Estates and Trusts
Not Keeping Records of Your Purchases and Sales, Location, and Authentication Documents – Implications of Restrictions and Patrimony
This is Part 7 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. The provenance of any item is essential to determining its value. Proper documentation of an item’s history and proof of chain of title help establish authenticity, ensuring the highest fair market value at the time of sale. It also prevents clients from wasting money on items later found to be inauthentic. A complete record of an item’s history and chain of title should include the item’s current location and any restrictions on selling or moving the item. This is particularly important when the asset holds historical significance, and the client plans to transfer items between jurisdictions with high taxes on the sale or use of art and collectibles. Understanding the limitations of an item’s sale or transfer can be crucial. Limitations on the use of artwork, as well as patrimony claims often affect the value of an item. For example, in the Estate of Ileana Sonnabend case, Ms. Sonnabend, an art dealer, owned Robert Rauschenberg’s Canyon, a collage featuring a stuffed bald eagle. Federal laws prohibit the possession or trafficking of bald eagles, dead or alive, making the artwork unsellable – although Ms. Sonnabend’s gallery had received a permit allowing the work to be loaned and exhibited during her lifetime. On the federal estate tax return filed for the estate, Canyon’s value was reported as zero. The IRS Art Advisory Panel challenged the valuation, asserting a $65 million fair market value under the assumption that it could be sold on the illicit market to "a recluse billionaire in China." After litigation, the estate resolved the issue by making a long-term loan of Canyon to MoMA in New York City, receiving a full charitable deduction for its full value. Many nations and communities advocate for the return of artworks that hold historical, spiritual, or national significance, arguing that these pieces were taken under coercive or unethical conditions. Patrimony claims often center on the rightful ownership and cultural heritage of works that have been displaced, looted, or unlawfully acquired. Museums and private collectors frequently face both legal and ethical dilemmas when addressing repatriation demands. The most high-profile case involves the Elgin Marbles—renowned Greek sculptures removed from the Parthenon in Athens and currently housed in the British Museum. A UK parliamentary inquiry in 1816 concluded that Britain had legally acquired the Marbles. However, in 2000, the Greek government, in anticipation of the opening of the new Acropolis Museum in Athens, formally requested their return. In 2013, Greece sought UNESCO’s mediation between the Greek and UK authorities regarding the Marbles’ return, but both the UK government and the British Museum rejected UNESCO's offer to intervene. In 2021, UNESCO asserted that the UK had an obligation to return the Marbles and called on the UK government to begin negotiations with Greece. Despite these developments, the controversy remains unresolved. At the Parthenon Museum in Athens, a portion of the original Marbles are on display with white casts held in place of the Marbles, which are still currently on display at the British Museum. While not every client owns artwork as unique as Canyon or the Elgin Marbles, understanding the nuances of a client’s collection is essential for proper representation and estate planning. Every client should keep clear and accurate records that include the acquisition date of each item, its location, and any restrictions on its use.
February 18, 2025
Family Law
Tracing Offshore Accounts in Divorce: How to Uncover Hidden Assets
Offshore accounts are appealing to those trying to hide money because they offer banking secrecy in certain jurisdictions, lax reporting requirements compared to domestic accounts, and complex structures involving shell companies, trusts, or cryptocurrency transactions. However, financial secrecy laws have weakened in recent years due to international regulations, making it harder for individuals to conceal offshore accounts completely. Hiding money offshore often leaves clues. Be alert if your spouse suddenly becomes secretive about finances, transfers large sums to foreign entities, owns international businesses or trusts, reports significantly lower income than expected, and/or has foreign tax filings or receives mail from offshore banks. If any of these signs are present, it’s time to take action. Start with Financial Records Carefully review all available documents, including: Tax Returns: Look at Schedule B (foreign accounts), Schedule D (capital gains from international investments), and FBAR (Foreign Bank Account Report) filings. Bank & Credit Card Statements: Identify unexplained wire transfers to foreign banks or unknown entities. Loan Applications: These often list all assets more honestly than tax returns. Work with a Forensic Accountant Forensic accountants specialize in uncovering hidden assets by analyzing financial patterns, tracing wire transfers, and identifying discrepancies that may indicate offshore holdings. They use advanced financial tracking methods to follow money trails. Leverage Legal Discovery Tools Your attorney can use various legal means to force disclosure of offshore accounts, including requiring your spouse to answer written questions under oath, demanding financial documents related to foreign assets, questioning your spouse under oath about offshore holdings, and/or issuing subpoenas to compel banks, accountants, and business partners to provide financial records. Utilize International Regulations & Reporting Laws Many offshore jurisdictions are now subject to financial disclosure agreements including: FATCA (Foreign Account Tax Compliance Act): Requires foreign banks to report U.S. account holders to the IRS. Common Reporting Standard (CRS): Facilitates global exchange of financial data between governments. Bank Treaties & International Agreements: The U.S. has information-sharing treaties with various countries that can help uncover hidden accounts. Hire an International Asset Tracing Expert If your spouse has business dealings or financial ties in a specific country, an international investigator with expertise in that jurisdiction’s banking laws can be invaluable in identifying hidden assets. Seek Court Orders & Legal Action If your spouse refuses to disclose offshore accounts, your attorney may request contempt of court orders for non-compliance, injunctions to freeze assets before they are moved, and/or orders to compel disclosure of offshore financial records. Don’t Overlook Cryptocurrency & Digital Assets Many individuals hide wealth in cryptocurrency wallets, offshore digital banks, or decentralized finance (DeFi) platforms. Forensic accountants can analyze blockchain transactions to uncover hidden crypto holdings. Tracing offshore accounts in a divorce is complex, but not impossible. With the right combination of forensic accounting, legal tools, and international regulations, hidden assets can be uncovered. If you suspect offshore accounts in your divorce case, consult an experienced attorney and financial expert to ensure a fair and transparent division of assets.
February 18, 2025
Intellectual Property
Navigating the USPTO’s New Trademark Fees
It’s finally here. After months of warnings, announcements, and uneasiness about their application, the U.S. Patent and Trademark Office implemented a number of trademark-related fee changes in January 2025. These fees changes, though, are more than just fee increases. Many of the new fee changes will require new filing practices and strategies to keep Trademark Office fees to a minimum, especially for filings by foreign applicants. Make Sure Your Application Has All Required Information In the past, it was possible to file an application without all of the required information. For example, an application could be filed without a signature and the signature submitted later. While this is still possible, applications filed without the required information will now be subject to an “insufficient information fee” of $100 per class. In some instances, these fees will be incurred at the time of filing (the electronic filing form is supposed to indicate what omissions will incur this fee), and in some instances, they will be incurred during the examination. For example, if an application is for the name of a living individual and is filed without written consent, or if the application is for a mark that is a foreign word and is filed without a translation, the application will incur an insufficient information fee during prosecution. Further, the insufficient information fee will be charged to new classes that are added to an application during prosecution if the application was filed with insufficient information. The Trademark Office does permit pre-examination amendments. The Trademark Office has advised, however, that using a pre-examination amendment to supplement an application with information omitted from the application at filing will wind up incurring the insufficient information fee during prosecution, eliminating a tool that was often used when an application needed to be filed in a hurry. These changes will put a premium on evaluating an application before it is filed to make sure that some effort is made to address all necessary requirements (e.g., a description of the mark, a transliteration, a color claim, applicant’s name, address, and domicile; etc.) Use the ID Manual Applications with listings of goods and services taken from the Trademark Office’s ID Manual (available here: https://idm-tmng.uspto.gov/id-master-list-public.html) are now charged a lower filing fee ($350) than those with listings not taken from the ID Manual ($550). Thus, using the ID Manual where possible is beneficial. In order to be entitled to the lower fee, each item in the listing for a particular class must be taken from the ID Manual. If one item in the listing is not from the ID Manual, then the higher fee will be charged. Further, the Trademark Office has explained that if any text is entered in what it calls the “free-form text” box in an application, the higher fee will be charged, even if some or all of the listings are taken from the ID Manual. Using descriptions from the ID Manual is not necessarily a guarantee that an applicant will be able to avoid the higher filing fee. Some descriptions in the ID Manual require applicants to fill in certain information. Guidance from the Trademark Office indicates that if a good faith attempt to fill in that information is made, the applicant will not be charged the additional fee during examination (use of a description such as “Printed educational materials in the field of specify subject matter” would not be considered a good faith attempt). In those situations, it will be up to the examining attorneys to determine if a good-faith attempt has been made. That will be a subjective determination, and it seems fair to expect the Trademark Office to take its familiar position that one examining attorney is not bound by the acts of another when determining what constitutes good faith. The Trademark Office has also indicated that if a party uses, in good faith, descriptions from the ID Manual and then is required to amend those descriptions, the additional fee will not be charged. Moreover, if an applicant files an application with a description from the ID Manual and then amends to a specification that is not in the ID Manual, the application will not incur the additional charge. One issue with the ID Manual is that it does not list every good or service (this can be a particular issue with new products, technology, etc.). One option for resolving this issue is to ask that a particular description be added to the ID Manual. This can be done by sending an email to tmidsuggest@uspto.gov with the following information: the name of the party submitting the proposed identification; an email address for correspondence relating to the proposed identification; and the proposed identification, which should be concise and no more than 25 words. Depending on how long it takes the Trademark Office to add descriptions to the ID Manual, that may not be a practical option (the Trademark Office’s website suggests that reviews will take 1 to 2 business days, and that accepted updates will be made in the next weekly update, but whether that time frame is accurate remains to be seen). Trademark Office guidance indicates that the insufficient information fee will not apply to issues with descriptions of goods or services. Keep Specifications Short One goal of the Trademark Office is to cut down on lengthy descriptions of goods and services. Thus, the Trademark Office has implemented a new fee of $200 per class where a specification entered as free-form text is in excess of 1,000 characters (the fee does not apply to specifications derived entirely from the ID Manual). The fee applies for each group of characters over 1,000, so a specification over 1,000 characters would incur a fee of $200 and a specification over 2,000 characters would incur a fee of $400. According to the Trademark Office, this fee will only be applied at the time an application is filed and will not be assessed during examination. Consider Filing Multiple Applications Instead of Multiclass Applications While a multiclass application may seem like it would be less expensive, under the Trademark Office’s new rules, it could actually be more expensive. For example, any insufficient information fees will be assessed against each class in an application. Further, if an application has two classes, and the description of goods or services for one is taken from the ID Manual and the other is entered as free-form text, both classes will be charged the additional fee due to the use of the free-form text feature. Additionally, if an application is filed using the free-form text option and a new class is added during examination, the fee for that class will be the higher fee, even if the description of the goods or services in that class is taken from the ID Manual. While it can be difficult to predict whether additional classes will have to be added during prosecution, filing a single class application rather than a multiclass application can reduce the likelihood that the higher fee will be incurred. File Through the Madrid Protocol, If You Can Applications filed through the Madrid Protocol are not subject to the new fees discussed above, making that an attractive means of filing in the United States. Use of the Madrid Protocol already had benefits not afforded to direct filings in the U.S.; applicants who file through the Madrid Protocol have six months in which to respond to any Office Actions that may be issued, rather than the three-month response period for applicants who file directly in the U.S., and this will continue to be the case. Applications filed directly in the U.S. will be subject to the Trademark Office’s new fees, even if those applications are filed based on foreign applications or registrations or claim priority to a foreign application or registration. Anyone considering filing directly in the U.S. based on a foreign application or registration would be well served to match the goods or services description in their home filing to those in the Trademark Office’s ID Manual, if possible, in order to avoid additional fees. If the application is based on a foreign application or registration that has already been filed, consider paring down lengthy specifications to avoid surcharges. A Note on Pending Applications Applications filed before January 18, 2025, will not be subject to any of the new fees if filed as TEAS Standard applications. Applications filed before January 18 as TEAS Plus applications (at the lower filing fee) may incur the insufficient information fee, if appropriate. Conclusion The Trademark Office’s fee changes have ushered in a brave new world of trademark practice in the United States. Only time will tell if these changes will accomplish the Trademark Office’s goals. At this point there are some means of avoiding the imposition of the Trademark Office’s new fees (particularly with some planning), and it is likely that the new fees will cause filers from outside of the U.S. to increase their use of the Madrid Protocol. In the end, though, the new fees and procedures reinforce the importance of working with skilled counsel to secure registration of a mark in as efficient a manner as possible.
February 17, 2025
Family Law
Co-Parenting a Child with Medical Issues Post-Divorce
Divorce is challenging under any circumstances, but when a child has medical issues, teamwork is key. Effective co-parenting is crucial to ensure your child’s health and emotional well-being while navigating medical appointments, treatments, and daily care. Some pointers for successfully co-parenting a child with medical needs after divorce are outlined below. Regardless of past disagreements, both parents must put their child's well-being first. This means setting aside personal conflicts and making joint decisions that prioritize the child’s medical care. Keep communication focused on the child’s needs rather than lingering relationship issues. A structured medical plan should be a key part of your co-parenting agreement. This plan may include: Primary care responsibilities: Who will take the child to doctor’s appointments and therapy sessions? Emergency protocols: What steps should be followed in a medical emergency? Medication and treatment schedules: Clear documentation of medication dosages, therapy sessions, and specialist appointments. Ensure both parents have access to medical records and communicate any changes in treatment. Clear and consistent communication is essential. Use tools like co-parenting apps (e.g., OurFamilyWizard, TalkingParents) to share medical updates, upcoming appointments, and concerns. If face-to-face communication is difficult, rely on written communication to keep emotions in check and ensure accuracy. Medical expenses can be significant, so both parents should agree on how to handle costs. Discuss things like who provides health insurance, how out-of-pocket expenses will be divided, and how unexpected medical expenses will be paid. A written agreement can prevent future disputes. Children with medical conditions often thrive on routine. Ensure both homes follow a consistent schedule for medication, therapy, diet, and rest. Disruptions in care can negatively impact their health, so cooperation is key. Medical conditions can be unpredictable, requiring last-minute schedule changes or adjustments to custody arrangements. Both parents should remain flexible and willing to accommodate each other when emergencies arise. If communication becomes strained, consider involving a mediator, family therapist, or parenting coordinator. These professionals can help facilitate discussions and create solutions that serve the child’s best interests. Divorce can be emotionally challenging for any child, but those with medical issues may feel additional stress. Encourage open conversations about their feelings, reassure them of both parents' love, and work together to create a stable environment. Conflicting medical opinions can create tension. Work together to make informed decisions, consulting with doctors, specialists, or medical advisors when needed. If disagreements persist, mediation or legal counsel may be necessary. Caring for a child with medical needs is demanding, and co-parenting adds another layer of complexity. Ensure you’re also taking care of your own mental and physical well-being so that you can be the best parent possible. Co-parenting a child with medical issues after divorce requires teamwork, patience, and mutual respect. By prioritizing your child’s health, maintaining open communication, and working together, both parents can provide the stability and care their child needs to thrive.
February 17, 2025
Franchise Law
Maryland Franchise Reform Act Introduced
On January 31, 2025, Delegate Marc Korman of Montgomery County introduced Maryland House of Delegates Bill 992, entitled the Franchise Reform Act, which would make the first significant changes to the Maryland Franchise Registration & Disclosure Law (the “Maryland Franchise Law”) since its enactment in 1981. Delegate Korman told me that he introduced the bill because several of his constituents had raised concerns about the franchising process in Maryland. He told me that, in preparing the bill over the past year, he did a deep dive into this law, consulting with the franchise regulators in the Maryland Attorney General’s Office, with me and with others who are familiar with this law. The Maryland Franchise Law is designed to protect people considering the purchase of a franchise from being misled or under-informed when deciding whether to buy. The law requires franchisors to prepare a prospectus (called a “Franchise Disclosure Document” or an “FDD”) detailing a wide variety of information and submit it to the Securities Commissioner, who is an officer with the Maryland Office of the Attorney General (the “OAG”) and obtain that agency’s approval to sell franchises in Maryland. That approval, called registration, must be renewed each year in which the franchisor continues to sell franchises to Maryland residents or for operation of the franchised business in Maryland (collectively, “Maryland Franchises”). The current law mostly addresses the franchise sales process rather than the ongoing relationship between the franchisor and the franchisee. The bill would do the following: For the Benefit of Franchisors Generally: The bill would establish a pilot program, to be run by the Securities Commissioner, that is intended to expedite franchise registration renewals. Maryland registration renewal delays have frustrated many franchisors from throughout the United States. For the Benefit of Maryland Franchisors: Based on the author’s communications with Delegate Korman since the bill’s introduction, he will submit an amendment to the bill that will limit the private parties who can sue a franchisor for violation of the Maryland Franchise Law solely to Maryland Franchisees. This will eliminate the ability of out-of-state franchisees to use the statute as a weapon in disputes with franchisors that are or were headquartered in Maryland – which was a deterrent to franchising from Maryland as compared to nearby states. This expected amendment is a key to making this a balanced and fair bill. For the Benefit of Franchisees: Given the Maryland Franchise Law’s purpose, parts of the bill will benefit franchisees. Specifically: For the first time, the Maryland Franchise Law will address the imbalance of power between franchisees and franchisors within the ongoing relationship, by prohibiting a franchisor from restricting or inhibiting Maryland Franchisees from associating with other franchisees within their brand for the franchisees’ common benefit “for any lawful purpose” – which could include collectively raising grievances with the franchisor for the franchisees’ mutual benefit. Maryland Franchisees will have a right to sue for injunctive relief and damages, in Maryland, if the franchisor violates this prohibition. This provision is similar to “free association” laws passed in several other states, including California and Illinois. The time period in which a franchisee may bring a private claim for violation of the law will be extended until the later of five years from buying the franchise rights or two years after the date of the initial commencement of operations of the franchise. This is a significant relaxation of the time restriction, which had been three years from the date the franchise rights were purchased (regardless of when the franchised business opened). This seems to be an overaggressive change for private rights of action, as we would prefer to see the time period be the later of three years from buying the franchise rights or three years after commencing operations. The Securities Commissioner will be directed to increase the dollar amount of the exemption from full registration review that exists for franchisors with significant “net equity” to account for inflation since that exemption was established in the 1990s. This will allow the Securities Commissioner to substantively review many more FDDs, which may increase compliance by medium-sized franchisors with the disclosure requirements. The time period for the Securities Commissioner to bring claims for violation of the Maryland Franchise Law also will be extended to five years from a violation, giving that office greater ability to protect franchisees who were misled into buying a franchise. (Of note, the amendments concerning private rights of action will not inhibit the Securities Commissioner’s enforcement ability, including the potential that it could sue a Maryland-based franchisor whose misrepresentations harm a substantial number of franchisees outside of Maryland.) The bill will be heard by the House of Delegates Economic Matters Committee in Annapolis on the afternoon of February 19, 2025, and the author has been invited to testify on the bill and plans to do so favorably, with the amendments discussed above. We plan to keep a close watch on the activity surrounding the bill and provide additional information.
February 14, 2025
Labor and Employment
Office Romance: Navigating Workplace Relationships and Managing Legal Risks
Dear Sarah, Two of my employees have started dating, and I’m worried it might affect their work or lead to complaints from others. Should we have a formal policy on workplace relationships? Are we even allowed to have such a policy? Yours in keeping it professional this Valentine’s Day (and beyond), The HR Cupid The HR Cupid, I can understand your concern. Office relationships, while not uncommon, can quickly become a tricky issue for employers to manage. Whether it's gossip, a drop in productivity, or potential legal claims, workplace romances can create significant risks for both employees and the company. The good news is, with a clear policy and proactive approach, you can mitigate these risks while still allowing employees to navigate their personal lives in a professional manner. Can You Have a Policy on Workplace Relationships? Yes, you absolutely can have a policy on workplace romances. In fact, it’s strongly recommended that employers do so. While outright banning office relationships is typically unreasonable (and likely unenforceable), a policy that establishes clear expectations for conduct can help mitigate potential risks. The reality is that office romances can open the door to several issues, including sexual harassment, retaliation, favoritism, and even workplace violence in extreme cases. These risks can lead to significant legal liabilities if not managed carefully. A thoughtful, well-drafted policy can go a long way in helping you prevent problems before they arise. What Are the Risks of Office Relationships? There are a number of risks to consider when office romance enters the picture: Sexual Harassment Claims: One of the most common legal risks of office romances is sexual harassment. These claims often arise when one employee feels their personal space or boundaries are violated by a romantic advance, particularly in relationships between supervisors and subordinates. Even consensual relationships can lead to claims if other employees perceive favoritism or if the relationship sours. Public displays of affection, or a sudden shift in the dynamics between employees, can also create uncomfortable work environments and lead to hostile work environment claims. Retaliation: If an employee rebuffs unwanted advances or ends a relationship, retaliation can become a concern. For example, an employee might claim that they were treated unfairly or passed over for promotions as a result of rejecting or ending a romantic relationship. Retaliation claims are often rooted in employees feeling that they were punished for not engaging in or maintaining a relationship. Favoritism and Conflicts of Interest: Relationships between supervisors and subordinates carry the risk of favoritism claims. Employees may feel that the romantic couple is receiving special treatment, whether in terms of assignments, promotions, or performance reviews. Even if favoritism is not actually occurring, the perception of bias can cause significant issues with morale and productivity. Workplace Violence: While rare, workplace violence stemming from a failed romance or unrequited affection is a very real possibility. Employers are responsible for maintaining a safe work environment, and if a situation involving a breakup or unreturned advances escalates into violence, the company could be held liable if they failed to manage the risks. How Can Employers Minimize Risk? There are several steps employers can take to reduce the risks associated with office relationships: Bar Romance Between Supervisors and Subordinates: Relationships between supervisors and subordinates are among the riskiest for sexual harassment claims and can lead to serious conflicts of interest. Many employers choose to prohibit these types of relationships or require the employee in the supervisory role to disclose the relationship so that any necessary adjustments can be made. A direct reporting relationship between a supervisor and their partner could create significant problems, and it’s often best to ensure that there is no overlap in their work responsibilities. Implement a “Love Contract”: A “love contract” is an agreement between two employees in a romantic relationship that affirms their relationship is consensual and not a form of sexual harassment. It can also include a reminder that the employees are expected to maintain a professional demeanor while at work. While not a guaranteed shield against legal action, it can provide a level of transparency and reduce the risk of future claims. Ensure Access to Sexual Harassment Training and Reporting Channels: One of the most effective ways to minimize the risk of sexual harassment claims is to provide ongoing sexual harassment training for all employees. This training should clearly define inappropriate behaviors, outline reporting procedures, and reassure employees that complaints will be taken seriously. Additionally, offering multiple, accessible reporting channels (such as anonymous hotlines or online forms) can help ensure that employees feel safe reporting any issues before they escalate. Communication and Monitoring Policies: In today’s digital age, communication often takes place via email, company chat systems, or even social media. Employers should make it clear that digital communications within the workplace are monitored and that harassment can take place through these channels as well. Having a policy that outlines acceptable use of company technology can act as a deterrent and ensure employees understand the expectations for professional conduct online. What Should Employers Do When Things Go Wrong? If a workplace romance goes sour, the situation can quickly escalate. The best defense for an employer is to ensure that all preventative measures—policies, training, and monitoring—are in place and adhered to. Courts will look at whether an employer has taken reasonable steps to address potential issues and mitigate risks. If a claim is filed, employers who have documented their policies, communicated expectations clearly, and enforced those policies will be in a better position to defend themselves. Additionally, any documentation related to the relationship (such as the disclosure of the relationship or a signed love contract) can be useful in protecting the company’s interests. Final Thoughts: Office Romance, Yes—But With Caution While you can’t stop love from blooming in the workplace, you can take steps to ensure that it doesn’t create legal or professional problems. By implementing a clear policy on workplace relationships, providing sexual harassment training, and setting expectations around professional behavior, you can manage the risks and allow your employees to balance their personal and professional lives effectively.
February 14, 2025
Commercial Litigation
Lenders Must Act Fast to Recover Funds in Fraudulent Loan Schemes
Lenders get into a groove with originating loans with existing and new borrowers. So often, the closing comes and goes, and the monthly payments commence without any trouble. But then a borrower comes along who seeks to defraud the lender. If the closing goes through, with the lender transferring out the funds and the funds making their way into the borrower’s account, the lender then faces significant challenges in getting that money back. The timing of the lender’s discovery of the fraud usually determines the odds of the lender clawing back the funds. With any luck, the lender will discover the fraud when it goes to record the documents with the local property records office and finds that the borrower had misrepresented that they would provide the lender with the first priority lien on the property and, in fact, had already obtained mortgages securing the property. Regardless of how quickly the lender learns of the fraud, it is crucial that the lender take immediate action. In New York and New Jersey, the lender may consider filing a complaint and order to show cause seeking to stop the borrower from transferring the funds out of their possession. These types of lawsuits require moving fast and detailing the fraud to the extent that the lender can. Keeping complete and accurate records for each loan is crucial. For instance, when it comes time to go before a judge and show where the fraud occurred, central to that are the loan documents in which the borrower made the misrepresentations to the lender. Without proof of those misrepresentations, it becomes very difficult to convince a court that fraud has occurred and unlikely that a court would effectively freeze the borrower’s assets. Occasionally, the title insurance company may extend coverage to these types of incidents, but there is no guarantee of coverage. Also, the title insurance company’s decision on whether coverage exists may take some time. That time can be very valuable for the lender to go after the borrower and may be the difference between recovering the funds or the borrower moving the funds out of the lender’s reach. A lender acting quickly in these situations is also important because if the borrower has defrauded this lender, the borrower has probably defrauded other lenders—and those other lenders may already be chasing down their funds. That borrower may have already transferred the funds out to hard-to-reach accounts, spent the money, or even thrown a wrench in the process by filing bankruptcy. Lenders that learn of the fraud hire counsel and act within hours, rather than days or weeks, maximize their chances for success.
February 13, 2025
Family Law
New York Takes a Progressive Step with Uncontested Joint Divorce
On January 31, 2025, the Chief Administrative Judge of the State of New York announced an inventive pilot program designed to change how the court system processes divorces, introducing the concept of "uncontested joint divorce" to simplify the divorce process for New Yorkers. While uncontested divorces have been available to New Yorkers since 2010, this new route to divorce allows eligible couples to file and sign their divorce papers together, neither party taking the role of “plaintiff” or “defendant.” It is targeted at reducing the emotional and financial burdens often associated with traditional divorce proceedings. Unlike the traditional divorce process, where one spouse typically initiates the proceedings by alleging one or more of the statutory reasons for ending the marriage, joint divorce recognizes that couples can maturely agree to end their marriage without assigning blame, consenting to a joint divorce on the uncontested divorce basis of the “irretrievable breakdown” in the marital relationship for a period of at least six months (otherwise known as a “no-fault” divorce). To qualify for a joint divorce, both spouses must mutually consent to the divorce and agree on all terms relevant to their particular marital elements, including property division, child custody, parenting time, and support arrangements. Couples can submit a single petition outlining their settlement, which can lead to quicker resolution times compared to traditional divorces and forestall needless tension as they navigate and acclimate themselves (and their family) to their new status as a divorced couple. This program presents various advantages for couples seeking to dissolve their marriages amicably. Not only does it hope to foster a positive environment for negotiation, but it also acknowledges the emotional strain of divorce and seeks to aid in promoting healing over conflict. For couples with children, the joint divorce framework can pave the way for healthier co-parenting arrangements by encouraging collaboration and mutual respect. By prioritizing the well-being of children, parents can establish a supportive foundation for their post-divorce relationship. To provide fairness and promote healthy communication, the program encourages couples to engage in mediation or counseling services before finalizing their joint petition. This step aims to ensure that both parties fully understand the implications of their decisions and maintain a constructive dialogue. By eliminating contentious litigation, joint divorce aims to reduce legal fees for couples. Since the need for prolonged court battles is minimized, couples can save money and allocate resources more effectively. And though the joint divorce process is designed to be cooperative, the court’s ultimate involvement will not be diminished inasmuch as the courts will still examine every submitted agreement for compliance with state laws and to ensure that agreements are fair, reasonable, not overreaching, and in the best interests of any children involved. The courts can and will reject agreements that do not comply with the legal and equitable requirements of New York’s laws. This new program represents a significant positive shift in New York's approach to processing divorces. It reflects changing societal attitudes toward marriage, divorce, and conflict resolution. As more couples prioritize cooperation and transparency, this reform may lead to a cultural shift in how divorce is perceived and managed. As couples embrace this new paradigm, it is essential for those considering divorce to stay informed about their rights and options under this law. Consulting with experienced family law attorneys can help ensure that all agreements are legally sound and that the best interests of all parties involved, particularly children, are upheld.
February 12, 2025
Estates and Trusts
Not Realizing the True Value of “Stuff”
This is Part 6 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. For federal estate and gift tax purposes, transfers are valued at the “fair market value” of the asset on the date of transfer. One of the more common estate tax audit issues is the failure to properly report the value of items of tangible personal property on a decedent’s Form 706. Similarly, failing to properly account for the value of tangible personal property transferred by inter vivos gift may result in the audit of a client’s Form 709. Despite their upfront cost, in order to identify the true value of art and collectible assets, clients should obtain professional periodic appraisals. Appraisals serve many functions, including estate and gift tax reporting, such as establishing value for insurance purposes, establishing bidding parameters for assets at auction, obtaining loans with tangible personal property serving as collateral, and planning for future gifts. For tax purposes, fair market value is defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.” Although the most persuasive indication of fair market value is an actual contemporaneous sale of the property in question, in the absence of such a sale, an appraisal is typically required to establish the taxable value of the asset subject to transfer. Under current regulations, a reported gift of tangible personal property that exceeds $5000 in value must be substantiated by a qualified appraisal conducted by a qualified appraiser. The Pension Protection Act of 2006 (the “Pension Act”) established new requirements for what it means to have a “qualified appraisal” for tax reporting purposes. A qualified appraisal must contain a declaration that the appraiser (i) understands that a substantial or gross valuation misstatement resulting from an appraisal of the value of the property that the appraiser knows, or reasonably should have known, would be used in connection with a return or claim for refund, may subject the appraiser to a civil penalty, and (ii) understands that an intentionally false or fraudulent overstatement of the value of the appraised property may subject the appraiser to civil penalty for aiding and abetting an understatement of tax liability. A qualified appraisal of tangible personal property must contain the following: a detailed description of the property; the physical condition of the property; the date or expected date of the contribution; the terms of any agreement or understanding entered into or expected to be , entered into by or on behalf of the client that relates to the use, sale or other disposition of the property, including any restrictions on the use or disposition or reservations of rights conferred on anyone other than the donee and any earmarks for particular use; the name, address and taxpayer id number of the appraiser; a detailed description of the appraiser’s educational background and qualifications; the date on which the property was valued; the appraised fair market value of the property; the method of valuation used to determine the fair market value; the specific basis for the valuation; and a description of the fee arrangement between the client and the appraiser. A qualified appraisal is prepared by a qualified appraiser defined as an individual who: has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in the regulations; regularly performs appraisals for pay; and meets other requirements that the IRS has prescribed in the regulations. An individual cannot be a qualified appraiser with respect to any specific appraisal unless she: demonstrates verifiable and passing professional or college level education and experience or earned a recognized appraiser designation from a generally recognized professional trade or appraiser organization or as part of an employee apprenticeship program or educational program; and the education and experience is in valuing the property type being appraised. In addition, the appraiser must make the following declaration: “I understand that my appraisal will be used in connection with a return or claim for a refund. I also understand that, if there is a substantial or gross valuation misstatement of the value of the property claimed on the return or claim for refund that is based on my appraisal, I may be subject to a penalty under section 6695A of the Internal Revenue Code, as well as other applicable penalties. I affirm that I have not been at any time in the three-year period ending on the date of the appraisal barred from presenting evidence or testimony before the Department of the Treasury or the Internal Revenue Service pursuant to 31 U.S.C. 330(c).” If the appraisal or the appraiser does not meet all of the above requirements, the resulting valuation report will not be considered as any evidence of value, and the IRS will conduct its own appraisal to determine the fair market value of the asset subject to transfer. In certain instances, providing the IRS with an appraisal that adheres to all of the requirements of the Pension Act may not help with avoiding an estate or gift tax audit, but provides a powerful bargaining tool. For example, regardless of the asset composition of the remainder of the estate, if a decedent dies owning artwork that has a claimed value of $50,000 or more, the appraisal will be subjected to consideration by the IRS Art Advisory Panel, comprised of a body of art industry experts who review and evaluate the acceptability of artwork appraisals submitted by taxpayers in support of claimed fair market value. When a qualified appraisal is submitted, you and your client may find that the IRS is more willing to compromise on valuation issues.
February 11, 2025
Estates and Trusts
Protecting Your Family and Future: Essential Estate Planning for the LGBTQ+ Family
Estate planning is a critical part of securing the future for any family, and for LGBTQ+ individuals, it is particularly important given the legal complexities and challenges that may arise in the current political climate. There have been several legal shifts that affect LGBTQ+ families’ rights and protections, which makes it even more essential for LGBTQ+ families to ensure their estates are properly considered, planned, and protected. Below is a simple checklist of estate planning documents that LGBTQ+ families must consider to safeguard their interests, particularly during a time of legal uncertainty and inequitable policies: Last Will and Testament When one thinks of an estate plan, a will is what likely comes to mind: it is considered a fundamental estate planning document. A will directs how a person's property, whether real or personal, should be distributed after death. For LGBTQ+ individuals, a will is especially important because, without one, state laws dictate who inherits your estate and in what proportion. With only limited exceptions, state laws do not recognize non-biological family members, such as a partner or even a registered domestic partner: close friends who are more like family are not recognized in any state. A will provides clarity to ensure that your relationships and wishes are honored, regardless of your family makeup. Why a will matters for LGBTQ+ individuals: If you have a partner but are not legally married, or if you want to leave property or assets to a close friend or chosen family member, a will ensures that these individuals are recognized as your beneficiaries. It also allows you to name the person you choose to oversee the distribution of your assets. While many states require that your biological family is informed of your death and provided a copy of your will, most courts are fiercely protective of directives in a will. As a result, documenting those wishes is imperative to ensure your wishes are carried out in the way that you desire. Without a properly executed will, most states simply distribute assets to your biological family members. Healthcare Directives Advanced healthcare directives such as a healthcare proxy and living will specify both the person you wish to speak for you in a healthcare setting and the type of care you would want (or refuse) in the event you cannot articulate those wishes. The health care proxy appoints an agent who knows you, understands your wishes, will communicate those wishes, and advocate for your rights in a health care setting. The living will outlines the type of care you want including memorializing your preferences for medical treatment or discontinuance of treatment. A living will sets forth whether you want life-sustaining treatment and how you would like to be treated in end-of-life scenarios. Why healthcare directives matter for LGBTQ+ families and individuals: In the event of incapacitation, biological family members may not always know or respect your wishes, particularly if your biological family does not support your identity, lifestyle, or relationships. Naming a healthcare proxy and having a living will in place ensures that your healthcare decisions are in line with your desires, even if your family disagrees or is uninvolved in your life. Without a healthcare proxy, a family member (who may not understand or accept your relationships) may gain control over your medical decisions. Without documentation, most states allow your next of kin to make these decisions, potentially preventing your partner from being involved in your care. Nominating your partner or chosen friend provides them with the legal authority to make decisions consistent with your wishes. Durable Power of Attorney A durable power of attorney (POA) allows you to designate someone, referred to as an agent, to manage your financial matters upon your incapacity. A POA can be tailored to the specific powers you wish to bestow upon your agent. For example, your agent can access your bank accounts, pay your bills, apply for public benefits, and manage investments on your behalf. Why a durable power of attorney matters for LGBTQ+ individuals: LGBTQ+ couples are not recognized as legal next of kin unless they are legally married and, therefore, will face complications if their relationship is not legally formalized, as most financial institutions are unable to speak with others without authority. This is especially essential if partners financially depend on one another but have separate financial accounts; without a POA in place, your partner cannot access your finances in the event of your incapacity. Having a POA ensures that your partner, rather than a biological family member who may not be involved in your life or support your relationship, has the authority to handle your finances, if necessary. Trust A trust is a key estate planning tool that allows you to manage your assets efficiently during your life and distribute your assets after your death without the necessity of probate (which is required with a Last Will and Testament). A trust also allows you to appoint a successor trustee, a person in charge of your trust assets if you can no longer manage your own trust assets. There are different types of trusts that can accomplish many goals within an estate plan, but the common theme is that assets funded in a trust avoid probate, a lengthy and expensive court process. In addition to avoiding probate, trusts do not have to be authenticated by a court or shared with your biological family members, as is the case with a Last Will and Testament. Why a trust matters for LGBTQ+ individuals: A trust can ensure that assets are passed on according to your wishes, even in cases where state inheritance laws might not recognize your partner or chosen family. Trusts can also be structured to provide for specific needs, such as the care of a dependent partner or a loved one, long after you die. Importantly, trusts are much more difficult to contest than wills, thus ensuring that estranged biological family members will not be able to easily upend your carefully constructed estate plan if they do not agree with your choices or your relationships. A trust is also a private document that others cannot access in the same way as a Last Will and Testament, which is a public document that is published in court. Beneficiary Designations Beneficiary designations ensure that your assets pass directly to your loved ones without going through probate. A beneficiary designation can be made on bank accounts, brokerage accounts, insurance policies, and retirement accounts. Relationships can change over time, and therefore, beneficiary designations should be reviewed and updated regularly to reflect your current wishes. Why beneficiary designations matter for LGBTQ+ individuals: If you have a domestic partner or chosen family members, it is crucial to ensure that your beneficiary designations align with your intentions. In most cases, financial institutions will not recognize a domestic partner or non-biological family members unless you have explicitly named them as beneficiaries on your financial accounts and policies. Beneficiary designations are also private and financial institutions are not at liberty to disclose those named as beneficiaries on your accounts after your death. Letter of Intent While not legally binding, a letter of intent can provide your loved ones with important details and intentions regarding why you constructed your estate plan the way that you did. For example, if you decide to disinherit a biological family member from an estate distribution, the reason for the exclusion can be articulated in the letter in a way that cannot be explained in the estate planning document itself. Why a letter of intent matters for LGBTQ+ individuals: If your estate plan is one that leaves out next of kin or biological family members, a letter of intent can provide further proof of your wishes related to your estate distribution. Letters of intent can also ensure that your funeral or memorial service reflects the way you wish to be remembered, celebrating your identity and your values. Letters of intent can also be entered into a court proceeding as evidence in an estate contest to further outline your rationale for the disinheritance of estranged family members. Guardianship Documents for Children It is vital for any parent to document guardianship of their minor child in the event of the parent’s death. Documenting a guardianship designation ensures that upon your passing, your children will be cared for by the person or the people you designate, not the person that a court may choose. Why guardianship documents for children matter for LGBTQ+ individuals: If you are an LGBTQ+ parent, establishing guardianship is incredibly important, especially if you are not biologically related to your child. In some cases, your biological family members may challenge your partner's ability to care for your children upon your death, particularly if you are in a non-married partnership. Establishing guardianship and memorializing your choice of guardian for your minor children provides clarity, protects your partner’s rights to care for your children, and safeguards the sanctity of your family structure. Estate planning is a crucial step for every individual, but it takes on an added level of importance for LGBTQ+ individuals, especially during times of legal uncertainty and political turmoil. With the right documents in place, you can be confident that your wishes will be respected and that your loved ones are protected, regardless of legal challenges or changes in administration. Estate planning empowers you to take control and secure the rights of your partner, your children, and your chosen family.
February 11, 2025
Immigration Law
What to Expect in the 2025 H-1B Season
The 2025 H-1B Cap Season is upon us, along with a new administration. There will likely be numerous changes at United States Citizenship and Immigration Services (USCIS) regarding policy and regulation, but in the immediate term, let’s take a look at the upcoming H-1B lottery and what we can expect. Increased Application Fee The filing fee for H-1B lottery applications has increased significantly for this cap season, jumping to $215 per application. USCIS increased fees across the board last year and has provided a fee calculator to assist petitioners and applicants: Calculate Your Fees | USCIS. Site Visits and Increased Compliance Recent rule changes at USCIS have expanded compliance requirements for H-1B employers. While site visits have long been a part of the H-1B program, the increase in third-party worksites and remote work has prompted USCIS to adjust enforcement accordingly. Additionally, worksite inspections and stricter enforcement of immigration rules are expected to increase under the new administration. Don’t Forget the H-1B for Entrepreneurs Individuals who own more than 50% of the sponsoring H-1B business can now qualify for H-1B status. These new petitions are limited to an initial 18-month validity period but represent a significant opportunity for entrepreneurs who previously would have missed out on the H-1B lottery. Revisions to H-1B Specialty Occupations Regulatory updates to the definition of “specialty occupation” have been implemented by USCIS, tightening key qualification areas related to the proposed position and the employee’s education. Specifically: Positions requiring a general or nonspecific degree will no longer qualify for H-1B purposes. Individuals with a general degree must demonstrate how their coursework directly relates to their proposed position. Employers must justify how each accepted degree is directly related to the role when multiple degree fields are listed as acceptable qualifications. These changes add complexity to certain occupations and underscore the importance of seeking legal advice early in the H-1B lottery process. Expect the Unexpected With a new administration taking the reins, significant changes to legal immigration policies are likely in the coming months and years. While there may not be enough time to implement major changes before this year’s H-1B lottery, we could see slowdowns in USCIS processing and potential disruptions in visa issuance.
February 10, 2025
Commercial Litigation
Virginia Sees Surge in Civil Lawsuits in 2024: How to Avoid Collection and Eviction Litigation
Civil lawsuit filings in Virginia's General District Courts increased more than 6% in 2024. The biggest increase? Warrants in debt (collection lawsuits) increased by 27%. A warrant in debt is a civil lawsuit to pursue recovery of money damages, usually due to unpaid debts and accounts receivable. Except for personal injury or wrongful death claims, Warrants in Debt are limited to a maximum recovery of $25,000. By contrast, unlawful detainer filings decreased by 8%. An unlawful detainer is an eviction lawsuit to pursue and obtain possession of real property (real estate) and unpaid rental charges, if applicable. There is no limit to the rental charges that can be pursued in an unlawful detainer filing. Virginia’s Circuit Court civil filings increased modestly by 4% compared to 2023. Virginia Circuit Courts generally hear civil and commercial claims involving controversies of more than $25,000, along with family law, probate and estate claims, and real estate title claims, among other matters. Full data on 2024 legal filings from the Supreme Court of Virginia can be found here: 2024 Virginia General District Court filing data & 2024 Virginia Circuit Court filing data. Landlords, tenants, property managers, lenders, creditors, and consumers in Virginia can take proactive steps to prevent costly litigation. Understanding your rights and obligations can minimize financial risks and avoid lawsuits related to unpaid debts or evictions. Establish Clear Agreements For landlords and creditors, well-drafted lease and loan agreements help prevent disputes. These should clearly define: Payment terms, due dates, and penalties for nonpayment. Responsibilities for property maintenance (landlords) and interest rates (creditors). Legal remedies in case of default. Tenants and consumers should carefully review contracts before signing and seek clarification on any unclear terms. Maintain Open Communication Early communication can prevent minor issues from escalating. If you are a tenant, customer, or consumer behind on payments, consider: Informing landlords or creditors of financial difficulties. Requesting a payment plan, forbearance, or temporary extension. Keep records of all communications and agreements. Landlords and creditors should consider offering reasonable repayment options where feasible, as these are more efficient than litigation. Follow Legal Collection and Eviction Procedures Virginia law requires strict compliance with applicable eviction and collection procedures before pursuing eviction or debt collection lawsuits: Landlords must issue a proper notice of lease violation to tenants depending on the grounds sought for eviction. Creditors generally should send a formal demand letter before pursuing legal action. Utilize Mediation and Alternative Solutions Mediation can be a cost-effective way to resolve disputes without court involvement. Courts often encourage, but normally do not mandate, negotiations between parties to explore mutually beneficial solutions. Understand the Legal Process and Consequences If legal action becomes necessary: Landlords must file an Unlawful Detainer for eviction, attend a court hearing, and obtain a Writ of Eviction if a judgment is granted. Creditors must file a warrant in debt or other applicable lawsuits and obtain a court judgment before pursuing wage garnishment or other collection means. Tenants and consumers should respond promptly to court notices to avoid default judgments. Seek Legal Guidance When Needed Landlords, tenants, creditors, and debtors facing complex legal issues should consult an attorney to ensure compliance with Virginia law and protect their rights. By taking these proactive steps, all parties can reduce the risk of eviction and collection lawsuits, fostering more stable financial and housing relationships.
February 7, 2025
Family Law
Defending Women from Gender Ideology an Individual’s Sex Is Not a Simple Matter
On January 20, 2025, President Donald Trump issued the executive order titled “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.” This directive mandates that all federal agencies recognize only two biological sexes -- male and female -- defined at conception. It requires the replacement of the term “gender” with “sex” in official documents and policies and prohibits the use of gender-affirming language and practices within federal operations. Additionally, the order restricts the use of federal funds for gender-affirming care and disallows self-selection of gender on government-issued identification, such as passports and visas. The executive order’s strict binary definition of sex may conflict with existing anti-discrimination laws that have been interpreted to protect individuals based on gender identity. Notably, the Supreme Court’s decision in Bostock v. Clayton County (2020) held that discrimination based on gender identity or sexual orientation constitutes sex discrimination under Title VII of the Civil Rights Act of 1964. By mandating a binary understanding of sex, the order could undermine these protections, leading to potential legal challenges. The order rescinds previous directives that promoted diversity, equity, and inclusion (DEI) within federal agencies and among federal contractors. This includes the revocation of Executive Order 11246, which had prohibited discrimination by federal contractors and required affirmative action to ensure equal employment opportunities. The removal of these protections may lead to increased discrimination claims and legal disputes concerning employment practices. By prohibiting self-selection of gender on federal identification documents, the order may create conflicts with state policies that recognize non-binary or transgender identities. This inconsistency could lead to legal challenges regarding the recognition of gender identity across different jurisdictions and the potential violation of individual rights to privacy and equal protection under the law. The prohibition of federal funding for gender-affirming care, including within federal prisons, raises legal concerns related to the Eighth Amendment’s prohibition against cruel and unusual punishment. Denying necessary medical care to transgender individuals in federal custody could result in litigation alleging deliberate indifference to serious medical needs. Civil rights organizations, including the American Civil Liberties Union (ACLU), have signaled intentions to challenge the executive order in court. Legal arguments are likely to focus on conflicts with established anti-discrimination laws, constitutional protections under the Equal Protection Clause, and precedents set by the Supreme Court affirming the rights of transgender individuals. President Trump’s executive order represents a significant shift in federal policy regarding the recognition of sex and gender. Its implementation is poised to have far-reaching legal implications, particularly concerning anti-discrimination protections, federal employment practices, identification policies, and access to medical care. As legal challenges emerge, courts will play a crucial role in determining the order’s alignment with existing laws and constitutional principles.
February 6, 2025
Labor and Employment
Sports Betting in the Workplace: Ensuring the Super Bowl and March Madness Don't Cause Legal Madness and Super Problems
Dear Sarah, My employees want to do a fantasy football league. I don’t really care as long as it doesn’t mess with their work. Is there any reason I need to worry about this, or can I just let them go at it? – Janet "I’m Not the HR Police" from Accounting It’s the season for sports betting excitement, with the Super Bowl upon us and March Madness just around the corner. Your employees are likely buzzing with talk of squares, brackets, and maybe even some secret side bets. While these friendly competitions can boost morale and foster camaraderie (especially for remote or hybrid teams), there are some legal considerations to keep in mind. Because as much fun as a bracket challenge can be, sports betting could land you in a legal bind if you're not careful. Is Workplace Sports Betting Legal? Thirty-eight states and Washington D.C. have legalized sports betting in some form since the U.S. Supreme Court struck down the federal ban in 2018. But here’s the kicker: the regulations vary widely. Some states have specific exceptions that allow for “social gambling,” meaning office pools can be permissible if they meet certain conditions, like ensuring no one running the pool profits. The rules on what qualifies as a “social” game and what constitutes “illegal” gambling can be murky, and those rules are still evolving. For instance, New York introduced a bill in 2023 to specifically legalize Super Bowl squares. Gambling and unlicensed sports betting, including office pools, are prohibited in many states and under the Interstate Wire Act of 1961 (IWA) and the Uniform Internet Gambling Enforcement Act of 2006 (UIGEA). The IWA makes it illegal for anyone in the U.S. to place or receive wagers on any sporting event or contest that involves interstate or foreign commerce. The UIGEA criminalizes the act of accepting funds for unlawful internet gambling, specifically by those "engaged in the business of betting or wagering." With the rise of remote and hybrid work setups, there's an increased risk that office pools could cross state lines, triggering the laws of multiple states and federal gambling regulations., So while you might think it’s just a friendly office competition, the law might say otherwise in certain jurisdictions. Understanding Which State Laws Apply Modern companies are no longer limited to hiring people from the state in which they are based, and remote-first businesses often have employees spread across multiple states with differing legal stances on sports betting. In most cases, the laws that govern sports betting are determined by where employees are physically located. If an employee is based in a state where sports betting is illegal, they may be restricted from participating in sports betting activities, regardless of whether the company itself operates in a jurisdiction where betting is legal. Companies with large, distributed teams need to have systems in place to track the physical location of employees and assess legal requirements accordingly. This is where working with a payroll provider, human resources tools, or compliance experts can be incredibly valuable in staying informed about location-based regulations. The rise of fully remote and hybrid work models has made this issue even more complex. For companies with employees working remotely from different states, where the employee is physically working from at any given time becomes key. For example, if an employee works from a state where sports betting is illegal, they may not be permitted to place bets, even if they are working for a company based in a state where the activity is allowed. If a company is headquartered in a state where sports betting is legal, but some employees are working remotely from states where it’s banned, the company may need to consider how to handle internal policies and even provide guidance about prohibited activities. Consider Non-Monetary Alternatives: Prizes Don’t Have to Be Cash The risk of violating gambling laws can be reduced significantly when the pool doesn’t involve money. You could opt for fun, non-cash prizes like extra time off, a team lunch, or even just bragging rights. These types of prizes keep things light and engaging without the potential legal risks associated with monetary rewards Maintain Productivity Amidst the Madness Between filling out brackets and selecting squares, productivity could take a hit. If employees are sneaking off to check scores, make sure you set expectations about what’s acceptable during work hours. Some companies have implemented policies where pools and betting activities are restricted to non-work hours, or at least during designated breaks. This helps mitigate the negative impact on productivity and keeps employees engaged without the legal headaches. Mitigate Common Risks with Written Policies A well-drafted company policy on sports betting can help minimize legal risk and clarify the boundaries for employees. A “no betting” policy or a policy that outlines clear, specific rules for office pools is a great start. An effective company policy on sports betting should touch on: Participation: Restrict participation to employees in states where it’s legal and clarify eligibility criteria. Emphasize that participation should always be voluntary to respect those who choose to opt out for personal, religious, or addiction-related reasons. Profits and Prizes: To avoid crossing into illegal territory, ensure that the person running the pool isn’t taking a cut of the money. This is a common rule in states that allow office pools: the organizer must not profit in any way. Be sure to also comply with any local laws that limit or restrict prize money. If your pool will offer non-monetary prizes, outline them in your policy. Procedures and Expectations: Prohibit employees from using work devices or company time to organize or manage pools. Encourage participation during breaks or outside of work hours. You should also establish procedures to address any potential complaints or violations that may arise to ensure fairness and transparency. Takeaway Where legal, office sports betting pools can be a great way to build morale and camaraderie, but they require careful planning to comply with the law. With the proper planning and compliance with the relevant laws, you can foster a fun and compliant workplace environment that avoids unnecessary risks.
February 5, 2025
Immigration Law
What is an H1B and Who Should Know About It?
H1B – Specialty Occupation The H-1B nonimmigrant visa allows companies and other employers in the United States to temporarily employ foreign workers for up to six years in occupations that require the theoretical and practical application of a body of highly specialized knowledge and a bachelor’s degree or higher in the specific specialty, or its equivalent. H-1B specialty occupations may include fields such as architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts. Who Needs to Know About H1B visas? The H1B is a very popular visa category as it can be very useful for a large number of potential applicants. So, who can benefit from this flexible employment-based visa? Students completing their studies in F1 status who are graduating with a bachelor’s or advanced degree are designed to be the typical H1B applicants. Specific provisions exist to assist the transition from OPT to H1B. Students who have multiple years of OPT ahead of them should also look carefully at the H1B visa as it is still a lottery, and they should maximize their attempts to make the lottery; Individuals with other nonimmigrant visas that don’t allow for employment (H4 dependents, etc.) or are running out of validity period (L1B, etc.). Professionals who are working in a status that ties them to a specific employer such as L1 visa holders or E visa holders. Professionals who are abroad – there is no geographic limit on H1B lottery submissions. Individuals who need a visa status that provides “dual intent” to allow them to easily pursue an employment-based green card in the United States. H1B Cap and the Lottery The number of new H1B Nonimmigrant visas is limited by law to 65,000 a year, and they must be submitted before April 1 for jobs that begin October 1 of that same year. In addition, there are an extra 20,000 H1B visas available for beneficiaries who hold a US master’s degree. When there is anticipated demand for more than the 85,000 available H1B visas, the USCIS is required to conduct a lottery for the selection of H1B visas. The current H1B lottery takes place in multiple stages. Initially a lottery for H1B applicants who hold US master’s degrees is conducted. Then, the remaining US master’s degree applicants are added to the larger applicant pool, and a lottery for the remaining 65,000 available visas is conducted. Finally, a lottery is conducted in the summer for any unused H1B visas. This process is conducted electronically, and selected applicants are informed very quickly if they have made the H1B Cap. Cap Exempt Employers H-1B workers who are petitioned for or employed at an institution of higher education or its affiliated or related nonprofit entities, a nonprofit research organization, or a government research organization are not subject to the H1B cap. These H1B petitions may be filed at any time and are not subject to the lottery rules. Key Aspects of H1B Petitions Employers should be informed about all the aspects of H1B nonimmigrant workers as regulations cover their placement, pay, and qualifications. As discussed, H1B workers must hold at least a bachelor’s degree, and they must also be employed in a position that at least requires the equivalent of a bachelor’s degree. The definition of specialty occupation is complex and requires careful review. Dependents of H1B visa holders can also obtain H4 status. However, H4 status does not by itself allow for work authorization. Only the spouses of H1B visa holders with an approved Immigrant Worker Petition that is subject to backlogs in obtaining permanent residence can apply for work authorization in H4 status. Fees H1B Petitions require filing fees to be paid to the Department of Homeland Security. The US immigration service is fee-based and relies entirely on these fees to provide its services. The fees for H1B petitions are complex and they can be significant. Below, please find the current breakdown of H1B petition filing fees; there is also an optional additional premium processing fee should that service be available for the H1B Cap. Below is a list of the current fees with a higher range provided for employers that have more than 25 employees: H1B Registration fee, to participate in the lottery: $210 Base Nonimmigrant petition filing fee: $460 - $780 Asylum program fee: $300 - $600 Fraud prevention and detection fee for all new H1B Petitions: $500 AICWA Fee (Imposed by the American Competitiveness and Workforce Improvement Act of 1998): $750 – for employers with 1 to 25 full-time employees $1500 – for employers with 26 or more full-time equivalent employees Public Law 114-113 Fee, only applicable for employers with 50 or more employees and more than 50% of employees are working under H1B or L1 status: $4,000 Premium Processing Fee, guarantees a response from USCIS on a petition in 15 days: $2,805 The Labor Condition Application H1B petitions must be accompanied by a certified Labor Condition Application from the Department of Labor. This application includes certain attestations, a violation of which can result in fines, bars on sponsoring nonimmigrant or immigrant petitions, and other sanctions to the employer. The application requires the employer to attest that it will comply with the following labor requirements: The employer/agent will pay the H-1B worker a wage that no less than the wage paid to similarly qualified workers or, if greater, the prevailing wage for the position in the geographic area in which the H-1B worker will be working. The employer/agent will provide working conditions that will not adversely affect other similarly employed workers. At the time of the labor condition application, there is no strike or lockout at the place of employment. Notice of the filing of the labor condition application with the DOL has been given to the union bargaining representative or has been posted at the place of employment. Prevailing Wages Pursuant to the Labor Condition Application, the H1B employer must offer to pay the actual wage or the prevailing wage level for the H1B occupational classification in the proposed area of employment, whichever is greater, based on the best information available. For example, a prevailing wage for a computer engineer could be a lower figure in a specific region, but if all similarly placed employees in the company are paid a higher figure that wage must be offered to the H1B worker. Accordingly, the prevailing wage must equal the average of the rate of wages paid to other workers similarly employed in the area of intended employment. Employers must be careful in identifying the specific wage ranges and areas of employment. Material Changes Matter US Citizenship and Immigration Services and Department of Labor regulations of H1B workers are strict and complex, with fines and penalties abound for the unwary. H1B employers must abide by the material terms of the H1B petition that they submit. Changes to job title, job duties, job location, salary, benefits, and any other material changes can have significant consequences. For example, H1B workers cannot be “benched,” and significant penalties can be incurred for violations. Compliance The H1B program has been subject to significant oversight in recent years, and that trend is only set to continue. Current regulations have increased the statutory authority for work site visits and compliance with the terms of H1B vias and the Labor Condition Application. Employers and H1B workers need to be aware that compliance is a key part of the H1B program and should be prepared for potential site visits.
February 5, 2025
Estates and Trusts
Not Hiring a Qualified Appraiser and Realizing the True Value of Art and Collectibles
This is Part 5 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. For federal estate and gift tax purposes, transfers are valued at the “fair market value” of the asset on the date of transfer. One of the more common estate tax audit issues is the failure to properly report the value of items of tangible personal property on a decedent’s federal estate tax return. Similarly, failing to properly account for the value of tangible personal property transferred by inter vivos gift may result in the audit of a federal gift tax return. Despite the upfront cost, professional periodic appraisals should be obtained to identify the true value of art and collectible assets. Appraisals serve many functions, in addition to those relating to estate and gift tax reporting, such as establishing value for insurance purposes, establishing bidding parameters for assets at auction, obtaining loans with tangible personal property serving as collateral, and planning for future gifts. For tax purposes, fair market value is defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.” Although the most persuasive indication of fair market value is an actual contemporaneous sale of the property in question, in the absence of such a sale, an appraisal is typically required to establish the taxable value of the asset subject to transfer. Under current regulations, a reported gift of tangible personal property that exceeds $5000 in value must be substantiated by a qualified appraisal conducted by a qualified appraiser. The Pension Protection Act of 2006 (the “Pension Act”) established new requirements for what it means to have a “qualified appraisal” for tax reporting purposes. A qualified appraisal must contain a declaration that the appraiser understands that a substantial or gross valuation misstatement resulting from an appraisal of the value of the property that the appraiser knows, or reasonably should have known, would be used in connection with a return or claim for refund, may subject the appraiser to a civil penalty, and understands that an intentionally false or fraudulent overstatement of the value of the appraised property may subject the appraiser to civil penalty for aiding and abetting an understatement of tax liability. A qualified appraisal of tangible personal property must contain the following: A detailed description of the property. The physical condition of the property; The date or expected date of the contribution. The terms of any agreement or understanding entered into or expected to be, entered into by or on behalf of the client that relates to the use, sale or other disposition of the property, including any restrictions on the use or disposition or reservations of rights conferred on anyone other than the donee and any earmarks for particular use. The name, address and taxpayer identification number of the appraiser. A detailed description of the appraiser’s educational background and qualifications The date on which the property was valued. The appraised fair market value of the property. The method of valuation used to determine the fair market value. The specific basis for the valuation. A description of the fee arrangement between the client and the appraiser. A qualified appraisal is prepared by a qualified appraiser defined as an individual who: Has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in the regulations Regularly performs appraisals for pay. Meets other requirements that the IRS has prescribed in the regulations. An individual cannot be a qualified appraiser with respect to any specific appraisal unless she demonstrates verifiable and passing professional or college-level education and experience or earned a recognized appraiser designation from a generally recognized professional trade or appraiser organization as part of an employee apprenticeship program or educational program as well as the education and experience in valuing the property type being appraised. If the appraisal or the appraiser does not meet all the above requirements, the resulting valuation report will not be considered as any evidence of value, and the IRS will conduct its own appraisal to determine the fair market value of the asset subject to transfer. In certain instances, providing the IRS with an appraisal that adheres to all the requirements of the Pension Protection Act may not help with avoiding an estate or gift tax audit, but provides a powerful bargaining tool. For example, regardless of the asset composition of the remainder of the estate, if a decedent dies owning artwork that has a claimed value of $50,000 or more, the appraisal will be subjected to consideration by the IRS Art Advisory Panel, comprised of a body of art industry experts who review and evaluate the acceptability of artwork appraisals submitted by taxpayers in support of claimed fair market value. When a qualified appraisal is submitted, you and your client may find that the IRS is more willing to compromise on valuation issues.
February 4, 2025
Labor and Employment
It Ends with Us, But Continues in Court: Blake Lively and Justin Baldoni's Legal Battle
The film “It Ends With Us” was a massive hit in 2024, grossing $350 million globally. Yet, the drama surrounding the film has shifted from the big screen to the courtroom, with a series of legal battles between its stars, Blake Lively and Justin Baldoni, that have captivated both the public and legal observers alike. In the ongoing legal battle between actors Blake Lively and Justin Baldoni, a federal judge has stepped in to try and quell the increasingly public war of words. At a hearing in Manhattan on February 3, 2025, Judge Lewis J. Liman ordered both legal teams to limit their out-of-court commentary, citing a New York rule (Rule 3.8) designed to prevent public statements that could prejudice legal proceedings. This intervention comes as the public has been parsing footage of a scene at issue in Lively’s lawsuit, recently released alongside a statement from Baldoni’s attorney. Baldoni’s team has also launched a website where users can access court documents related to the film's production. The lawsuits present conflicting accounts of events on the set of "It Ends With Us," an adaptation of a novel about domestic abuse, in which Lively plays the heroine and Baldoni her abusive partner. Lively’s suit accuses Baldoni and Wayfarer Studios CEO Jamey Heath of sexual harassment, including entering her trailer uninvited while she was undressed or breastfeeding, improvising unwanted kisses, and discussing his “previous pornography addiction.” She claims that after raising objections, Wayfarer launched a “retaliation campaign” against her. Baldoni’s suit denies these accusations, claiming all trailer entries were consensual, kissing scenes were not improvised, and the discussion of his past addiction was contextualized. He accuses Lively, her husband Ryan Reynolds, and her publicist of defamation and extortion, claiming she sought to “extract concessions and creative control” of the movie. He further alleges that he was the victim of her attempts to damage his reputation. The hearing was the first court appearance by the lawyers since Lively filed her initial complaint in California in December, followed by a New York Times report on her accusations. Baldoni has since sued the Times for libel, claiming the article omitted key information. The Times has stated they will vigorously defend their reporting. Judge Liman, acknowledging the extensive public record of the accusations, emphasized that the court proceedings, not public pronouncements, will ultimately determine the facts of the case. Neither Lively nor Baldoni was present at the hearing. Initial Allegations On December 20, 2024, Blake Lively filed a formal complaint with the California Civil Rights Department, accusing director and co-star Justin Baldoni, producer Jamey Heath, and Wayfarer Studios of sexual harassment and creating a toxic work environment. It seems that behind the movie magic was a not-so-glamorous reality. Lively’s complaint lays out a series of troubling incidents, including Baldoni allegedly ignoring intimacy protocols, improvising unapproved physical contact (like, biting Lively’s lower lip during a scene), and inserting controversial sexual content into the film without consent. Meanwhile, producer Heath is accused of showing Lively an unsolicited nude video of his wife giving birth. From a legal standpoint, these allegations—if proven true—could present serious violations under California’s Fair Employment and Housing Act (FEHA). FEHA protects workers from discrimination, harassment, and retaliation, and sexual harassment is a particularly serious violation that could expose the production company and individuals involved to significant liability. In Lively’s case, the allegations regarding unsolicited physical contact and the lack of consent for intimate scenes could amount to unlawful sexual harassment in the workplace. These types of cases are taken very seriously in California, where the state’s strict sexual harassment laws are designed to prevent such behavior and ensure that victims have legal recourse. The real complexity in these claims lies in proving the behavior was pervasive and unwelcome. Given that these events allegedly took place during production and involved multiple key players—director Baldoni and producer Heath—it will be important for Lively to provide evidence of the repeated and pervasive nature of the harassment to make her case. The New York Times published an article about the allegations the very next day, also hinting at deeper tensions, including a campaign allegedly aimed at destroying Lively’s reputation. Baldoni Fires Back with Defamation by Implication Claim Ten days later, Baldoni fired back and sued the New York Times for defamation on December 31, 2024[i]. Baldoni claims the publication’s story about the sexual harassment allegations against him was part of a broader “smear campaign” orchestrated to undermine him. This counters Lively’s claims; Baldoni accuses Lively of damaging his reputation through false reporting. Baldoni’s lawsuit presents an interesting legal angle, focusing on defamation by implication. According to his complaint, the New York Times article contained damaging content that painted him in a false light. While the article never directly accused him of sexual harassment, Baldoni contends that the context and tone of the reporting led readers to infer his guilt. Defamation by implication occurs when the publication or communication indirectly suggests false information that harms a person’s reputation. Baldoni argues that the story—by highlighting Lively’s allegations without providing his side—implicitly presented him as the perpetrator. Moreover, Baldoni also seeks to address the “damage to his career” caused by these articles, which is a standard claim in defamation suits (i.e., the plaintiff is claiming that the defamatory statements harmed their reputation and resulted in professional or financial loss). He’s not just asking for retraction or correction; he’s pursuing actual damages (compensation for the real losses suffered as a result of the defamation) and possibly punitive damages (additional financial penalties aimed at punishing the defendant if the reporting was done with reckless disregard for the truth or malicious intent). Baldoni has also claimed that Lively was actively working against him throughout production, asserting that she "berated" him on set and attempted to undermine his creative control. The lawsuit further alleges that Lively edited the film’s final cut without his approval and attempted to block him from attending the premiere. Baldoni claims that Lively’s actions amounted to a "pattern of vindictiveness" designed to ruin his professional standing. This part of Baldoni’s claim—focused on the editing of the film and his exclusion from the premiere—could potentially lead to a breach of contract or tortious interference claim. A breach of contract claim would suggest that terms agreed upon in a legal agreement were violated, while tortious interference occurs when someone intentionally disrupts the relationship or contractual agreement between parties, potentially leading to significant financial damages and reputational harm. Film directors often have the final say on creative decisions, so Lively’s interference could be viewed as overstepping and damaging to Baldoni’s reputation in the film industry. Additionally, Baldoni claims that Lively, along with her husband Ryan Reynolds, leveraged their Hollywood clout to push for his removal from the film's production, including allegedly pressuring William Morris Entertainment to drop him as a client. If true, this could form the basis for a tortious interference claim. In such a claim, one party would argue that another intentionally interfered with their contractual relationships or business dealings. This can be tricky to prove, as it requires showing that the interference was unjustified and intentional. Lively Escalates Her Complaint into a Federal Lawsuit On the same day as Baldoni filed his lawsuit against the New York Times in Los Angeles, Lively formalized her California Civil Rights Department complaint into a federal lawsuit[ii] in New York. According to Lively’s lawsuit, Baldoni, Heath, and a crisis PR expert named Melissa Nathan tried to bury Lively’s reputation by manipulating social media, planting negative stories, and leveraging crisis communications to protect Baldoni’s public image. Lively claims that this campaign included texts from Nathan and Baldoni discussing how to “bury” people and target women in the public eye. The lawsuit alleges that even the big money folks at Wayfarer Studios, including co-founder Steve Sarowitz, were involved in the plot. From a legal perspective, if Lively’s claims about the smear campaign are proven, this could be a strong case for defamation and tortious interference. Defamation requires showing that false statements were made about a person, which harmed their reputation. In this case, the alleged "burying" of Lively through negative media manipulation would likely involve defamatory statements, whether directly or indirectly implied. Tortious interference claims, on the other hand, focus on one party intentionally damaging another’s business or reputation by improper means. If Lively can demonstrate that Baldoni and his team used these tactics intentionally to damage her career, there could be significant legal repercussions for all involved. However, the challenge for Lively will be proving that these negative media tactics were both intentional and defamatory, rather than part of a broader public relations strategy designed to mitigate the fallout from the initial complaints. PR teams are often hired to clean up a reputation, but if they cross the line into deceptive practices or actively seek to harm someone's reputation, they may have legal exposure. The decision to file the lawsuit in New York—despite the initial complaint being lodged in California—appears to be a strategic move regarding forum selection. California might offer more protections under its state laws, but New York law allows for quicker and more direct access to the courts, enabling Lively and her legal team to bypass some procedural hurdles and go straight to litigation. Additionally, the New York venue may offer a broader legal framework by incorporating both federal and state claims, and it could potentially provide a more favorable jurisdiction for Lively's case, particularly considering that much of the case's events occurred in New York. Lively’s complaint included demands for a jury trial. Baldoni Also Sues Lively in the Southern District of New York Adding another layer to the legal battle, Baldoni and Wayfarer Studios filed a lawsuit[iii] against Lively, Reynolds, and publicist Leslie Sloane on January 16, 2025, seeking a staggering $400 million in damages. This suit, filed in the federal District Court for the Southern District of New York, expands upon the existing claims, alleging civil extortion, defamation, and a series of contract-related violations. This lawsuit reinforces the argument that the conflict originated from a creative struggle. It alleges that Lively gradually increased her influence, demanding creative control beyond the typical scope of an actor's role. This included taking over wardrobe decisions, rewriting scenes, creating her own film cut, and ultimately demanding Baldoni's exclusion from promotional activities. The lawsuit vehemently denies any sexual harassment or inappropriate behavior by Baldoni, Heath, or any member of the production team. Instead, it accuses Lively and Reynolds of engaging in "extortionate threats" to damage Baldoni's reputation. Baldoni amended his complaint on January 31, 2025, just days before the scheduled initial pretrial conference. In the amended filing, which now includes the New York Times as a defendant, Baldoni alleges that metadata on the New York Times' website reveals the paper had access to Lively's civil rights complaint at least 11 days prior to their bombshell December 21st report. That report, titled "'We Can Bury Anyone': Inside a Hollywood Smear Machine," accused Baldoni and his publicists of orchestrating a campaign to damage Lively's reputation, seemingly in retaliation for her complaints of sexual harassment on set. This new information regarding the Times' prior knowledge of the complaint raises questions about the timing and context of their reporting. Furthermore, the amended lawsuit includes new claims regarding Ryan Reynolds' portrayal of the character Nicepool in "Deadpool & Wolverine," with Baldoni accusing Reynolds of using the character to mock and bully him. The amended filing includes claims for civil extortion, defamation, false light invasion of privacy, breach of implied covenant of good faith and fair dealing, intentional interference with contractual relations, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, promissory fraud, and breach of implied-in-fact contract. Leaked Footage, Gag Order Request, and Website Launch On January 21, 2025, Justin Baldoni's legal team dropped a bombshell: a 10-minute video from the "It Ends With Us" set. This move, intended to counter Blake Lively's sexual harassment allegations, captures intimate moments, including a rehearsal of a romantic dance with Lively. While Baldoni claims the footage exonerates him, Lively's team argues it actually supports her claims, pointing to specific scenes as evidence of inappropriate behavior. In a dramatic escalation, Lively and Reynolds filed a motion for a gag order against Baldoni's lawyer, Bryan Freedman. They accuse Freedman of a relentless media campaign, including inflammatory statements and potential leaks, aimed at swaying public opinion and prejudicing the jury pool. This, they allege, is a continuation of the alleged retaliation orchestrated by Baldoni and his team since Lively first spoke out. Additionally, a day after amending his New York complaint on January 31, 2025, Baldoni’s legal team launched a website, featuring the amended complaint and a detailed timeline of events. Given the proximity of the launch to the pre-trial conference, this may have been a preemptive move by Baldoni to circumvent any potential gag order. By publishing the information online, Baldoni may be attempting to solidify his narrative in the public eye and potentially undermine the basis for a gag order. Case Consolidation and Trial Date Set In a major update from New York, federal judge Lewis J. Liman has scheduled a trial date for March 9, 2026, marking the next chapter in this high-profile legal battle. The trial, which will address the complex claims of sexual harassment, defamation, and contract violations, is now set to proceed after Liman moved the initial conference from mid-February to next week. The court is also preparing for discussions on pretrial publicity and attorney conduct, with both sides expected to present concerns over the impact of public statements and potential jury bias. This adjustment follows a filing by Lively’s legal team, which alleges that Baldoni’s attorney is attempting to influence potential jurors. Specifically, Lively’s lawyers claim that Baldoni’s legal team has been actively working to harm Lively’s career by launching a website that selectively releases documents and communications between the two stars. According to Lively’s legal representatives, the goal of this strategy is to sway public opinion and turn prospective jurors against her before the trial even begins. As the New York case gains momentum, another legal front has emerged in Texas. Lively has filed a request in a Texas court to depose a man she claims played a central role in turning online sentiment against her during the film’s release and promotion. This new legal move adds further complexity to the already tangled web of lawsuits, as Lively seeks to identify and address those responsible for the negative publicity she alleges was orchestrated to damage her public image during the film's promotional campaign. As the legal battle intensifies on both coasts, all eyes will be on the actions of the court and the legal strategies of both Lively and Baldoni as they prepare for what promises to be a protracted and high-profile trial. The Legal Implications Moving Forward Judge Liman's January 27th decision to consolidate the Lively and Baldoni cases in the Southern District of New York marks a new, and potentially decisive, phase in their legal battle. This procedural move streamlines the trial process, focusing the complex factual and legal issues into a single proceeding, while simultaneously raising the stakes considerably for both parties. Consolidation not only avoids duplicative litigation but also presents a unified narrative to the court, forcing both sides to confront the totality of the allegations and defenses. While it remains to be seen whether Judge Liman will also consolidate Baldoni's separate, and arguably related, suit against the New York Times, the fact that the Times is now a defendant in the consolidated case suggests this is highly probable. This joinder could significantly broaden the scope of discovery and potentially introduce thorny First Amendment issues regarding journalistic privilege and fair report. The outcome of these lawsuits carries significant implications for the entertainment industry, potentially shaping the landscape of workplace conduct and media scrutiny. If Lively's claims of sexual harassment and retaliation are substantiated, particularly given the high-profile nature of the case, it could establish a crucial precedent for worker protections in Hollywood, especially for women navigating the pervasive power imbalances. This could embolden others to come forward and trigger a wave of policy changes regarding reporting and investigating harassment claims. Conversely, Baldoni's claims of defamation and tortious interference, if successful, could raise important questions about the often blurry line between personal and professional conduct on set, potentially chilling the willingness of individuals to report misconduct for fear of legal reprisal. This aspect of the litigation touches upon the delicate balance between free speech and reputational harm, an area of law ripe for development in the context of the #MeToo era. As the litigation unfolds, the entertainment industry will be watching closely. It will be interesting to see how the courts navigate these complex issues of proof and credibility, particularly regarding allegations of harassment and retaliation, which often rely on circumstantial evidence. The case also presents a fascinating interplay between traditional defamation law and the evolving standards for media reporting on sensitive matters, particularly in the context of ongoing investigations and public accusations. Furthermore, the potential long-term effects on industry dynamics, including the power of public opinion and social media pressure, are significant. Regardless of the outcome, this litigation is likely to leave a lasting mark on Hollywood and beyond. [i] Wayfarer Studios LLC v. New York Times, 24STCV34662 (Ca. Sup. Ct. Dec. 31, 2024) [ii] Lively v. Wayfarer Studios LLC, 1:24-cv-10049, (S.D.N.Y.) [iii] Wayfarer Studios LLC v. Lively, 1:25-cv-00449, (S.D.N.Y.)
February 4, 2025
Franchise Law
Virginia Bill That Would Ban Franchise Non-Competes Advances in State Senate
Virginia Senate Bill 798, introduced by former in-home senior care franchisee Sen. Chris Head, was passed unanimously by the Virginia Senate on January 17, 2025. The bill would amend Virginia's Retail Franchising Law to require franchise agreements for a Virginia location to be governed by the laws of Virginia. It would make it illegal to offer or enter into such a franchise agreement “that restricts the right of a franchisee to engage in the business of offering, selling, or distributing goods or services at retail after termination or expiration of the franchise agreement.” It will be heard in a Virginia House of Delegates Labor & Commerce Committee, likely sometime during February 2025. Why it Matters: Covenants not to compete are hallmarks of franchising. Some argue that they are necessary to protect a franchisor’s confidential and proprietary information from misuse by former franchisees to the detriment of both the franchisor and its remaining franchisees. Many franchisees think such provisions restrict their ability to hold a franchisor accountable, since the non-compete traps franchisees in the relationship with little recourse to advocate for their benefit. Very few states have outlawed post-termination or expiration covenants not to compete in franchise agreements. California is well-known for its law that makes non-competes unlawful in most contracts, including employment and franchise agreements, unless the covenant is given in the context of selling a business as a going concern. Illinois restricts the ability of a franchisor to enforce a non-compete following the expiration of a franchise agreement unless the franchisor has offered the franchisee the right to renew. Indiana restricts the duration and scope of acceptable post-relationship non-competes. But to this author’s knowledge, no state’s law, even California’s, is as far-reaching in restricting post-relationship competitive restrictions in franchise relationships as the Virginia bill. What to Do if the Bill Passes: If a franchisee seeks to break away from the franchisor during the term of the franchise agreement, the franchisor did not violate applicable franchise sales law, that the franchisee has the option to rescind the franchise, and the franchisor fulfilled its material obligations under the franchise agreement, then the franchisor should have a claim for lost future profits for the franchisee abandoning the franchise without cause. If Virginia passes this bill into law, it will be important for franchisors selling in Virginia to ensure that their standard franchise agreement clearly states that the franchisor has the right to collect such damages. As to the expiration of the franchise, traditionally, most franchisees have had the option to continue the franchise relationship at expiration if they sign the franchisor’s “then-current form of franchise agreement.” The problem has been that franchise agreements have often become more one-sided for the franchisor, particularly as a system matures, and if there is a non-compete applicable upon non-renewal then the franchisee has little ability to negotiate more favorable terms at “renewal.” The bill, if enacted, would dramatically change that dynamic at expiration. One provision that franchisors might consider adding to their agreements is an option for the franchisor to purchase the business as a going concern at expiration, if the franchisee does not accept the franchisor’s offer of a new agreement at least 90 days prior to expiration. The provision would require the franchisor to pay the fair market value of the franchised business, including goodwill attributable to local use of the trademarks, and also require the franchisee to agree to provisions that are customary in a business purchase and sale agreement. Covenants not to compete, after sale of a business for value, are customary and should be enforceable following such an arms-length sale, notwithstanding the language of the Virginia bill. Another approach that may be helpful to franchisors is to define all customer information collected or obtained by the Franchisee during the franchise relationship as proprietary to the franchise system and forbid the use of that information subsequent to the end of the franchise relationship. Such a provision should state that the Franchisee has a license to use the customer data during the relationship, and that license (and the local goodwill with those customers) is an asset that the Franchised Business that the Franchisee may sell to a new franchisee as part of an approved transfer. Such a provision, particularly with franchisees who are new to the system and the industry, may enable the franchisor to stop a former franchisee from using the customer data under trade secret laws, notwithstanding the bill discussed above. Such a restriction would make it less attractive for the franchisee to leave the system. However, such a provision could also have negative ramifications for the franchisor if it is sued by a franchisee’s customer. The details of each such provision, and others to protect truly proprietary and unique assets of a franchise system, require careful consideration and customized drafting. However, if Virginia enacts this bill into law, then it would join a select group of states that have tilted the playing field in favor of veteran franchisees, and franchisors will need to consult with experienced counsel who understands the ramifications of contract provisions.
January 31, 2025
Estates and Trusts
The Impact of Transgender Executive Order on New York Residents
On January 20th, President Trump issued an executive order entitled “Defending Women from Gender Ideology Extremism and Restoring Biological Trust to the Federal Government.” The executive order included provisions for the limitation of two gender markers – male and female -- on United States passports. The passport gender marker limitation is not retroactive but will only apply to issuing new passports and renewing existing passports. The order would force changes to federal documents, including new and renewed passports, visas, and Global Entry cards, and would require trans inmates to be removed from areas in federal prisons that align with their gender identity. It also rescinds the Biden-era executive order that allowed trans individuals to serve in the military. Almost immediately after the announcement, transgender advocacy organizations began receiving frantic calls from members of the transgender community, fearing that the executive order could lead to the inability to change identification documents to conform to one’s gender identity, as well as fears of physical harm. New York is one of several states that have enshrined the protection of gender identity in its constitution. Substantial pushback on the executive order is anticipated at the federal and state levels. If you are a member of the trans community and were born in New York City and/or the State of New York, you should still be able to change your name and state-issued identity documents to properly align with your gender identity. If you have not already done so, you should start the process of changing your legal name and state-issued identification documents. Various organizations, including A4TE and Lambda Legal, offer assistance with these processes. Along with your state-issued identification documents, you should make sure that your estate planning documents, including wills, trusts, powers of attorney, health care proxies, and designations of agents for the disposition of your remains, are in order and properly reflect your gender identification. Selecting the proper agents who will fulfill your wishes with respect to your health care and bodily remains is equally important.
January 30, 2025
Immigration Law
What to Do if ICE Shows Up at Your Workplace
ICE Enforcement Actions The Trump administration has immediately followed through on campaign priorities of aggressive immigration enforcement. The agency in charge of immigration enforcement is the U.S. Immigration and Customs Enforcement agency, otherwise known as ICE. We have seen an expansion of federal deportation actions and the removal of protections for areas previously considered safe spaces from agency actions. ICE enforcement actions can now occur in places of worship, schools, and courthouses. ICE agents can and will detain large numbers of individuals in a single action to determine their immigration status. Finally, the passage of the Laken Rily Act means that convictions of relatively minor crimes, such as shoplifting, could lead to indefinite detention for immigrants. ICE Actions and Deportation Warrants All people living in the United States, including individuals here without status, have certain specific rights protected by the Constitution. Key considerations of ICE enforcement actions are as follows: An ICE deportation warrant is not the same as a search warrant. If the ICE warrant is the only document ICE can show to justify their presence, they cannot legally enter a premises without agreement. You can and should ask for a search warrant signed by a judge and review it outside the premises. Warrants must be facially correct, including the individual’s correct name and address, as well as the Judge’s full name. Worksite Enforcement Given the current increase in ICE enforcement actions, it is clear that there will be additional forms of worksite actions specifically related to legal immigration compliance. These actions may be conducted by U.S. Citizenship and Immigration agents from the Fraud Detection and National Security Directorate, Department of Homeland Security (DHS) Homeland Security Investigators, and/or ICE agents. These actions are described as “worksite enforcement” and cover enforcement of various immigration laws, including but not limited to I-9 compliance, immigration fraud, and compliance under the H1B and L1 visa programs. Typically, these actions are large-scale enforcement actions with warrants, but they can also consist of a smaller team of agents following up on a business that sponsored a single individual. Paperwork compliance is critical for employers, and ensuring I-9 compliance is recommended for all employers. A heavily recommended first step is to conduct I-9 audits. One key consideration is that worksite enforcement actions are in person, and accordingly, it is critical that employers brief team members about how to interact with agents. Finally, these actions are not necessarily entirely immigration-related, and compliance with employment laws generally will be reviewed as well. So, what are the best practices moving forward in another age of enhanced compliance by the DHS? Our five tips would be: Standardize processes for hiring and verification, including immigration compliance, to have a robust compliance program for all hires moving forward. Review I-9 compliance, potentially including an audit of I-9s. Consider moving to E-Verify for compliance purposes. Have a plan in place for federal agents showing up. Designate a point of contact and ensure they are familiar with organizational rights and obligations. Keep informed. Keeping up to date on changes in immigration and enforcement policies is key. We have seen changes to passport issuance for transgender U.S. citizens, as well as the threat of travel bans and further disruption and delay for immigration processes. Courthouse Enforcement Regarding the courthouse memorandum, ICE has been told to generally avoid non-criminal courts for enforcement. Still, such guidance is not binding, and heightened vigilance at all courthouses is recommended for clients. This action is similar to the prior Trump administration’s enforcement priorities. Detainee Locator After apprehension by ICE, it is often exceedingly difficult for employers or loved ones to find an individual detained by ICE. Sometimes detainees may be sent to the side of state or to a different state entirely for processing. ICE does have a robust detainee locator system that can assist in finding individuals caught up in enforcement actions: https://locator.ice.gov/odls/#/search. Resources Please find attached a quick guide produced by the American Immigration Lawyers Association for individuals questioned or detained by ICE. Additional Resources: Protecting The American People Against Invasion – The White House Interim Guidance: Civil Immigration Enforcement Actions in or near Courthouses Misguided Laken Riley Act Does Nothing to Fix the Problems That Plague Our Immigration System | American Immigration Council DOJ threatens to prosecute local officials over immigration: NPR
January 30, 2025
Business
Startup Success Starts with Governance Documents and Clear Ownership Rules
If you are launching a new business without proper governance documents, you’re risking financial loss and business owner disputes. Every business owner needs properly drafted governance documents. This cannot be overstated. It’s exciting to launch a new business, but failing to properly document the business relationship between owners is a major pitfall. It is not uncommon for attorneys to have witnessed this firsthand, numerous times, and it almost always results in financial loss or dispute. An episode on Acquiring Minds podcast provides a powerful example of the troubles you can face without these governance documents (jump to the 51-minute mark to hear why). Learn how to safeguard your venture from the outset. Assuming a business is structured as an LLC, an operating agreement sets the governance foundation and prevents many avoidable disputes. Key Provisions to Consider Equity Vesting Schedule: For startups and emerging companies, it’s critical to protect the company from premature departures. Implementing a vesting schedule keeps everyone incentivized for the long haul, ensuring commitment and stability. Dispute Resolution: Conflict is inevitable. Whether it’s a disagreement over strategy or management style, a clear dispute resolution mechanism (such as mediation or arbitration) can help resolve disputes without causing a full breakdown of the business. In the Acquiring Minds podcast example, a "shotgun clause" would have been helpful. This is a buyout mechanism that also doubles as a form of dispute resolution. These tools work together to protect the business during critical decision-making moments. Equity Buyout Terms: Define how ownership interests can be bought or sold to ensure fairness while protecting the business from being forced into unwelcome arrangements. Important terms include shotgun clauses, puts, and call options. Decision-Making Processes: Specify how major business decisions will be made. This includes setting voting thresholds and identifying areas that require unanimous consent. It’s also important to establish early on whether someone will hold a majority stake in the company. Even a 1–2% difference in ownership can make a significant impact. Exit Strategies: Plan for the future by outlining provisions for dissolution, sale, or succession. For instance, drag-along rights protect majority shareholders in a sale, while tag-along rights safeguard minority interests. These provisions ensure smooth transitions and clarity for all parties. Don’t Rely on A Handshake A handshake may start a partnership, but only a well-drafted operating agreement can protect it. Having robust governance documents isn’t just a best-practice, it’s essential for protecting your venture and ensuring long-term success. Don’t overlook the importance of partnering with experienced legal professionals to get it right.
January 29, 2025
Estates and Trusts
Not Maintaining an Up-to-Date Inventory of Art and Collectibles for Estate Planning
This is Part 4 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. A well-organized inventory is essential for effectively managing and planning the distribution of collectibles, including art. Clients may struggle to track their assets without an inventory, making future distribution and estate planning significantly more challenging. Maintaining an inventory can be as simple as using a basic spreadsheet or, for larger collections, leveraging specialized inventory management software. Regardless of the method, a comprehensive inventory should include: Size, materials, and description of items, as well as photographs of each individual item. A system for recording purchases and sales, including transaction dates and parties involved. Documentation of loans and gifts, specifying recipients and terms, as well as the location of items. Records of appraisals and insurance coverage. Logs of damages and losses. Keeping an up-to-date inventory also helps track each item's provenance, which is critical for authentication and valuation, particularly in the event of a sale. Maintaining an inventory of copyrights is just as important for clients who are also artists or creators. These intellectual property rights may have been licensed for specific periods or may require a distinct distribution plan separate from the original works upon the artist’s passing. Ensuring these details are well-documented can prevent legal complications and preserve the creator’s legacy.
January 28, 2025
Los Angeles Wildfire Legal Resource Center
Supporting Wildfire Victims: Isabel Conrath's Dedication to Community Recovery
When disaster strikes, the strength and resilience of a community often shine through the actions of those determined to help. Isabel Conrath, an associate in Offit Kurman’s Estates and Trusts West Practice Group, has exemplified this spirit by stepping forward to assist victims of the devastating Palisades and Eaton fires. Isabel, a graduate of Pepperdine University Caruso School of Law, was deeply involved in the school’s Clinical Education Program. Her ongoing commitment to serving others drove her to volunteer with Pepperdine’s Disaster Relief Clinic in Malibu, supporting wildfire victims with the legal challenges they face in the wake of such tragedy. “When the devastating Palisades and Eaton fires broke out earlier this month, I knew that I wanted to use my role as an attorney to help those impacted in any way possible,” Isabel shared. “This work included listening to their stories and helping them navigate insurance claims and secure disaster relief benefits.” Her efforts have provided more than just legal assistance; they have also offered hope and comfort to individuals facing unimaginable losses. For Isabel, the most rewarding aspect of this work has been witnessing the resilience of the wildfire victims and the strength of the community coming together in times of need. “Seeing the difference a small piece of my time can make—hopefully restoring some small sense of hope—is exactly why I chose to become an attorney,” Isabel reflected. While the work has been fulfilling, it is not without its challenges. Isabel admits that witnessing the emotional and financial toll on members of her community has been heartbreaking. “This is especially difficult to witness knowing that I am unable to alleviate many of the concerns they have in that moment,” she said. To those affected by the wildfires, Isabel offers a heartfelt message of compassion and solidarity: “I want to express my deepest sympathy for the hardships caused by the recent wildfires. The physical and emotional toll of losing so much, so quickly, is unimaginable. Please know that your community is here for you, and Los Angeles County will rebuild!”
January 24, 2025
Real Estate
Will 2025 Bring Greater Equity Investment and Debt Financing in NJ? NJ Aspire 3.0 aspires to do just that.
On January 23, 2025, Governor Phil Murphy enacted significant amendments to the New Jersey Aspire Program by signing Senate Bill 1323/Assembly Bill 2076 into law. The amendments, collectively referred to as “NJ Aspire 3.0” are designed to enhance the program’s effectiveness in stimulating redevelopment projects across New Jersey. The key revisions in NJ Aspire 3.0 concern project award amounts, eligibility periods, tax credits, eligible project expenses, and occupancy requirements. Increased Project Award Amounts: Award amounts for eligible projects have been increased to bridge financing gaps more effectively, aiming to attract greater equity investments and facilitate debt financing for redevelopment projects. Reduced Eligibility Periods: The maximum eligibility period for most projects has been reduced from 15 years to 10 years. For projects located in Government Restricted Municipalities (“GRMs”), this period is further reduced to five years. Under the prior law, only Trenton, Atlantic City, and Paterson were considered GRMs. NJ Aspire 3.0 adds Camden, East Orange, and New Brunswick to the list of GRMs. The adjusted eligibility periods aim to encourage more timely project completion and quicker utilization of the program benefits. Carry Forward Tax Credits: Purchasers of tax credits can now carry forward unused credits for up to five years, providing greater flexibility in tax planning. State Buyback of Unused Tax Credits: The state will now buy back unused tax credits and tax credit transfer certificates at 85% of their value, providing a safety net for developers who are unable to utilize or sell their credits. This is an increase from the 75% floor provided by the previous law. Proration of Tax Credits: The obligation to prorate tax credit awards has been eliminated, a change that applies retroactively to the inception of the New Jersey Aspire Program. Eligible Project Expenses: Projects in GRMs are now permitted to include land acquisition costs as eligible project expenses, capped at 20% of the total eligible project costs. Occupancy Requirements: The previous mandate for a 60% occupancy rate has been removed for residential developers and commences in the 4th year of the eligibility period for commercial developers. This eases the compliance burden for residential developers and provides commercial developers with additional time to achieve necessary occupancy levels. These legislative updates are anticipated to make the New Jersey Aspire Program a more robust tool for closing financing gaps in redevelopment projects, thereby attracting greater equity investments and facilitating debt financing. NJ Aspire 3.0 has the potential to significantly enhance opportunities for real estate developers and investors by incentivizing economic growth and community revitalization across New Jersey. By offering targeted incentives for real estate development projects, the program aims to attract private investment, support the creation of mixed-use, commercial, and residential spaces, and stimulate job creation, particularly in underserved or high-priority areas. By doing so, NJ Aspire 3.0 aims to enhance the state’s economic competitiveness and foster equitable and sustainable growth. Understanding the legal nuances of eligibility and compliance is critical, ensuring developers and investors maximize the program’s advantages while adhering to its requirements. Developers and investors in New Jersey’s redevelopment sector should review these changes carefully to understand the new opportunities and requirements.
January 24, 2025
Estates and Trusts
Equal Shares, Unequal Outcomes: Estate Planning Strategies for Parents and their Qualified Retirement Accounts
Typically, a parent wishes to treat their children equally in their estate plan and presumes they will achieve this goal by dividing all their assets into equal shares upon their death. Accordingly, they will designate their children as equal beneficiaries of their qualified retirement accounts, such as traditional IRAs and Roth IRAs. However, doing so without considering the individual circumstances of their children may be less tax efficient and may ultimately result in one child receiving more assets after the payment of taxes than their siblings. Traditional IRAs vs. Roth IRAs: Key Differences A traditional IRA is funded on a pre-tax basis, with the income taxes on any appreciation deferred until assets are withdrawn from the account. Traditional IRAs are subject to requirement minimum distributions (RMDs) when the account holder attains the age of 73. A RMD is the minimum amount that must be withdrawn from the IRA each year. Contributions to a Roth IRA, on the other hand, are made with after-tax dollars, and the distributions are withdrawn tax-free. In addition, there is no RMD requirement for a Roth IRA during the lifetime of the account holder. The Ten-Year Rule When the account holder dies, most beneficiaries must take distributions pursuant to the “ten-year rule,” which requires that the beneficiary withdraw the account assets in full within ten years from the date of death of the original account holder. During this withdrawal period, the beneficiary must take RMDs in each year that the inherited account is open. As these withdrawals are made, the beneficiary must pay the deferred taxes based on their individual income tax bracket. Notably, withdrawals from a Roth IRA account remain income-tax free to the beneficiary, and are not subject to the RMD requirement. Tax Benefits for Eligible Designated Beneficiaries (EDBs) A beneficiary that is deemed an “eligible designated beneficiary” (“EDB”) is not subject to the ten-year rule and may take distributions from the inherited account over their lifetime. Thus, the account assets may continue to appreciate tax deferred over a significantly longer period of time. EDBs include beneficiaries that are not more than ten years younger than the original account holder, surviving spouses, beneficiaries that are deemed disabled or chronically ill, and minor beneficiaries.[1]. It will be inherently more tax efficient for a parent to name an EDB as a beneficiary of their qualified account because of the extended withdrawal period the beneficiary will have to take distributions from the account. Therefore, if a parent has two or more children, one of whom is deemed an EDB, and names each of them as an equal beneficiary of their IRA account, the child who is an EDB will ultimately receive significantly more assets than their siblings because the assets in the account will have significantly more time to appreciate tax-deferred. In addition, because of the extended withdrawal period, the beneficiary has more flexibility in choosing when to take distributions from the account to avoid getting bumped into a higher marginal income tax bracket. Accordingly, if the parent wishes that each of their children receive as nearly equal shares of their assets as possible, and one or more of their children are deemed EDBs, it may be better to provide a greater share of their qualified accounts to the EDB beneficiaries, and the non-EDB beneficiaries with a greater share of their other estate assets. Case Study: Tax Efficiency and Equalizing Shares What if the account holder does not have any beneficiaries who will be deemed an EDB? Even then, the account holder should still consider their children's individual income tax circumstances. Suppose the account holder is single with a Roth IRA with $1,000,000 in assets and a traditional IRA with $2,000,000 in assets. The account holder has two children: Alex, who is a stockbroker, and Jamie, who is a public school teacher. We can presume that Alex has more taxable income than Jamie and that Alex has a higher earning potential in their career. If Alex and Jamie were named equal beneficiaries of the traditional IRA, it is likely that the distributions from the account would bump Jamie into a higher income tax bracket in the years that they are received, thus generating more income tax liability. Alex’s distributions are almost certain to be taxed at a higher marginal rate than Jamie's. If Alex and Jamie are named equal designated beneficiaries of the Roth IRA, the distributions would be tax-free in the year that they are received, leaving their respective income tax brackets unaffected. Therefore, naming Jamie as a primary beneficiary of the traditional IRA, where distributions will be taxed at a lower tax bracket, and designating Alex as the primary beneficiary of the Roth IRA is likely more tax efficient and most likely to ultimately result in each child receiving equal shares of the assets after payment of income taxes. As this example illustrates, naming each child as an equal beneficiary of a qualified account may not result in equal distributions after the payment of taxes, frustrating the intentions of a well-meaning parent. Therefore, careful consideration must always be given to the individual circumstances of an account holder’s intended beneficiaries. [1] Minor beneficiaries become subject to the ten-year rule once they attain the age of 18.
January 23, 2025
Commercial Litigation
Five Things to Take into Consideration When Negotiating and Settling a Case
Settling a case is hard. Negotiating the terms and coming to an agreement can take weeks or months. But once the parties agree to the general terms of a settlement (e.g., the amount of money changing hands and the timing of the settlement payment), there are a number of other considerations for putting the settlement agreement in writing. Here are five things to know when you are negotiating to settle your case: You Can Protect Your Privacy Even though the documents filed in the lawsuit will remain public, the settlement details don’t have to be public. One effective tactic is to separate the settlement agreement from the “stipulation of discontinuance.” This allows the terms in the settlement agreement to remain private, with the only document being filed with the court simply stating that the parties have agreed to discontinue the case. You Can Set the Rules for After the Lawsuit A settlement agreement can also be useful for clarifying what the parties can and cannot do after the lawsuit. Often, parties agree to include a provision in the settlement agreement requiring the parties to keep the settlement terms confidential and not to disclose those terms to anyone. Some parties may even agree to a non-disparagement provision, requiring them to refrain from saying anything negative about each other. Although these are provisions that often can be overlooked when negotiating a settlement, they can help to permanently put the dispute to rest and assist the parties with moving past the lawsuit. Plan for What Happens if Someone Breaches the Agreement You may be feeling optimistic that you are finally settling your case. Not so fast. Contemplate what may happen if something still goes wrong: what if the settlement payment doesn’t come through? Or what if someone breaches some other part of the agreement? The settlement agreement should provide a roadmap for what happens next. You may want to include whether the breach of the agreement goes back to the court you were in or whether the dispute goes to arbitration. You also may want to have a provision stating that if the other side breaches the agreement, you are entitled to additional damages and that the other side has to compensate you for your attorneys’ fees. Including these terms in the agreement can save you resources and avoid the frustration of going back to court if the other side breaches. Don’t Overcomplicate It Lawsuits are stressful. Don’t add to that stress by making the settlement more complicated than it needs to be. Include the terms you need to wrap up the case and exclude those other terms that often don’t apply to your case or that you don’t need. Prioritize being clear with the terms you include, as sometimes a settlement agreement can go on for dozens of pages when just a fraction of that can suffice. Once You Sign, the Settlement is Final Before you sign a settlement agreement, make sure you understand each piece of the agreement. If you don’t understand some portion of the agreement, you may be taking on obligations you don’t know about or waiving rights that leave you worse off. Settling a case requires careful attention to detail, and drafting a settlement agreement that clearly reflects the parties’ intentions is critical to avoiding future disputes. By addressing these key considerations in your negotiations, you can ensure the settlement process is effective and that your interests are protected.
January 22, 2025
Estates and Trusts
The Hidden Cost of Failing to Plan
The Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients Mistake #3: The Hidden Cost of Failing to Plan Art and collectibles, while beautiful and culturally significant, can pose significant estate planning challenges. At the time of death, these assets are subject to estate taxes based on their fair market value. Without proper planning, federal and state estate taxes—combined with the costs of selling the assets—could erode over 50% of a collection’s value. Art, as an alternative investment, began emerging in the 1970’s and has only boomed as a result of digitalization. Art as a profitable investment now consistently outperforms other asset classes such as the FTSE 100 and S&P 100. According to 12 Wall Street Journal article, "The Art of Passing Along Art," highlights an unexpected problem faced by many collectors, particularly those who acquired their art in the 1950s and 1960s. These octogenarian collectors are discovering that their art collections have appreciated significantly more than their liquid assets. As a result, their estates often lack sufficient liquidity to cover estate tax obligations. For example, consider a New York estate with $40 million in liquid assets and $100 million in art. That New York estate will potentially incur a $63.5 million tax bill, forcing the executor to sell some or all of the art within nine months to satisfy the obligation. Such rushed sales often lead to undervalued transactions, significantly reducing the collection's realized value. In extreme cases, the entire collection might be sold for a fraction of its worth simply to meet the estate's federal and state tax liabilities. Strategic Solutions for Collectors Fortunately, there are various strategies to reduce the estate tax burden on art and collectibles. These include: Charitable Contributions: Using art to fulfill philanthropic goals can provide both estate tax relief and personal fulfillment. Lifetime Gifting: Strategic gifting of art during the collector's lifetime can shift value outside the taxable estate. Estate-Freezing Techniques: These methods help move highly appreciated (or soon-to-appreciate) assets out of the taxable estate. Moving the Collection out of state: Using limited liability companies and other entities can eliminate the potential for state estate taxes by changing the location of the assets. When considering these options, it’s essential to evaluate whether the collection holds more value as a cohesive whole or as individual pieces. Each strategy should be tailored to the collector's goals, ensuring that both financial and sentimental value are preserved for future generations. Make sure you speak with a trusted estate planner who specializes in planning for large collections of art and other intangible assets.
January 21, 2025
Estates and Trusts
Ethical Wills: The Heart of Your Estate Plan
When most people think of estate planning, Trusts and Last Wills and Testaments usually come to mind. I have spent my career espousing the essential tools for ensuring an efficient transfer of assets from one generation to the next, planning for taxes and incapacity, and outlining health care desires. However, the standard estate plan does not capture something equally valuable: the values, lessons, and hopes that many wish to document for their loved ones. That is where an ethical will comes in. Ethical wills, also known as “Letters of Intent, or “Legacy Letters” are non-legal documents that convey the intangibles like morals, beliefs, and reflections on your life - both the highs and the lows. What is an Ethical Will? A traditional Last Will and Testament or a trust directs how your tangible assets will be distributed upon your death. An ethical will instead can serve as heartfelt advice and guidance to your loved ones and future generations. While it is not legally binding, an ethical will can be deeply personal and meaningful. Ethical wills are not new. In fact, there is mention of an ethical will in the Book of Genesis in the Bible and they were traditionally recited orally to family members. It was not until the Middle Ages when they were recorded in writing with the hope that the message would be preserved and shared with future generations. Do you need an Ethical Will? The short answer is no. But considering the fact that in creating a traditional estate plan, most put significant time, thought, and energy into who should inherit and in what proportion, it likely would be appreciated and helpful to share your reasoning behind how you came to those decisions, or what you hope the beneficiary might consider when living their lives and using what you left to them. Content of an Ethical Will: Values: Leaving your worldly goods, your home, and other financial assets to the next generation is certainly important, but your ethical will might explain to your beneficiaries the values that you lived by that enabled you to acquire those assets. It can provide a platform for you to share with your beneficiaries your principles, your beliefs, and the lessons learned in doing so. Strengthening Family Connections: The event or ceremony of sharing your ethical will together can be a truly powerful experience for a family. A document containing stories, anecdotes, and your successes and failures can help family members feel connected to your story and to each other during your life or long after your death. Clarifying Intentions: Sadly, the decisions and bequests made in a traditional will or trust can be misunderstood and lead to conflict within a family – having the opposite effect that you intended. An ethical will provides you with the opportunity to explain your reasoning behind the content of your legal estate planning documents, reducing the likelihood of misunderstandings or hurt feelings. Providing Comfort and Guidance: An ethical will should be a sort of love letter to your family in which you provide words of encouragement, share the joy you felt with your loved ones, and impart wisdom and advice for their future reference. For those with religious beliefs, many choose to share how faith served as a touchstone if a parent or loved one is no longer here. Ethical wills can also provide a great source of comfort and strength during times of grief. Get started: The best part of an ethical will is that you don’t need to hire a lawyer to start. Reflect on Your Life. Consider the experiences that shaped you over the course of your life. What life lessons do you think are worth sharing with your loved ones for years to come? Tell them to “take that risk” because it served you well. Do you have hopes for your loved ones for their lives? Now is the time to share those hopes for their higher education, or creating a family in the future. Is there something specific that you want to be remembered for? If so, convey what that is and why it’s important to you. Be Honest and Authentic. This is not a formal legal document; you should write in your own voice. The whole point of an ethical will is to be heartfelt and a reflection of you. Get personal and write it as though you are having the most heartfelt conversation with your loved ones. Do not be concerned with form, grammar, or the legality of it all. It’s ok to be vulnerable and share your failures and your regrets. Nothing is Forever. Let’s face it, things change and because of that, you can always revise and update your ethical will. Just as I tell clients that legal wills and estate plans should be updated, your ethical will should also be updated. Relationships, net worth, health, values, and perspective are not permanent. Do not be afraid to reconsider and revise. Sharing is Caring. In most cases the ‘reading of a will’ is only something made for TV. With an ethical will, the choice is yours: you may decide that you want your ethical will read prior to revealing the contents of your legal will to set the stage for how your assets are to be distributed, or choose to share your ethical will during your life. Whether it is something left behind to be read after your death, or if you prefer gathering your family together to foster a discussion about legacy and lessons, there are no rules how you share. Combining an Ethical Will with Traditional Estate Planning. While an ethical will is not a substitute for a legal will or trust, it certainly can complement your estate plan by adding an emotional, encouraging, loving, and sometimes spiritual dimension. Work with your estate planning attorney to ensure your proper legal documents are updated and in place and consider crafting an ethical will to share with your lawyer so that they can better understand what is important to you and how to help you accomplish your goals. Creating an estate planning does not just have to be about the legality of moving assets from one generation to the next, it can be much more. Including an ethical will in your plan may ensure that your lessons, love, and legacy are preserved for future generations.
January 21, 2025
Labor and Employment
Better Call Sarah: Political Speech in the Workplace
Dear Sarah, Help! After this last election, it seems everyone at the office has something to say about politics, and I’m caught between my mission to keep the peace and the very real risk of stifling free speech. Is there a way I can manage these heated political discussions without turning our office into a debate club or accidentally infringing on anyone's rights? Sincerely, Politically Puzzled in HR Dear Politically Puzzled in HR, Political discussions at work intersect with various labor and employment laws, including anti-discrimination regulations, the National Labor Relations Act (NLRA), state laws on mandatory meetings[1], and voting leave policies. Political conversations can also give rise to claims of discrimination, harassment, or retaliation under federal, state, and local anti-discrimination laws. By being mindful of both your right as an employer to set boundaries on political expression and employees’ rights in this area, you can comply with the law and maintain a positive workplace culture. Misconceptions About Free Speech in Private Workplaces Many people assume that the First Amendment guarantees unlimited free speech rights in all workplaces, but it actually applies mainly to government regulation, not to private employers. This means that, generally, private companies have broad discretion to manage political speech at work. However, federal laws like the National Labor Relations Act (NLRA) and anti-discrimination statutes create important limits on this authority. Protected Activities Under the National Labor Relations Act (NLRA) The NLRA, for instance, protects employees—even in non-union settings—when they engage in “concerted activities” related to workplace conditions, such as discussions about pay or safety. If political discussions are directly related to these issues, they may also fall under protected activity. Employers should take care in addressing such conversations, especially as recent guidance from the National Labor Relations Board (NLRB) suggests that protected discussions may now include social justice or other political topics related to employee rights. Risks of Political Speech Leading to Discrimination Claims Even though political views themselves are generally not protected under anti-discrimination laws, discussions that touch on protected characteristics (e.g., race, gender, national origin) may lead to complaints of harassment or discrimination. For example, political debates on topics like immigration or reproductive rights could be seen as targeting certain groups, creating a hostile work environment. Employers should handle any related issues consistently and fairly to prevent claims of biased or discriminatory treatment. State and Local Laws Offering Additional Protections Additionally, some states have laws that prevent employers from disciplining or restricting employees based on their political affiliations, views, or party associations. In some cases, state protections extend beyond traditional political speech to cover social justice advocacy and other issues. Employers must also be aware that state and local laws often provide greater protections for employees than federal laws. For example, some states offer protections similar to First Amendment rights for private employees. Employers should also be familiar with the differences between federal EEO laws and state-level EEO regulations to ensure compliance. Developing Clear and Inclusive Policies Employers should develop clear, effective policies that align with legitimate business interests while minimizing ambiguity around what political activities and expressions are allowed. The policy must consider activities and communications protected under the NLRA as well as relevant state and local laws. To reduce the risk of discrimination, harassment, or bullying claims, employers may want to discourage supervisors from engaging in political discussions with subordinates, as supervisors are not protected by the NLRA. However, these policies must also be carefully crafted to comply with state-specific laws. Additionally, employers should consider implementing a social media policy to set clear expectations for online behavior. Political statements—especially on social media or in public spaces—can have a direct impact on your company’s reputation. Public backlash can arise if an employee, visibly linked to the organization, expresses controversial views. In today’s digital landscape, social media posts are just as influential as in-person comments, so it’s essential to handle online expression carefully. Many states protect employees’ privacy, meaning employers generally cannot demand access to personal social media accounts. If disciplinary action is needed, verify that any content was publicly accessible and relevant to workplace conduct to avoid legal risks. A policy on social media use, drafted in line with state and federal regulations, can help clarify expectations for how employees express their views online. Managing Off-Duty Conduct Employers should be mindful of employees’ rights to engage in political expression outside of work. In California, Colorado, New York, and North Dakota, laws protect employees from adverse actions based on lawful political activities conducted outside of work hours. Employers should exercise caution when considering disciplinary actions for off-duty conduct to avoid violating state-specific protections. Fostering a Respectful and Inclusive Workplace Culture Addressing political speech in the workplace requires a careful balance. A comprehensive, consistently applied policy that values respect and inclusivity can help maintain a positive work environment while respecting employees’ rights. By fostering a respectful culture, employers can reduce potential conflicts and support a productive, harmonious workplace. In the current polarized climate, taking proactive steps to handle political speech thoughtfully can strengthen workplace morale and protect the company from legal risks, ensuring a fair, respectful environment for all. [1]Mandatory employer-sponsored or so-called “captive audience” meetings are those an employer convenes during working hours to educate employees on certain topics, particularly the employer’s views on unionization. Although the NLRB has yet to issue a formal ruling on this issue, it is anticipated that the agency may take a strong stance against these types of meetings.
January 17, 2025
Estates and Trusts
Maryland’s 2025 Budget Proposal: Changes to Estate Taxes and What They Mean for Estate Planning
Recent Maryland proposed budget cause for close estate planning review before the sunset of the federal Tax Cuts and Jobs Act. This week, Maryland Governor Wes Moore released his proposed 2025 budget to the public and submitted House Bill 352 to the Maryland Assembly for review and approval. The proposed changes in the budget have a significant impact on estate planning, especially as it relates to Maryland’s death taxes. Maryland is the sole state in the union that assesses both an estate and inheritance tax against the estates of resident decedents. The governor’s budget proposed abolishing Maryland’s Collateral Inheritance Tax on probate and non-probate transfers and inter vivos gifts made within two years of the date of death. The proposed budget does not abolish Maryland’s Estate Tax, but significantly reduces the exemption amount. Maryland’s current estate tax exemption is $5,000,000 per individual and $10,000,000 per married couple. The newly proposed budget would reduce the estate tax exemption by more than half to $2,000,000 per individual and $4,000,000 per married couple. Under the terms of the budget, the changes to Maryland’s Estate Tax exemption will go into effect in July 2025. Should the proposed budget and changes go into effect, many Marylanders will need to take a renewed look at their estate planning to mitigate the impacts of the changes to the new state estate tax threshold.
January 17, 2025
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