – Unlike SBA loans, which cap at $5 million, conventional banks can finance larger acquisitions, making them more suitable for companies with $5M+ in EBITDA. Stronger Banking Relationships – Working with a commercial bank can create opportunities for long-term financial partnerships, including credit facilities, treasury services, and strategic capital allocation. More Favorable Equity Retention Terms – Conventional lenders often allow higher levels of seller financing and preferred equity arrangements, giving the buyer greater control over the capital stack. Stricter Covenants: More Financial Controls and Reporting Unlike SBA loans, conventional financing requires detailed financial oversight, which, while adding complexity, can ultimately benefit long-term financial planning and investor confidence: Debt Service Coverage Ratios (DSCR) – Lenders typically mandate a minimum DSCR threshold, ensuring the business maintains healthy cash flow relative to debt obligations. Regular Financial Reporting – Borrowers must provide quarterly and annual financial statements, reinforcing financial discipline and operational transparency. Leverage & Liquidity Limits – Many conventional loans include leverage constraints, preventing businesses from taking on excessive debt that could jeopardize financial stability. While these restrictions may seem burdensome, they prepare companies for future institutional investment and create stronger exit opportunities by making businesses more attractive to private equity firms and strategic acquirers. Choosing the Right Financing for Sponsors and Search Funds The decision between SBA and conventional financing depends largely on the business model, investor profile, and long-term capital strategy of the acquirer. SBA Loans Are Best For: First-time search funders acquiring sub-$5 million EBITDA businesses Deals where seller financing is limited or unavailable Entrepreneurs seeking maximum leverage with minimal equity investment Buyers prioritizing cash flow flexibility over institutional financing constraints Conventional Loans Are Best For: Larger acquisitions requiring more flexible financing structures Search funders looking to build long-term banking relationships Companies planning to secure future private capital or institutional investment Acquisitions where financial discipline and structured reporting will be critical for growth and scalability Final Thoughts: Aligning Capital with Growth Strategy For independent sponsors and search fund entrepreneurs, financing is about more than just getting the deal done—it’s about positioning the business for long-term success. SBA loans can provide immediate access to capital, but conventional financing ensures long-term scalability and financial discipline. Navigating the complexities of acquisition financing requires strategic planning and expert guidance. Working with an experienced attorney and financial advisor can help independent sponsors and search funders structure deals properly, negotiate loan agreements, and ensure compliance with lender requirements, ultimately protecting long-term equity value.
February 28, 2025
Estates and Trusts
Essential Legal Documents Transpeople Must Update for Protection
Navigating life as a transgender individual involves critical steps toward ensuring that your identity is recognized legally and accurately, particularly in the current political climate. Updating your legal documents is an essential part of the process, especially in a world where current systems are not designed with gender diversity in mind. Updating these documents not only reflects your true identity but can also help you avoid potential challenges, whether it is at the doctor's office, in the workplace or when traveling. Below is a comprehensive list of essential legal documents that every trans person should consider immediately to ensure their identity is represented accurately: Legal Name Change One of the most important steps in affirming your gender identity is ensuring your government-issued identification reflects your gender and name. The process of a name change is different in every state. In New York, your local county Supreme Court provides an administrative form to request a name and gender marker change, which is the first step to ensure that all other government IDs can then be changed to align with your true identity. Once approved in New York, you will receive a court order to reflect your name and gender marker. A court order is not required in all states; many states have an administrative process to effectuate the change. Name Change: In New York, unless you are changing your name via marriage, adoption, divorce or citizenship, a court order is required. Once your name and gender marker are legally changed via court order, you may then update your driver’s license and begin the process of updating all other government IDs, including the reissuance of your birth certificate as discussed below. Gender Marker: In some states like New York, you can update the gender marker on your identification to reflect your gender identity. While the process and requirements vary by state, as discussed below, some states require proof of medical transition or a letter from your healthcare provider. Birth Certificate The birth certificate is a foundational legal document. The process of changing a birth certificate varies from state to state and will involve an administrative process or filing a court petition to obtain a court order or directive reflecting the change in name and gender marker. Name Change: Some states allow you to amend your name on the birth certificate without any additional steps or documentation, while others may require a court order. Gender Marker: New York allows you to amend the gender marker on your birth certificate. As of February 2025, Florida, Kansas, Montana, Oklahoma, Tennessee, and Texas are the only states that prohibit the changing of gender marker. Alabama, Arizona, Arkansas, Georgia, Guam, Kentucky, Louisiana, Michigan, Missouri, Nebraska, North Carolina, and Wisconsin all require medical proof of gender change. Certainly, many states make it challenging to amend the gender marker, but it is absolutely worth pursuing to ensure that your birth record aligns with your gender identity. Social Security Upon your legal name change you should update your records with the Social Security Administration (“SSA”). Updating your Social Security records ensures that your name aligns with your legal identity, especially for the purposes of employment, Social Security Disability or Retirement benefits, and taxes. In some states, failing to update your identity with the SSA could even result in the suspension or revocation of your state driver’s license. Name Change: You may update your name by submitting a legal name change document to the Social Security Administration, which is available online at www.ssa.gov. Gender Marker: As of the date of this publication, the Trump Administration has issued a directive to exclude the use of gender marker “X” and prevent the update of gender markers to reflect a transition. Passport Updating your United States Passport information is important for those who wish to travel outside of the country. Your passport must reflect your name and should reflect your gender to ensure ease of travel. A passport reflecting your true identity is necessary not only to leave the US but also to deal with border officials, obtain visas, and participate in immigration processes in other countries. It should be noted that an inconsistent gender marker does not automatically prohibit your travel, but it may cause complications within the United States when leaving or upon arrival in a different country. Name Change: To update your United States Passport, you will need to provide the court order or administrative ruling from your state reflecting your name and a copy of your newly issued birth certificate. Gender Change: The Trump administration has suspended issuing passports with X markers and passport renewals with differing gender markers. This directive is currently pending litigation and there has been no final determination of its legality. As of the date of the publication of this article, it is being widely recommended by trans-rights groups that until there is a legal determination and the policy is released, trans people who have a current, valid passport should refrain from attempting to renew or change it. Health Insurance and Medical Records Your health insurance and medical records should reflect your correct name and gender to prevent confusion and ensure that you are receiving the appropriate medical care. It goes without saying that doctors entrusted to provide medical care and treatment for their patients should be informed of your proper name and gender in the furtherance of health care. HIPAA requires that healthcare providers update a person’s gender identity or transition care and are prevented from sharing this information without your express consent. However, there are several legal battles brewing in states regarding the release of this information for minors and gender-affirming care. Health Insurance: You should contact your insurance provider to update your name and gender on all of your insurance records. In general, proof of a name change and gender markers are requested. Medical Records: Update your doctor, therapist, and other healthcare providers on your name and gender marker so that your medical records accurately reflect your identity. This will also help you avoid issues when seeking medical care, such as incorrect gender-specific treatments or tests. Employment Records Updating your name and gender with your employer ensures that your employer recognizes your identity at your company. Providing this updated information to your employer will avoid unnecessary confusion in official communication from your company, payroll, retirement benefits and health care benefit administration. Name Change: Once you have legally changed your name in your state, you must notify your employer so that your employer may update their records, including the name on your paychecks, your tax documents and your benefits enrollment. Gender Marker: Some employers offer the ability to update gender markers in their records, which can be important for workplace respect and to avoid misgendering. Many employers provide the opportunity for its employees to indicate their gender within office systems, such as email and signature blocks, to promote a culture of respect and affirmation. Estate Planning Transgender individuals should make sure their estate planning documents reflect their identity and desires. They should also ensure that their loved one’s estate planning documents naming them also reflect their name and gender marker changes. These documents may include: Executor, Trustee and Beneficiary Updates: Ensure that your name is properly reflected in your own estate planning documents such as your Last Will and Testament and Trust instruments. For others, ensure that the names of your chosen executors and beneficiaries in your documents are accurate and that their gender is respected in all related documents so that they can be easily identified in the probate or estate administration process. While many states, such as New York, have done away with gender terminology within official legal documents, it is important to note that others’ estate planning documents must also be changed if you were referred to in your parents’ documents as a daughter or a son and said identification no longer applies to you. Health Care Proxies and Powers of Attorney: Make sure that your health care proxies and health care appointment documentation have been updated with both your proper name and gender markers, as well as your agents’ proper names and gender markers. The same is true for Powers of Attorney, which are presented to financial institutions to gain access to your financial accounts. If an identity cannot be verified, often financial institutions will restrict access to prevent fraud and financial misdealing. Bank Accounts and Financial Documents Financial institutions require legal documentation to update your name on accounts, checks, and credit cards affiliated with the institutions. Name Change: You should provide your legal name change court order or administrative determination to your bank and financial institution to update the name on your accounts, credit cards, and other financial documents. You should also ensure that named beneficiaries on your financial accounts are updated when your loved ones have name changes. Gender Marker: While gender markers do not always need to be updated for financial documents, you may request that your gender be reflected accurately in your account details to avoid confusion. Academic Records Educational records held with universities and educational institutions must properly reflect one’s identity. Diplomas and other credentials should be updated to reflect your name and gender marker. Most private educational institutions allow you to change your records to match your name and gender identity; however state institutions will likely follow state law as it relates to name and gender markers. Name Change: You should contact the registrar at your educational institution or university to request that your name be updated on your academic records and diploma to reflect your identity. Gender Marker: Depending on the institution’s policies, you may be able to update your gender marker in school records. Updating official legal documents is a process that requires legal and administrative processes and often patience. However, it is an important step toward living authentically and without continued administrative hassle. Whether you are transitioning or you simply wish to align your documents with your identity, updating your legal records ensures that you are recognized for who you are.
February 26, 2025
Estates and Trusts
Not Properly Insuring a Collection
This is Part 8 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. Accidents happen—whether a piece of artwork or a collectible is damaged in shipping, affected by fire or water or even knocked over by Steve Wynn’s elbow. Having the right insurance in place can help mitigate financial losses and protect a client’s investment. Without proper coverage, even a minor incident could result in significant economic consequences. When insuring a collection, there are three primary options: Including it as part of a homeowner’s policy, Scheduling individual items separately, or Obtaining blanket coverage. For clients with valuable or extensive collections, we often recommend the additional effort and cost of scheduling items separately. This approach typically requires obtaining a qualified appraisal to establish fair market value at the time of coverage. To ensure continued protection, these appraisals should be updated regularly so that coverage reflects the collection’s current worth, rather than its purchase value. Total loss claims are rare. More often, insurers assess the damage to determine if an item is salvageable and provide funds for repairs or restoration. Unfortunately, this can lead to a loss in value that remains unquantifiable until the item is sold. To best protect collectible assets, clients should seek insurance from companies specializing in the relevant categories of items, even if it comes at a higher upfront cost. Additionally, different policies may be necessary if parts of a collection are housed in multiple locations. Are the items in a private residence, a storage facility or on loan to an institution? Are they owned directly by the collector or held within an entity or trust? Understanding these nuances ensures that each piece remains properly protected.
February 25, 2025
Estates and Trusts
Death Tax Repeal Act
On February 13, 2025, Republican lawmakers in Congress introduced the Death Tax Repeal Act, which aims to permanently eliminate the federal estate tax. Since 2015, various legislative efforts to repeal the estate, gift, and generation-skipping transfer (GST) taxes have been introduced in Congress but have failed to pass. Current Federal Transfer Tax Framework The Internal Revenue Code imposes a tax on an individual’s right to transfer property during life and at death. The federal gift tax applies to lifetime transfers at a rate of 40%, though individuals benefit from a "unified credit" that allows a certain value of transfers to be made tax-free during life and at death. In 2025, the unified credit stands at $13,990,000. Any combined transfers exceeding this amount are subject to the 40% tax rate. Additionally, the GST tax applies to transfers made to individuals who are two or more generations below the transferor or to certain trusts benefiting such individuals. The GST tax is also levied at 40%, with an exemption matching the unified credit amount of $13,990,000. Impact of the 2017 Tax Cuts and Jobs Act (TCJA) Under the 2017 Tax Cuts and Jobs Act (TCJA), enacted during the first Trump administration, the unified credit and GST exemption were temporarily doubled. However, since the TCJA was passed as a reconciliation measure, it is set to expire on December 31, 2025. Unless Congress takes further action, the unified credit and GST exemption will revert to their 2016 levels, adjusted for inflation, or approximately $7,000,000 each. Key Provisions of the Death Tax Repeal Act The Death Tax Repeal Act seeks to go beyond simply extending the TCJA provisions beyond December 31, 2025. If enacted, it would: Permanently repeal the federal estate and GST taxes, allowing individuals to transfer unlimited amounts of property at death free of transfer tax. Establish a permanent $10,000,000 lifetime exemption against the gift tax (indexed for inflation to $13,990,000 in 2025). Transfers exceeding this exemption would be subject to a 35% tax rate. Retain the current "step-up" in basis for capital assets at death, minimizing capital gains taxes for beneficiaries upon the sale of inherited assets. Implications for Estate Planning The passage of the Death Tax Repeal Act would significantly impact estate and wealth transfer planning. Estate planning documents that currently reference the federal unified credit or GST exemption amount would need to be reviewed to ensure they align with the proposed law and the client's intentions. Additionally, several states impose a separate estate or inheritance tax — Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska (County inheritance tax only), New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin — or have decoupled from federal estate tax provisions. If the Death Tax Repeal Act becomes law, many of these states will continue to impose their own estate and/or inheritance taxes. Clients residing in or owning property within these states may require substantial revisions to their estate planning documents to optimize state transfer tax savings. Next Steps Our team of estate and trust attorneys is closely monitoring the progression of the Death Tax Repeal Act in Congress. We are available to answer any questions and review your estate planning documents to ensure they accurately reflect your wishes under the proposed law.
February 25, 2025
Page 12 of 35
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