Estates and Trusts
Race to the Sunset: Critical Insights for Clients on Estate Tax Exemptions ending in 2025
As we approach 2025, it is important to stay informed about the upcoming changes to federal estate and gift tax exemptions. Under the Tax Cuts and Jobs Act (TCJA) of 2017, the estate and gift tax exemptions were temporarily increased and are currently $13.61 million per individual in 2024 (adjusted annually for inflation) and will go up to $13.9 million in 2025. However, this law will expire at the end of 2025, potentially reverting the exemption to pre-TCJA levels. Understanding the impact of these changes and seeking guidance on tax mitigation and estate planning is crucial. What is the Sunset Provision? The TCJA's temporary increase in the federal estate tax exemption allows individuals to pass on up to $13.61 million (adjusted for inflation) at death without incurring federal estate taxes and make up to $13.61 million in lifetime gifts. Without further intervention from Congress, after December 31, 2025, this exemption is expected to revert to approximately $5.49 million per individual, adjusted for inflation. Projections adjusted for inflation indicate this will amount to around $6.5 million at the beginning of 2026. This will be a significant decrease from the $13.9 million exemption amount allowed in 2025. Implications for Estate Tax Liability The reduced estate tax exemption could significantly impact estates valued above the lowered threshold. Estates exceeding the new exemption will be subject to higher federal estate taxes at a rate of up to 40%, reducing the inheritance that beneficiaries receive. This underscores the need for proactive estate planning to minimize future tax liabilities. Strategic Estate Planning Ahead of 2025 With the sunset provision approaching, it's crucial for individuals to review and adjust their estate planning strategies. Key steps to consider include: Gifting Strategies: Clients may want to take advantage of the higher exemption by making significant gifts to heirs or charitable organizations before 2025. This can reduce the size of their taxable estate and help avoid higher taxes later. Utilizing Irrevocable Trusts: Establishing trusts is a powerful way to manage and protect assets while reducing estate taxes. Trusts offer flexibility in ensuring that assets are passed on in accordance with the wishes of a client and can help mitigate estate taxes. Updating Estate Plans: Regularly reviewing and updating wills, trusts, and other estate planning documents is essential as tax laws evolve. Ensuring your estate plan is up to date with current laws and well-positioned to address the upcoming changes in 2025 is critical. Consulting Professionals: Working with estate planning professionals, including attorneys and financial advisors, provides valuable guidance on navigating these complex changes and strategies. Their expertise in tailoring estate plans to individual circumstances is key to successful tax and planning management. Action Steps for Estate Planning in 2025 To prepare for the upcoming changes, consider taking these steps: Schedule a Consultation: Meet with your estate planning attorney, financial advisor, and accountants to discuss how the 2025 changes could impact your estate plan and assets. Review and Update Estate Documents: Ensure your will, trusts, and other documents align with current goals, and consult with your trusted advisors to ensure that your plan is compliant and efficient. Explore Gifting Options: Consider making substantial gifts before the estate and gift tax exemptions decrease to maximize tax benefits and minimize future liabilities. As the 2025 sunset of estate and gift tax exemptions approaches, understanding the potential impact on your estate plan is crucial. By taking proactive steps to review your plan, explore gifting opportunities, and consult professionals, you can better navigate the complexities of estate tax planning and safeguard your assets for future generations. The sooner you consult with your estate planning attorney and financial advisors, the sooner you will be able to determine whether the sunset will impact you and get guidance on how to navigate the correct planning necessary for you to timely and adequately address the TCJA. Post-2024 Election Considerations During Donald Trump’s initial term as president, the TJCA was introduced and passed. In light of the recent election results, we can expect that there will be a push to renew and extend the TCJA. If the TCJA is extended, it could allow the estate and gifting annual and lifetime exemptions to remain in place and to further increase annually by adjustment for inflation provisions. This would continue the greatest transfer of wealth in history, allowing individuals to pass larger gifts to their loved ones or establish more complex plans to take advantage of gifting techniques as part of the transfer of wealth. Clients should continue to speak with their financial advisors and estate planning attorneys to remain updated on the TCJA and the potential sunset.
November 13, 2024
Family Law
Essential Legal Protections for LGBTQ+ Families in a Shifting Political Climate
In recent years, LGBTQ+ rights have made significant progress, providing many LGBTQ+ families with stronger legal protections, including marriage equality and anti-discrimination laws. However, shifts in the political landscape can bring uncertainty, making it critical for LGBTQ+ families to proactively protect their rights and ensure the stability of their family structure within the legal system. As legal challenges to established rights increase and state-level protections fluctuate, LGBTQ+ families face a pressing need to safeguard their rights with extra care, vigilance, and planning. Below are some legal strategies to help LGBTQ+ families secure protection and stability, regardless of changes in the political climate. Wills and Estate Planning Documents Wills and estate plans are essential for all families, but they hold particular importance for LGBTQ+ families, who may face unique legal challenges influenced by the political climate. A well-drafted will ensures that your wishes are clear and your assets are distributed according to your intentions. Without a will, intestacy laws in your state could determine the division of your assets, which may not align with your wishes or reflect your family structure. Advanced Directives Advanced directives, including documents such as a living will and durable power of attorney for healthcare, are vital for LGBTQ+ families. These documents empower you to designate a partner or spouse as your decision-maker in medical situations where you’re unable to make decisions yourself. Without these documents, other family members—who may not support your relationship—could potentially gain legal standing to make decisions on your behalf. Second-Parent Adoptions For LGBTQ+ couples raising children, second-parent adoption offers an added layer of legal security, especially when one parent is the biological or adoptive parent. This process allows the non-biological parent to legally adopt their partner’s child without the biological parent losing any parental rights. It ensures that both parents have full legal rights to the child, regardless of marital status or potential changes in the law, providing stability and protection for the family structure. Family Planning For LGBTQ families, family planning needs may include adoption, surrogacy, fertility treatments, and other reproductive services. Access to these services can be impacted by laws that regulate reproductive healthcare or place restrictions based on sexual orientation or gender identity. Legal professionals can help safeguard parental rights by drafting clear agreements, ensuring all legal parental statuses are properly documented, and staying informed on shifting policies. Estate Planning for Non-Biological Parents Estate planning is especially crucial for non-biological parents in LGBTQ+ families. Without proper legal protections, these parents may encounter challenges in securing custody or inheritance rights for the children they have raised. Comprehensive estate planning can help protect these relationships and ensure the family’s intentions are honored. Given the potential for changes in state and federal policies, LGBTQ+ families can benefit immensely from working with a knowledgeable attorney to address their unique legal needs. A skilled attorney will not only ensure that all documents are legally sound but will also help anticipate potential changes in laws that could impact your family. By working with an attorney experienced in these areas, you can proactively address any legal gaps and feel confident that your rights will be protected, regardless of the political landscape.
November 8, 2024
Estates and Trusts
Defensive Estate Planning For the LGBTQ+ Community
The political landscape has shifted, and those of us in the LGBTQ+ community are worried about what the future may hold. There is a lot to lose, and the new administration promises to be decidedly anti-gay. The rights of same-sex couples, adoptive parents, transgender individuals, and queer youth could well be in jeopardy. Among these is the simple right to get married. In Dobbs v. Jackson, the Supreme Court decision that overturned Roe v. Wade, one justice suggested revisiting Obergefell v. Hodges, the landmark ruling that legalized same-sex marriage nationwide. The right to marry was a milestone victory for the LGBTQ+ community. With the arrival of a new administration and conservative majorities in both houses of Congress, an emboldened Supreme Court could strike down marriage equality. With so much at stake, it is more important than ever to harness the protections the law currently provides. The Benefits of Marriage For couples in committed relationships, the best protection may well be marriage itself. Marriage not only provides a wide range of federal and state legal benefits; it also ensures that in a crisis, your spouse has essential rights regarding inheritance, health care decisions, and other critical matters. Taking advantage of the right to marry now—while it is still secure—could be a prudent move. Before tying the knot, talk to a lawyer to ensure that you understand the state and federal benefits, as well as the tax obligations. For example, being married means having to file your annual tax returns as a married couple, and some couples will pay more in income taxes under the “marriage penalty.” But most couples pay less in taxes, and they enjoy a sense of security that simply being partners may not provide. If the Supreme Court decided to overturn Obergefell, it would mean that marriage equality would no longer be federally protected, leaving it up to individual states to determine whether to allow same-sex marriages. This could lead to a patchwork of state laws, some continuing to permit same-sex marriage and others outlawing it. Already having a marriage license will help guard against such uncertainty. The Importance of Estate Planning Marriage confers significant legal benefits, but a marriage license alone isn’t enough. No matter what the future holds for same-sex unions, an estate plan will help protect your relationship from some of life’s most significant uncertainties. 1. Will The backbone of most estate plans, a will specifies how your assets should be distributed upon your death, who will care for any minor children, and who will be responsible for settling your estate. For same-sex couples, wills are particularly important to ensure that each partner is legally recognized as an heir. Without a valid will, your partner may not inherit your property automatically, and your assets could go to family members who do not have your best interests at heart. 2. Powers of Attorney If you should ever become incapacitated, someone would need to pay your bills, file your taxes, and possibly even sell your home if the incapacity appears to be permanent. A power of attorney will authorize a partner, spouse, or other trusted individual to take on this role. If you have no power of attorney, it could be necessary for someone to become your legal guardian. This is an expensive and time-consuming process, and it involves a court hearing. At just a few pages, a power of attorney can prevent the need for a guardianship and save your loved ones a lot of stress. In Maryland, it’s helpful to have the state’s statutory power of attorney, which banks and other entities are obligated to accept. You can even include special instructions in the document, such as authorizing your attorney in fact to make gifts on your behalf. 3. Advance Medical Directives An advance directive enables you to name a “health care agent”—someone you trust who will manage your health care if you ever become incapacitated. It also says what kind of care you want to receive in an end-of-life situation, like a terminal illness. If you have a partner, naming them as your agent helps ensure that they have the legal right to make critical medical decisions on your behalf. Without such a document, hospitals or medical staff may default to family members who may not recognize or support your relationship. Being married means your spouse automatically has the legal right to make medical decisions for you. But an advance directive is an important backup. It ensures that your spouse is in charge even if your marriage is not recognized, and it names a backup agent in case your spouse is not available. For trans individuals, an advance medical directive can also help make their care as dignified as possible. For example, the document can instruct your healthcare providers to address you by your preferred name and pronouns, regardless of your legal name or the gender marker on your driver’s license. This simple provision can prevent the distress of being called by the wrong name at an especially vulnerable time. To help prevent being misgendered, you can also request that your appearance be maintained to align as much as possible with your stated gender. Including this instruction in an advance directive will alert your healthcare providers as to your wishes and also help your healthcare agent ensure that they are followed. 4. Trusts In addition to a will, many people choose to set up a trust to manage their assets during their lifetime and distribute them efficiently upon their death. A trust allows you to specify how your assets will be used for the benefit of your loved ones, and it can enable them to bypass the lengthy probate process. A trust is also more private than a will. In a hostile political environment, having a trust can protect your privacy as a member of the LGBTQ+ community. Second-Parent Adoptions Less certain than the right to marry is the future of adoptions by same-sex couples. If one parent has a legal connection to a child, such as through birth, it’s smart to have the other parent file for a “second-parent adoption” to create a clear legal relationship. (This will require the consent of the child’s other biological parent.) A court order giving the second parent full legal rights will prevent problems when enrolling the child in school or accessing their medical records. Trans Individuals The incoming administration has directed some of its harshest rhetoric at the transgender community. Because the laws may shift in ways that limit protections for trans individuals, it’s a good idea to take steps now to safeguard your rights. For someone who is transgender or in transition, these might involve legally changing their name to reflect their gender identity or choosing a gender-neutral name that aligns with their preferences. It’s also important to update the gender marker on their birth certificate. In many states, a new birth certificate will be issued—rather than an amended version—showing the updated name and gender marker. A legal name change can occur at any time, regardless of the stage of the person’s transition. Once the change is final, they should notify Social Security and the Motor Vehicles Administration of the new name. Having a driver’s license and Social Security card bearing the new name will make it easier for other agencies and businesses to update their records as well. And, of course, your will, power of attorney, and advance directive should be updated to reflect your new name as well. Conclusion These are challenging times. The good news is that the legal rights of the LGBTQ+ community are still largely intact, even with the future uncertain. By acting now, you can enjoy some peace of mind, knowing that you have taken important steps to protect yourself and those you care about. This article appeared in the May 2025 edition of Maryland OUTLoud.
November 8, 2024
Mergers and Acquisitions
Sell-Side M&A: Navigating Continuing Entanglements After the Deal Closes
Sell-side mergers and acquisitions (M&A) can be transformative events for companies, shareholders, and stakeholders alike. For the seller, this often means a significant payout and the culmination of years or even decades of hard work. However, post-closing sellers often remain connected to the business in various ways through what are known as "continuing entanglements." These post-transaction obligations can have legal, financial, and operational implications for the seller. Earnouts and Contingent Payments An earnout is a mechanism where the seller receives additional compensation based on the post-closing performance of the business. Earnouts are common in deals where the buyer and seller cannot agree on the valuation or where future business growth is uncertain. However, earnouts can be complex and can be areas of dispute post-closing. Sellers should negotiate clear terms that are tied to objective financial indicators, especially as Sellers may have little control over the business post-sale. Escrow and Holdback Provisions Buyers often require a portion of the sale price to be held in escrow or retained as a "holdback" for a period after closing as means to cover post-closing items such as undisclosed liabilities and indemnifications. Sellers need to negotiate protections and structure into these escrows including the terms of release and limitations against escrow claims. Representations, Warranties, and Indemnifications In M&A transactions, Sellers provide representations and warranties about the state of the business at the time of sale. If these representations turn out to be inaccurate or incomplete, the buyer may seek indemnification. Sellers should limit the duration and scope of their representations and warranties. At times, representation and warranty insurance may be an option to protect sellers from such claims. Non-Compete and Non-Solicitation Agreements Buyers often require sellers to sign non-compete and non-solicitation agreements as part of the M&A transaction. Sellers should also evaluate how these restrictions will affect their future business ventures and negotiate reasonable carve-outs when possible. Consulting or Employment Agreements In many cases, the buyer may require the seller to stay involved with a consulting or employment agreement, especially for transition and integration. Sellers should be careful about clarifying their role and expectations post-closing, including a seller’s ability to terminate the arrangement. Tax Implications Taxes drive transactions and M&A transactions can trigger significant tax liabilities for sellers. Sellers should work closely with tax advisors to structure the deal in the most tax-efficient way as well as be mindful of tax treatment for contingent payments like earnouts. Operational Matters Sellers should be careful to account for day-to-day potential entanglements with buyers post-closing. Such items include bank account transfers, leases, licenses, etc. Having a clear understanding with the buyer as to what will be the disposition of these items post-closing is important. Conclusion For sellers, it is important to be mindful of the continuing entanglements that can persist long after the deal is done. Legal, financial, and operational obligations may continue to bind the seller to the business for years to come. Sellers should work closely with experienced legal counsel to navigate these complexities and minimize their post-closing risk.
November 7, 2024
Bankruptcy
How Can Rights to Future Payments Survive Bankruptcy? Lessons Learned from Pharma Bankruptcy Cases
In a decision published earlier this year, the Third Circuit gave creditors in the pharma space clear pointers on how to manage risk in advance and structure a transaction in a way that rights to future payments could survive a bankruptcy filing. In re Mallinckrodt PLC, 99 F.4th 617. Mallinckrodt and its affiliates operated a global specialty biopharmaceutical company that produces and sells both generic and branded pharmaceutical products including specialty products for the treatment of rare diseases and controlled substances. Prior to the Mallinckrodt’s bankruptcy filing Sanofi and Mallinckrodt entered into an Asset Purchase Agreement ("APA ") which transferred ownership of a drug called Acthar which treats chronic inflammation and auto immune disease, and related intellectual property to Mallinckrodt. It was an outright sale in which Mallinckrodt paid Sanofi $100,000 upfront and promised a perpetual royalty of 1% of all net sales over $10 million per year. Sanofi took a security interest in the up-front payment but not the royalty. By 2019, sales hit almost one billion dollars. With the confirmation of Mallinckrodt’s reorganization plan, the Sanofi’s claim for royalties was discharged and Mallinckrodt kept the drug and IP without the obligation to share revenue upon emergence from bankruptcy. Sanofi could have structured the deal differently. It could have licensed the rights to the drug, kept a security interest in the intellectual property, or set up a joint venture to keep part ownership. Instead Sanofi transferred its rights to Alchar Gel in an outright sale.
November 6, 2024
Bankruptcy
Gating Issues for Foreign Trustees Looking to Obtain Chapter 15 Recognition
There has been an uptick in chapter 15 cases, and they have raised various intriguing issues. Among them is the threshold question of who can actually file a Chapter 15. By design chapter 15 applies where assistance is sought in the United States by a foreign court or a foreign representative in connection with a foreign proceeding of a foreign debtor. The Bankruptcy Code itself proclaims that the purpose of this chapter is to incorporate the Model Law on Cross-Border Insolvency so as to provide effective mechanisms for dealing with cases of cross-border insolvency. A decision rendered by the Eleventh Circuit (including Florida, Georgia and Alabama) in the spring of 2024 created a circuit split on a threshold eligibility question, namely whether the foreign debtor must have domicile, business or property in the U.S. to obtain recognition. Section 109(a) of the Bankruptcy Code limits the scope of who may be a debtor, stating that “only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor” in a domestic bankruptcy proceeding. The Eleventh Circuit held that a duly qualified representative of a foreign debtor that is properly subject to a foreign proceeding is entitled to seek and obtain Chapter 15 recognition even if such foreign debtor has no property in the United States or otherwise does not qualify to be a debtor under section109(a) of the Bankruptcy Code. In re Al Zawawi, No. 22-11024, 2024 WL 1423871 (11th Cir. Apr. 3, 2024). This is directly contrary to the precedent established in the Second Circuit more than ten years ago, which requires courts in New York, Connecticut and Vermont to factor in Section 109(a) of the Code. In re Barnet, 737 F.3d 238 (2d Cir. 2013). It remains to be seen which approach will prevail and if the Eleventh Circuit courts will become the primary forum for foreign representatives when they want to investigate potential claims or conduct discovery in the United States, but the foreign debtor has no assets here.
November 6, 2024
Commercial Litigation
Virginia Court of Appeals Clarifies Impact of the CARES Act on Eviction Actions
In a recent decision, the Virginia Court of Appeals clarified the impact of the CARES Act on Virginia eviction proceedings. Read the full ruling here. The ruling is significant for Virginia landlords, property managers, and tenants, particularly those managing or residing in properties covered under the CARES Act. Background: The landlord filed an eviction action (unlawful detainer) against residential tenants after they allegedly failed to pay rent. Under Virginia law, the Landlord issued a five-day notice to pay rent or vacate the premises. However, the notice also stated the tenants had 30 days to vacate pursuant to the CARES Act. The trial court dismissed the eviction action, ruling it violated the CARES Act’s 30-day notice requirement because the action was filed before the 30-day vacate period expired. On appeal, the Court of Appeals reversed the trial court’s decision. Key Implications of Ruling: Filing an Eviction Action Does Not Require a Tenant to Move Out: Filing an eviction action is only the first step in the legal eviction process, and it does not require the tenant to leave the property. Therefore, a landlord who files an eviction action within the 30 days allowed by the CARES Act does not violate the CARES Act. Difference Between Summons and Execution of a Writ: The CARES Act prohibits landlords from taking action that would require a tenant to vacate the premises before the 30-day notice period has expired. However, it does not prevent landlords from initiating an eviction action. Only a physical eviction of a tenant, performed by a Sheriff, would violate this provision if done within the 30-day timeframe. Practically speaking, a physical eviction cannot occur this quickly. Preemption of State Law by Federal Law: When there is a conflict between federal and state law, federal law preempts state law. Thus, the CARES Act’s requirements, if applicable, provide tenants in covered properties with 30 days before they must vacate, superseding any contrary provision of Virginia law. Impact on Virginia Landlords and Tenants: Proceed with Filing: Landlords can file eviction actions within the 30-day notice period without violating the CARES Act. Understand Tenant Protections: The ruling reinforces the requirement for landlords, subject to the CARES Act, to allow the full 30-day period before proceeding with any action that would physically remove tenants from the property. Any attempt to execute a writ of eviction within that period could lead to legal consequences. Clarity on Lease Termination: Even if a lease is terminated under Virginia law, the tenant still has the right to remain on the premises for 30 days after receiving notice, in accordance with the CARES Act. Conclusion In sum, the Court of Appeals’ ruling balances the rights of landlords to initiate legal eviction actions while ensuring tenants receive protections guaranteed under the CARES Act, if applicable. The CARES Act and the Virginia Residential Landlord Tenant Act impose significant obligations on landlords and tenants regarding rental properties. Understanding applicable legal requirements and responsibilities is essential for fostering a harmonious landlord-tenant relationship and protecting the interests of both parties. Consulting with a trusted attorney in your area is critical if you or your organization have a landlord-tenant related claim. While outcomes cannot be guaranteed and past performance cannot assure future success, Offit Kurman real estate litigator Anders Sleight | Offit Kurman is available to evaluate your situation.
November 4, 2024
Estates and Trusts
The Key to Succession Planning: A Revocable Trust
How can you ensure your legacy endures and your loved ones are spared unnecessary heartache during a challenging time? Succession planning is one of the most crucial aspects for securing financial stability and ensuring a smooth transition of wealth across generations upon the death of a business owner. Proactive planning today can save loved ones future confusion, stress, and financial strain. Among the many tools available for succession planning, a revocable trust stands out as one of the most versatile and effective methods for securing one's legacy and preserving the value of a business. What is a Revocable Trust: A revocable trust, also known as an “inter vivos” or "living” trust, is a legal document that allows an individual, known as the grantor, to transfer ownership of their assets, including a business, into a trust for their own benefit during their lifetime. Simply put, a trust can be the proverbial bucket in which you “hold” your assets. The grantor can revise the document at any time, adding or removing assets or even revoking it entirely if circumstances change. Upon the grantor’s death, the trust becomes irrevocable, and the designated successor trustee—the person named by the grantor to manage the trust after their death—distributes the trust's assets according to the terms outlined in the trust document. Unlike a Last Will and Testament, which becomes effective only after death, a revocable trust functions during the grantor’s lifetime. It provides control over assets while simplifying asset distribution after death by avoiding the probate process required with a Last Will and Testament. Key Benefits of Using a Revocable Trust in Succession Planning: Avoiding Probate: One of the primary advantages of a revocable trust for a business owner is that assets held within the trust bypass the probate process. Probate is a public, court-supervised process that can be lengthy, costly, and stressful for heirs. During probate, the deceased’s assets, including business assets, can be frozen during the pendency of a probate proceeding. When a business is one that needs daily attention, services customers, runs a payroll, and has employees, even a short delay could mean financial ruin. With a revocable trust, the appropriate party can step in immediately to manage the business, allowing for uninterrupted operations and quick, private inheritance for beneficiaries. Maintaining Privacy: Probate is a public process, meaning the estate details—including the business assets owned by the decedent and their beneficiaries— become a matter of public record (as illustrated by the widely reported Last Will and Testament of actor James Gandolfini, published on the first page of the New York Post). A revocable trust, however, remains private, ensuring a discreet transfer of assets and protecting family members from unwanted attention, potential disputes, and estate contests. Flexibility and Control: The grantor of a revocable trust retains control over the assets placed in the trust, allowing for the addition or removal of assets as needed. Business interests, investments, and real property owned in different states can all be titled in the same trust, creating an organized structure for asset management. This flexibility allows for updates as family dynamics or financial situations evolve (consider the 5D’s), ensuring the trust remains adaptable and effective throughout changing circumstances. Protection for Beneficiaries: If you have young or financially inexperienced beneficiaries, a revocable trust can also protect their inheritance by establishing “sub-trusts” specifically for them. Simply put, the grantor’s trust can contain additional trusts to benefit the beneficiaries. These sub-trusts provide guidelines and stipulations for how and when distributions to the beneficiaries are made, providing structure and oversight. When business assets are left to inexperienced beneficiaries, these guidelines and stipulations are particularly helpful, and a trustee can be appointed who has familiarity and understanding of the business to ensure that those interests are protected. Sub-trusts are particularly useful for parents or grandparents looking to ensure that minors or financially vulnerable beneficiaries are cared for responsibly, preventing unrestricted access to valuable business assets. Incapacity Planning: In the event that the grantor becomes incapacitated, even temporarily, a revocable trust allows for seamless management of their affairs by a designated successor trustee. This trustee, selected by the grantor, can be someone well-versed in both the business operations and the grantor's family dynamics. Appointing a competent successor trustee in advance can effectively manage potential financial and administrative crises, helping to avoid the need for a court-appointed guardianship, which can be a lengthy and an emotionally taxing process. Avoidance of Disputes: A revocable trust clearly defines named beneficiaries, ensuring they receive their inheritance without being involved in the probate court process. In New York and many other states, next of kin, who may not even be beneficiaries named in the Last Will and Testament, are notified of their family member’s death and provided the opportunity to appear in court and dispute the terms of the Last Will and Testament. However, with a revocable trust, there is no probate court proceeding, eliminating the notification requirement for disinherited individuals. This absence of a court process makes it significantly more challenging to dispute the terms of a revocable trust. Securing Your Legacy Succession planning with a revocable trust provides control, flexibility, and protection for both the business owner and their beneficiaries. By securing financial stability and continuity in business operations, even after the death of the owner, a revocable trust can be a valuable component of a comprehensive estate plan. Whether you are in the process of building your business or preparing for sale or succession, or planning your legacy, consider the use of a revocable trust to protect your family’s future with confidence.
November 4, 2024
M&A Nuggets
M&A Nuggets: Working Capital Requirement: The Seller's Scourge?
One of the most befuddling concepts to a seller in a merger transaction is the working capital requirement. Buyers base their purchase price offers assuming that there will be a normal amount of working capital in the business at closing. To a seller, the concept of leaving any working capital in the business may seem illogical. As a result of these disparate views, an inordinate amount of time is devoted to negotiating the working capital requirement. However, the working capital process does not need to burden moving a deal forward, There are two key steps in the working capital process. The first step is to establish the target working capital that will be required at closing. The second step is to determine after closing whether the target amount of working capital was left. An important part of determining the target working capital is the definition of working capital itself. In its most basic form, working capital equals current assets less current liabilities. However, sellers are often surprised when buyers propose to include in working capital certain current assets and current liabilities that the sellers have not historically included. Here are two key takeaways to be mindful of when negotiating the definition of working capital: Purchasers prefer to base working capital on a strict GAAP (Generally Accepted Accounting Principles) standard. Sellers, however, often maintain books and records at least in part on a basis other than strict GAAP. Sellers should therefore negotiate for certain of their historical methods of accounting to be utilized to determine working capital, even if at variance from GAAP. Although certain historical accounting practices may not be in accordance with GAAP, it is unusual for a seller’s financial statements to be totally divergent from GAAP, that is, many accounting practices will be in accordance with GAAP. There are, however, different methods to account for certain items, all of which are consistent with GAAP. For example, GAAP recognizes several different methods to value inventory. For those items that it is agreed GAAP will apply to, sellers should insist that an agreement be made on which alternative allowed GAAP method is to be used. The purpose of negotiating the finer details of the working capital target is to have a meeting of the minds between the buyer and the seller, the result of which is no adjustment, or a small adjustment, to the purchase price when actual closing working capital is compared to the target.
November 4, 2024
Intellectual Property
OK Alert | Understanding the FTC’s New “Click-to-Cancel” Rule
Businesses that automatically charge their customers on a recurring basis may have to update their practices to comply with new consumer protection regulations. The Federal Trade Commission (FTC) has introduced a new “click-to-cancel” rule that places stricter requirements on negative option programs—business models that require customers to actively cancel or opt out to stop recurring charges. Common iterations of negative option programs include free trials that roll into paid subscriptions, recurring delivery services, automatic renewals, and similar continuous service agreements. While these programs offer convenience for consumers and predictable revenue for businesses, the new rule comes as a response to persistent consumer allegations of unfair and deceptive practices in some negative option programs. The FTC’s new “click-to-cancel” rule requires: Transparency: All program terms (billing frequency, total costs, how to cancel, etc.) must be disclosed clearly and conspicuously. Businesses cannot bury this information in fine print or hard-to-find sections of their websites or agreements. Consent: Businesses must obtain explicit, informed consent from consumers before collecting billing information and should retain these consent records for at least three years. Ease of cancellation: Canceling must be as easy as signing up, with no hidden barriers or cumbersome processes. In short, this rule aims to ensure consumers know what they are signing up for. Businesses must now clearly disclose the program terms, secure consumer consent before billing, and make it straightforward to cancel. When to comply: Exact dates for compliance have not been announced yet. The rule will begin to take effect 60 days after it is published in the Federal Register. Various provisions will also have staggered compliance dates, making the timeline more complex. Additionally, there are lawsuits challenging the rule that could lead to potential delays or pauses in implementation, adding further uncertainty. It may be advisable to consult with a lawyer on your specific compliance needs. Insights and best practices: Even if the rule is delayed or does not take effect, there are business advantages to proactive compliance. The practices defined in the “click-to-cancel” rule—clear terms, consent, and an easy cancellation process—address common consumer frustrations. Implementing transparent business practices can help you build consumer trust and goodwill, a quantifiable business asset. More information: The FTC announced the “click-to-cancel” rule in a press release on October 16, 2024. The full proposed text for the final “click-to-cancel” rule can be found here: Final Rule Concerning Recurring Subscriptions and Other Negative Option Programs, 16 CFR part 425. The following week, industry groups began challenging the FTC’s new “click-to-cancel” rule in the U.S. Courts of Appeals. On October 22, 2024, Electronic Security Association v. FTC (24-60542) was filed in the 5th Circuit and Michigan Press Association v. FTC (24-3912) was filed in the 6th Circuit. Offit Kurman will continue monitoring developments surrounding this new rule.
November 4, 2024
Labor and Employment
Employer Alert: Employees’ Right to Time-Off for Voting
With the first Tuesday in November around the corner and matters both big and small on the ballots – from local environmental issues to the right to choose and election measures on state ballots to the exalted presidential election – it is an appropriate time to reexamine employees’ rights and employers’ obligations to provide time off to vote. Strangely, there is no federal law that addresses the rights of employees to voting leave. Instead, there is a tapestry of state laws addressing the issue. Some states require paid voting leave, while others only provide for unpaid leave. And, of those that require leave – some have specific exceptions if an employee has enough time to vote before or after work while polls are open. Still, other states require employers to notify employees of their rights. This, no doubt, results in a complex web of laws that is difficult for employers to navigate. For example, (a) New York requires employers post notice of employees’ voting leave rights and provide employees with at least two hours of paid voting time, unless the employee has at least four non-working hours while the polls are open, (b) Maryland requires that employers provide registered voters with up to two hours of voting leave, unless the employee has at least two continuous hours off-duty time while the polls are open, and (c) California requires employers post notice of employees’ voting leave rights and to pay employees for up to two hours of voting time at the beginning or end of a work shift. Employers are reminded that it is best practice to consult their own internal policies which may well provide employees with rights that go beyond those required by the state in which their employees are working. As November 5th approaches, Offit Kurman’s Employment Law Group is always available to answer any questions you might have on voting leave or any related matter.
November 1, 2024
Construction
How (and Why) Does a Mechanics’ Lien Cause Pressure to Pay for Work
All contractors and subcontractors have some degree of understanding that if they have not been paid for work performed on a project, they have the right to file a mechanics’ lien against the project. The details of why the lien filing often results in payment, however, are often murky to most contractors and subcontractors. This article clarifies these items. The first thing to understand about a mechanics’ lien is that it acts as a type of lien against the project property. There are numerous types of instruments that can act as liens. Tax liens can be attached to a property. So can monetary judgment liens. A mortgage acts essentially the same as a lien. For all of these instruments, the gist is that a debt is owed—whether that be a loan, delinquent taxes, or payment for work performed—and the debt is collateralized to the property. In other words, if the debt is not paid, the real property will be sold to pay for the debt. Mortgages are the type of instrument that most people have some degree of experience. With a mortgage, there is a loan of money, and if the loan is not paid, then, the mortgage can be foreclosed on to pay the debt. The foreclosure on the mortgage is the execution sale of the real estate to pay the loan debt. The mortgage typically gives priority status so that the loan will be paid from proceeds from the foreclosure sale. Mechanics’ liens function similar to a mortgage. If a laborer or supplier has not been paid for the work furnished to the project, then, the lien secures the unpaid debt to the property. In most jurisdictions, the process for progressing a lien claim to a final judgment and ultimate sale of the real estate is similar to the process for foreclosing on the mortgage and selling the real estate at foreclosure sale. From a big picture point of view, it’s the same idea: an unpaid debt is secured to the property, and the property will be sold to pay for the debt. It is for these reasons that mechanics’ liens tend to receive prompt attention when filed against a project. The mechanics’ lien acts similar to an additional mortgage against the real estate. And, if pursued to its end, the mechanics’ lien can force an execution sale of the property. This, of course, is of significant concern to the property owner and any lenders with mortgages on the property. Similarly, a mechanics’ lien is of concern if the owner intends to refinance or sell the real estate. Typically, any liens or mortgages attached to the property must be addressed or paid if a refinance or sale of the land occurs. As a last and final related point, the state specific statutory laws that govern mechanics’ liens will typically provide a method for a bond to be posted with the court, to act as substitute collateral for the lien claim, and therefore discharging the property from the lien claim. If pursuing a mechanics’ lien claim, or if managing a project that is under threat of lien claims, best practice is to consult with trusted, experienced counsel that is knowledgeable on the intricacies of construction law. Offit Kurman construction attorneys are available to advise and counsel owners, contractors, construction managers, design-builders, design professionals, subcontractors, and developers on construction contracts, risk, and project disputes.
October 31, 2024
Estates and Trusts
The Easy Way to Leave Your Car to a Loved One
When someone dies, their car is often the first thing the heirs will ask about. Who gets it, they wonder, and how long will it take to transfer the title? Whether the vehicle in question is a gleaming new SUV or a humble and aging hatchback, getting it to the new owner can be a priority. A car can sit for only so long before maintenance problems develop, and the deceased owner’s estate will be responsible for paying insurance premiums in the meantime. When the vehicle is part of the deceased owner’s estate, the estate must generally be opened before the title can be transferred. Although the process is relatively efficient, it can take time. A death certificate must be obtained, a bond purchased, and the whereabouts of any Last Will and Testament determined. These documents are submitted to the Register of Wills in the county where the decedent lived. Once everything is in order, the personal representative (executor) will receive “Letters of Administration,” which give him or her the legal authority to deal with the car and other assets of the estate. All told the car may have to sit for days or weeks before its new owner can take possession of it. To streamline the transfer, the Maryland MVA allows you to designate a beneficiary for your vehicle right on the title. For a nominal fee, you can have a new title prepared that names the person or business that will receive the vehicle upon your death. Under this arrangement, the car will no longer be part of your probate estate but will instead transfer to the named beneficiary regardless of what your will might say or whether your estate has even been opened. When the time comes, the person you have named can simply visit an MVA office to transfer the title to your car. There will be no need to wait until the estate has been opened, and if the Department of Health and Mental Hygiene has been notified of your death, there won’t even be the need to show a death certificate. The MVA requires that the vehicle have only one owner and be titled in Maryland. A beneficiary can be added even if there is a lien on the vehicle. Before the car is transferred to the beneficiary, any liens must first be satisfied, or the lien holder can give the beneficiary a letter of permission to transfer ownership. Adding a beneficiary won’t affect your ownership of the vehicle during your lifetime, and you can still sell the car whenever you want. If you change your mind about who should receive the car, you can delete or change the beneficiary designation anytime. There is, however, a fee to add, delete, or change a beneficiary to a vehicle’s title. When the time comes, it won’t be necessary to have the vehicle inspected if the beneficiary is your spouse, child, or parent. Even the vehicle registration can be transferred if the new owner is a member of your immediate family. A transfer to an unmarried partner, a niece or nephew, or a friend will require the purchase of new registration plates. Naming a beneficiary for your car is like adding a “transfer on death” provision to a bank account or designating a beneficiary on a life insurance policy or retirement account. These provisions can help streamline the administration of your estate, but it’s advisable to speak with an estates and trusts attorney before you get started. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 30, 2024
Estates and Trusts
The Gift of Planning Your Estate
As 2024 draws to a close, the season of giving that rounds out the year will once again be upon us. As you fill your shopping list with festive sweaters, cool electronics, and other treasures, consider planning for the unexpected as a gift to the people you care about. Estate planning is a good place to start. Consider the consequences if something were to happen to you. Would someone you trust be allowed to take care of you and manage your health care? With an advance medical directive, you can put the right person in charge in case you ever become unable to speak for yourself. This person could then work with your doctors to help ensure that your care is appropriate and in keeping with your wishes. As part of a complete estate plan, an advance directive also enables you to make choices for serious, end-of-life situations such as a terminal illness. Would you simply want to be kept comfortable, or would you prefer to have more aggressive measures taken? These are tough questions to consider. But wresting with them in advance, before the need arises, will make life easier for the people who care about you. What about your finances? If you should ever become incapacitated, someone would need to pay your bills, file your taxes, and possibly even sell your home. A power of attorney will authorize a trusted friend or family member to take on this role. If you have no power of attorney, it could be necessary for someone to become your legal guardian. This is an expensive and time-consuming process, and it involves a court hearing. At just a few pages, a power of attorney can prevent the need for guardianship and save your loved ones a lot of stress. It is also important to plan for what happens if the worst comes to worst. Upon your death, who would settle your estate? Who would inherit your assets? If you have minor children, who would their guardians be? Should they receive their inheritance through a trust or outright? The best way to sort through these questions is to speak with an attorney who can guide you through the planning process. In addition to helping you explore your options; the attorney can draft a will and other essential documents. A complete estate plan will also address things like updating the beneficiaries on retirement accounts and life insurance policies. It will help ensure that your “digital assets,” like online accounts, frequent flyer miles, and credit card award points, are included in your estate. It will also give you an opportunity to plan a meaningful memorial service that reflects your wishes and beliefs. The effort that goes into creating an estate plan can be considered a gift. It is, first of all, a gift to yourself. With your plan complete, you can enjoy the peace of mind that comes from knowing that, as much as possible, you are ready for what lies ahead. An estate plan is also a gift to the people you love. A minimum amount of stress will enable them to care for you if you can’t care for yourself. It will also save them time, money, and worry when you are no longer in the picture. Whether you have a spouse or partner, children, or just dear friends, consider preparing an estate plan as a gift to them. As Booker T. Washington said, “Those who are happiest are those who do the most for others.” Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 30, 2024
Estates and Trusts
Why Your Estate Plan Might Need a Tune-up
An estate plan is a set of papers that usually includes a will, durable power of attorney, and advance medical directive. These essential documents can help you manage financial and health-related matters if you ever become incapacitated, and they should provide for the efficient transfer of your assets upon your death. In other words, an estate plan is a hedge against uncertainty, a defense against the curveballs life may toss your way. An up-to-date plan can help you minimize death taxes, protect your assets from creditors, provide for your loved ones, establish trusts for your children, and appoint guardians to care for them. Although estate-planning documents don’t “expire,” they can become out of date and ineffective if your life circumstances have changed. This is when a “tune-up” may be in order. A phone call with an Estates & Trusts attorney is advisable if any of the following apply to you — You have had children or gotten married or divorced. Someone named in your documents has died. You have bought or sold real estate (in Maryland or elsewhere). Your assets have changed significantly. Even if your circumstances are largely unchanged, it is still recommended that you review your plan every three to five years. Tax laws change, new planning techniques become available, and updated documents can offer important new benefits. It’s also possible that your wishes have changed since your documents were drafted. For example, do you want to update the list of people who will inherit from you? Is it time to change the individuals who will settle your estate, act as your trustees, or serve as guardians to your children? Do your financial power of attorney and advance medical directive still name the right people to manage your affairs if you no longer can? An attorney who specializes in this area can help you think through your planning goals and suggest your best options for achieving them. Even if no changes to your documents are necessary, receiving the assurance that you are ready for the unexpected is reason enough to speak with a planning professional today. Of course, if you don’t already have a current estate plan, there is no better time than the start of a new year to put your affairs in order. Making decisions today about your will, power of attorney, and advance medical directive can bring you peace of mind and a new confidence about what lies ahead. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 30, 2024
Labor and Employment
Better Call Sarah: Mental Health in the Workplace
Dear Sarah, With October being Mental Health Awareness Month, I’m concerned about how we can better support our employees’ mental well-being at work. We’ve been hearing a lot about the importance of mental health, but as a small business owner, I’m unsure how to implement effective strategies. What can I do to create a more supportive environment? – Mindful in Marketing Dear Mindful in Marketing, Thank you for your thoughtful question! Mental health in the workplace is an increasingly relevant issue, especially during October, when awareness campaigns are in full swing. Supporting your employees’ mental well-being is more than a compassionate choice – it is a smart business strategy that can lead to increased productivity and lower turnover rates. You also need to comply with the law. If an employee’s mental health condition qualifies as a disability under the Americans with Disabilities Act (ADA), you are required to provide reasonable accommodations. Conditions like major depressive disorder, bipolar disorder, and schizophrenia meet this definition, while others such as PTSD, anxiety, and depression may also qualify. Mental health conditions may also trigger protections under the Family and Medical Leave Act (FMLA) [1]. It's important to be aware of these legal frameworks to protect both your employees and your business. It’s also especially important for businesses to comply with these laws, as the Equal Employment Opportunity Commission (EEOC) has emphasized its focus on protecting workers with mental health-related disabilities in its most recent Strategic Enforcement Plan. Fortunately, you can take proactive steps to support mental wellness in the workplace to support your employees and help protect your business from potential discrimination claims. Mental Health Policies and Procedures Employers should be prepared with the proper policies and procedures in place to address employee mental health concerns. Draft and Communicate a Mental Health Policy Create a clear mental health policy that outlines your commitment to employee well-being. Include resources available, such as Employee Assistance Programs (EAPs) and mental health days. Make sure this policy is easily accessible and communicated to all employees. Manager Training and Education Train managers and supervisors on their legal obligations under the ADA, FMLA, and related laws. This should include knowing how and when to involve HR. It’s also wise to designate HR professionals to handle leave requests and accommodation issues promptly and consistently. Engage in the Interactive Process If an employee approaches HR with a mental health-related issue that qualifies as a disability, employers must engage in the “interactive process.” This dialogue between employer and employee is aimed at finding reasonable accommodations that allow the employee to perform their job. Common accommodations to address mental health issues are extended leave, scheduling changes, and additional breaks. You need to listen to the employee and the employee’s healthcare provider. Always remember that this is an interactive process, so it may take several steps. Be patient and creative. Reduce Mental Health Stigma Historically, employers avoided discussing mental health with their employees. Even today, employers may feel uncomfortable bringing it up because they don’t know the “right” words or worry they might overstep. But it’s important to talk about. Employees who feel supported and who have receptive supervisors may be less likely to have a sudden need for an ADA accommodation. They are also less likely to file an EEOC charge. Check On Your Employees Regular check-ins with employees—whether through one-on-one meetings or anonymous surveys—can help you gauge how employees are feeling. When employees feel supported, they are more likely to seek help early, which can reduce the need for more formal ADA accommodations later on. Offer Mental Health Trainings Consider organizing workshops or inviting mental health professionals to provide guidance on recognizing the signs of mental health struggles and how to support colleagues. Train managers to approach sensitive conversations with empathy and understanding. Lead by Example As a business leader, it’s important to model healthy behaviors. Share your own strategies for managing stress and openly discuss the importance of mental health. When employees see leadership prioritizing well-being, they feel empowered to do the same. Create A Work Environment That Promotes Mental Well-Being Building a culture that supports mental health involves more than just offering workshops—it requires integrating mental well-being into everyday work practices. Flexibility, balance, and proper resources are straightforward ways employers can build a work environment that supports employees’ mental health. Flexibility Mental health can fluctuate over time, and offering flexibility—whether through adjustable workloads, flexible deadlines, or remote work options—can help employees manage stress during tough times. Encourage employees to communicate their needs and be open to adjustments as necessary. Work-Life Balance Promote a healthy work-life balance by encouraging employees to take regular breaks, use their vacation time, and, if possible, offering flexible work schedules. Employees who feel that their personal time is respected are more likely to be productive and less likely to experience burnout. Adequate Staffing and Resources Employers can reduce unnecessary stress by ensuring employees have access to the tools and resources they need to do their jobs effectively. This includes providing up-to-date technology, clear processes, and adequate staffing levels so employees aren’t overburdened. When employees have what they need to perform their tasks efficiently, they experience less frustration and can focus on their work without additional stress. Regularly assess whether your team has the proper support, equipment, and training, and address any gaps promptly to maintain a healthy and productive work environment. Incorporating mental health support into your workplace culture is a powerful investment in your business’s future. These strategies can ensure legal compliance while also fostering a positive, healthy work environment. Prioritizing employee well-being will reduce stress, improve productivity, and create an atmosphere where your team can thrive. [1] The U.S. Department of Labor published “Fact Sheet #280: Mental Health Conditions and the FMLA” in May 2022, to explain leave eligibility under the Family and Medical Leave Act (FMLA) for use related to an employee’s own mental health condition or that of an immediate family member. Additionally, the FMLA’s definition of a serious health condition can be broader than the definition of a disability and encompass many illnesses, injuries, and physical or mental conditions that require multiple treatments and intermittent absences. State leave and disability laws can provide greater amounts of leave and/or benefits to employees, including those who may not be covered by the ADA or FMLA.
October 30, 2024
Family Law
Jewish Private School Education During Divorce: Financial, Custody, and Parenting Challenges
Navigating a Jewish private school education during and after a divorce presents unique challenges for both parents and their children. High tuition costs, combined with differing priorities post-separation, can add stress to an already difficult situation. In addition, factors such as shifting lifestyle choices and varying educational values can further intensify existing tensions within the family dynamic. Shared or joint custody arrangements often require both parents to make decisions about their children’s education collaboratively. This can become particularly complicated if religious beliefs or values have evolved since the divorce. For example, one parent may wish to enroll the child in a Jewish school to maintain cultural ties, while the other might prioritize a more secular education due to differing beliefs. Moreover, for families that prioritize a Jewish education as a key part of their child's upbringing, the decision to enroll in a Jewish school may be of critical importance. However, if one parent is not Jewish or has relocated to a different community with varying levels of commitment to Jewish education, disagreements over school choice may arise. Like many private institutions, Jewish schools often come with high tuition costs, placing an additional financial strain on families. During the divorce process, parents must determine how these costs will be allocated. They can include education expenses in their divorce agreement, specifying whether tuition and related costs will be arranged, whether split equally or based on each parent's income. Some may agree to divide responsibilities, with one parent covering tuition while the other handles extracurricular expenses or supplies. In certain cases, child support payments may be adjusted to account for private school tuition, especially if the chosen school is deemed necessary for the child’s well-being or educational needs. To ensure fairness, parents will likely need to share their financial situations to come to a fair agreement about dividing educational costs, considering income, assets, and other obligations. Parents are encouraged to seek the assistance of financial planners or legal advisors to navigate these discussions effectively. If they cannot agree, mediation with a neutral third party can help facilitate a mutually acceptable arrangement. Furthermore, parents may also need to revisit these agreements as financial circumstances change, fluctuations in income, or changes in school tuition. Despite these complexities, it is essential to recognize that a child's school can provide a vital sense of community and support, which is particularly valuable for children from Jewish families. Maintaining connections to their religious community and participating in Jewish traditions and events can play a critical role in a child's well-being during and after a divorce. To support this, parents can also support their children emotionally by encouraging open discussions about their feelings regarding the changes in their educational environment. Counseling services may be beneficial for children who struggle with the transition. While the process introduces complexities into educational decisions—such as choosing a Jewish school—effective communication and cooperation between parents are crucial. To facilitate this, parents can adopt strategies like implementing regular family meetings or joint decision-making sessions, focusing on the child’s best interests. Seeking guidance from legal professionals, family counselors, or even a Rabbi who understands the intersection of divorce and education can help families navigate these decisions. Additionally, local community organizations and Jewish educational foundations may offer resources to assist families in transition. In conclusion, prioritizing the child’s best interests is key to successfully managing these educational challenges. By fostering open communication, seeking professional support, and considering the unique needs of their children, parents can navigate the complexities of Jewish education in the context of divorce more effectively.
October 29, 2024
Family Law
Understanding The Role of Parent Coordinators in Custody Cases: Navigating High-Conflict Disputes for Effective Co-Parenting Solutions
In high-conflict custody cases, finding a productive way for parents to work together can be challenging. To address this, courts are increasingly turning to parent coordinators—specially trained professionals who assist families in resolving conflicts, improving communication, and ensuring that children’s needs remain at the forefront. A parent coordinator serves as a neutral third party, typically appointed by the court or agreed upon by both parents, to work with families involved in high-conflict custody or visitation disputes. Parent coordinators are often mental health professionals, social workers, or attorneys with specialized training in conflict resolution, family dynamics, and child development. They guide parents in managing disputes, fostering cooperation, and promoting a child-centered approach. Key Responsibilities of a Parent Coordinator Conflict Resolution: Parent coordinators help parents resolve conflicts by helping each party understand the other’s perspectives in hopes of finding common ground. Through structured discussions, they encourage constructive communication and discourage destructive behaviors. Facilitating Communication: Effective co-parenting relies on clear communication, often hindered by residual anger or mistrust in high-conflict cases. Parent coordinators set guidelines for respectful interactions and fostering collaboration in making decisions that affect their child’s life. Implementing Court Orders: Parent coordinators assist in ensuring that court-ordered custody agreements are implemented in ways that minimize conflict. They help parents navigate issues related to visitation schedules, holiday arrangements, education, extracurricular activities, and healthcare while aligning with court expectations. Decision-Making Authority: Parent coordinators do not have decision-making authority in most states. However, parents may agree to follow their recommendations until the court can make a ruling. This approach can reduce conflict and stress for the child in the interim. Focusing on the Child’s Best Interests: Above all, parent coordinators educate parents and make recommendations that are in the child’s best interests. They help parents understand the impact of ongoing conflict on their children and encourage solutions that support the child’s well-being. Benefits of Using a Parent Coordinator Reduced Court Involvement: Custody battles can be exhausting, costly, and emotionally draining for everyone involved. Parent coordinators facilitate resolutions outside of court, reducing the need for repeated legal intervention and saving time and legal fees. Decreased Emotional Impact on Children: When parents frequently clash over custody arrangements, children often bear the emotional toll. Parent coordinators work to reduce children’s exposure to parental conflict, which can otherwise lead to stress, anxiety, and emotional issues. Better Co-Parenting Relationships: Through constructive communication and conflict resolution training, parent coordinators help parents develop healthier dynamics. Even if parents continue to disagree, they may develop tools to manage their interactions more constructively, creating a more stable environment for the child. Efficient Resolution of Disputes: With guidance from trained professionals, many conflicts between parents can be quickly resolved, allowing parents to move forward without protracted arguments. Qualifications and Training of a Parent Coordinator Parent coordinators typically come from backgrounds in psychology, social work, family law, or a related field. They typically undergo extensive training in family conflict resolution, child development, and family dynamics, often meeting certification requirements specific to their region. Parent coordinators are trained to remain impartial and to focus solely on the family’s needs rather than individual grievances. Limitations and Challenges While parent coordinators play an essential role, their effectiveness often depends on both parents’ willingness to engage constructively and make concessions. In cases of uncooperative behavior, their ability to help resolve disputes may be limited. Additionally, while parent coordinators can help facilitate decisions, they are not a substitute for legal advice, therapy, or other professional services. Parent coordinators are valuable assets in high-conflict custody cases, helping families resolve disputes in a way that prioritizes the child’s well-being. By fostering better communication, reducing reliance on the courts, and focusing on practical solutions, they create a supportive structure for co-parents and children alike. For families facing ongoing conflicts, working with a parent coordinator can be a step toward establishing healthier co-parenting relationships and a more stable environment for children.
October 29, 2024
Estates and Trusts
Protecting a Loved One’s Benefits With a Special-Needs Trust
Caring for someone with special needs is both a burden and a privilege. Although the challenges can be all-consuming, the rewards are often deeply gratifying. Few of us who don’t bear this burden can fully understand the level of commitment required. For many caregivers, this commitment extends to remembering the individual with disabilities in their wills. This is a commendable impulse, but it is important to proceed cautiously. Without proper planning, an inheritance left to someone on government assistance can lead to nothing short of disaster. The difficulty stems from the nature of public assistance. Some benefits, such as Medicaid and Supplemental Security Income (SSI), are “means-tested.” This means they are available only to individuals with disabilities whose assets are below a certain level. Leaving any kind of inheritance to someone who receives means-tested assistance can cause these benefits to be taken away. And for the person with disabilities, government benefits can be critical. SSI is a federal program administered by the Social Security Administration that pays monthly stipends to people who are elderly or disabled. Medicaid provides health care benefits and many other programs that can enhance the quality of life of people with disabilities. Importantly, Medicaid coverage is automatically granted to individuals receiving SSI in Maryland and many other states. Under Social Security rules, a person with disabilities with more than $2,000.00 in assets cannot receive SSI and, therefore, will not qualify for Medicaid. As a result, leaving a bequest to an individual with disabilities can do more harm than good. This problem can be circumvented by setting up a special-needs trust. This type of trust includes language that requires the trustee to pay only for items the government isn’t paying for. In this way, the trust supplements the person’s public benefits without jeopardizing them. Because the beneficiary cannot compel the trustee to make a distribution, the government does not take the trust assets into account when determining whether the beneficiary qualifies for public assistance. In other words, a special-needs trust creates the illusion of poverty, which allows someone with special needs to receive an inheritance while leaving their government benefits intact. Choosing the right trustee is essential. In addition to having the beneficiary’s needs at heart, this person must understand special-needs trusts and their rather arcane rules. For example, the trustee may not pay for the beneficiary’s food or shelter unless they are enjoyed while the beneficiary is away from home—say, on a vacation. Sending the beneficiary a gift card is also not allowed unless it’s for an establishment like a gas station that sells only things that are allowable expenses under the trust rules. The trustee should consult with an attorney to avoid any missteps. As a practical matter, a special-needs trust is typically set up through the caregiver’s will. Called a testamentary trust, it can be funded with the caregiver’s ordinary assets like bank accounts and real estate. In addition, the trust can be named as the beneficiary of the caregiver’s life insurance policy or retirement account. Another approach is to establish the trust in the caregiver’s lifetime. This type of trust, called an inter vivos trust, can be funded directly by contributions from the caregiver or from the friends and family of the beneficiary. These individuals can also name the trust as a beneficiary of their wills and other assets. Whether a testamentary or inter vivos trust is to be established, the assistance of an attorney is essential. The tax implications of setting up a special-needs trust are numerous and complex, and the laws affecting trusts in Maryland have recently changed. Properly done, however, the trust can be an essential legacy to help someone with special needs. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 29, 2024
Estates and Trusts
Estate Planning for the Newly Divorced Woman: A Critical Step Toward Your Future
Divorce is an emotional and often life-changing experience, regardless of whether it is amicable or contentious. For many women, especially those who have been married for years, it can feel like stepping into the unknown. As a newly divorced person, you may find yourself grappling with a whirlwind of financial, emotional, and logistical challenges. One crucial aspect that often gets overlooked during this transitional period is estate planning. After a divorce, the financial landscape shifts dramatically, necessitating an urgent need to review and potentially restructure your estate plan. Whether you had an estate plan in place during your marriage or are considering one for the first time, having a proper plan is essential to safeguard your assets, protect your children, and secure your future. Suffice it to say estate planning should be a top priority for newly divorced women. Update Your Will and Trust: Control Over Your Legacy During your marriage, your Last Will and Testament or Revocable Trust likely reflected decisions made with your former spouse in mind. After a divorce, these documents require a comprehensive overhaul. One immediate change to consider is removing your former spouse as a beneficiary unless there are specific legal obligations, such as alimony or child support, that necessitate their inclusion. Additionally, if you have children, your prior will may have named guardians for them. In light of your changed family structure, consider appointing different trustees for the funds you intend to leave to your children. While your former spouse retains certain rights as a biological parent, your estate plan allows you to designate who will manage your children's inheritance if something were to happen to you. Change Beneficiaries on Life Insurance and Retirement Accounts It is imperative to change the beneficiaries on life insurance policies, retirement accounts (such as IRAs and 401(k)s), and any other accounts where your former spouse is named. Accounts with designated beneficiaries pass directly to the listed beneficiary, bypassing the terms of your Will or Trust. Failing to update this information may result in your former spouse receiving these funds, regardless of your divorce. Many mistakenly assume that their divorce automatically revokes outdated beneficiary designations; however, this is not always the case. To ensure your assets are allocated to the correct beneficiaries, update these designations immediately. Consult your matrimonial attorney before making changes if your divorce is not yet final, as restrictions may apply. Revisit Powers of Attorney and Health Care Proxies An often-overlooked aspect of estate planning post-divorce is updating your powers of attorney (POA) and health care proxies. If your former spouse was named to make financial or medical decisions on your behalf, this designation should be revisited. While some states automatically revoke these fiduciary appointments upon divorce, others do not. Depending on your state, failing to update these documents could allow your former spouse to control your medical decisions and finances during a vulnerable time. Taking charge of this now is one of the most empowering steps you can take toward your newfound independence. Even if your state automatically revokes a former spouse’s right to act as a fiduciary under a POA or a health care proxy, it is imperative that you have a successor to act in your former spouse’s stead. As with any fiduciary role, you must appoint someone you trust: whether it is a family member, a close friend, or an adult child, someone should be appointed to handle these responsibilities should you become incapacitated. Planning for Your Children’s Future Divorce significantly impacts your minor children’s future—emotionally, financially, and legally. Although your former spouse retains certain financial and custodial rights, you can use your estate plan to specify your wishes regarding their upbringing and financial care. Consider establishing a trust for your children to ensure their inheritance is managed responsibly by someone you trust, particularly if you have concerns about your former spouse’s financial management. Appoint a trustee who will oversee the disbursements to your children over time, even if your former spouse is their guardian. Post-divorce is also a good time to reassess your life insurance needs. You may need additional coverage to ensure that your children are well provided for in the event of your passing, especially if you are the primary caregiver or breadwinner post-divorce. Protect Your Assets and Build a New Financial Legacy It is well-known that divorce has a disparate financial impact on women versus their spouses. Divorce often leaves the divorced woman in a starkly different financial position than what she had during her marriage. You may now own a home solely in your name, with the bills to match. Proper estate planning and consultation with a trusted financial planner provide you with knowledge and control over how these assets are distributed when the time comes. Proper planning provides a platform for you to rebuild and protect your financial legacy for the future. If your spouse previously managed the family finances, it is not uncommon to feel uncertain about your financial independence. Even if you were the primary financial manager, your current financial landscape may differ significantly from what it was during your marriage. Working with an estate planning attorney and a trusted financial advisor will help you get organize your finances, understand your current standing, and plan for long-term security. Moving Forward with Confidence Divorce marks the end of one chapter while opening the door to new beginnings. Though the process can be overwhelming, estate planning is an essential tool that offers clarity and control. By taking proactive steps now, you can ensure that your assets, loved ones, and legacy are protected as you embark on this new phase of your life. Partnering with a trusted estate planning attorney will guide you through this process, allowing you to focus on rebuilding your life with confidence. You have the power to shape your future, and estate planning is one of the most empowering steps you can take.
October 28, 2024
Mergers and Acquisitions
Risk Challenge: Bridging the Gap
Typical Professional Advisor Approach: Hates risk Paralyzed by risk Gap and Disconnection Between Typical Advisor and Typical Entrepreneur Typical Entrepreneur/Business Owner Approach: Embraces risk Views risk as gateway for opportunity My Approach to Bridge Marrying my 25+ years of practical understanding of business to specific clients’ risk tolerance profiles in order to educate and empower clients to make informed decisions. Entrepreneurs are a different than most people. Entrepreneurs embrace risk…every day. Business and personal risk to an entrepreneur are always present. Just ask an entrepreneur about their personal guarantee of the business’ debt (as an example). The smart management of risk by an entrepreneur is how he or she advances the business and sleeps at night. The problem is that most advisors working on behalf of business entrepreneurs approach risk from a position of fear and absolute avoidance. Thus, with the entrepreneur embracing and needing risk to advance business on one side of the spectrum, and the typical advisor on the other side of the spectrum, a large divide is created between the two parties and miscommunication and disconnect are often the end result. Like an entrepreneur being different, my approach is also different than most advisors. My job is to advise the entrepreneur of the potential risks associated with an action – and the job of my entrepreneurial client, once educated, is to let me know how little or much he or she “cares” about the risk. If my client does not “care” about the risk, I don’t waste valuable resources on it. However, if my client does “care” about the potential risk, I spend my time working to manage and mitigate the associated risk. Knowing that proper risk management is the key to helping entrepreneurs advance their business allows me and my clients to sleep well. Originally posted 7/18/2018, no content changes.
October 24, 2024
Business
Why Are the Fees to Sell a Business So High? It’s a Matter of Expectations
“How much will it cost to sell my business?” It seems like a reasonable enough question—and a business owner is wise to plan ahead and think about the financial impact of merger, acquisition, or other business transactions early on. However, focusing on what you’ll pay to sell a business is a classic example of “missing the forest for the trees.” Or, to put it another way, missing the sale for the fees. I get it. Legal costs are never pretty. Most business owners are fortunate enough to only pay attorney’s fees periodically, on an as-needed basis, for relatively small projects. We’re talking about document review, collections, intellectual property development, and so forth. If you’re really unlucky, you may need to bring on a lawyer for litigation. The associated bills aren’t pleasant, but they won’t bankrupt you (and if they do, you hired the wrong attorney). When you have the opportunity to consummate the sale of your company, on the other hand, you can expect to receive the largest legal bill of your lifetime. Depending on the size of the deal, your attorney may charge you upwards of six figures. In any other situation, the price would seem exorbitant—outrageously so. But a business transaction isn’t like other situations. It’s an extraordinary event with exponentially higher stakes than an owner is used to. No business milestone compares. Yes, you’ll receive the largest legal bill of your lifetime—because you’re earning the biggest payday of your lifetime. It’s a matter of scale and complexity. You will not get a good second “bite of the apple.” For sellers, some level of legal “sticker shock” is understandable. Few people on Earth can normalize earning several million dollars, or several hundred million, at once. The problem arises when a business owner handcuffs their advisors due to fee constraints. The handcuffs could have unintended implications for a seller. I recently represented a client who had grown accustomed to relying on legal assistance from a family friend. He was used to essentially paying his lawyer a couple of bucks and a case of beer. When it came time to sell his business, the client realized he needed a different caliber of attorney—but failed to adjust his expectations accordingly. When he learned he owed approximately $300,000 in legal fees, I watched the color drain from his face. Keep in mind my client’s business sold for $75 million. Our fees amounted to less than 1% of the total sale price. That’s in line with (admittedly loose) industry standards—if not below. My client knew how many hours were invested in the matter—and he had the budget in mind before the deal commenced. He knew a substantial bill was coming. But it wasn’t tangible for him until the end. The moral of the story? Don’t wait until after you’ve sold your business to think about the costs of selling your business. Develop a financial plan—and speak to your advisors to understand the moving parts and inputs to a transaction. Be prepared to spend substantial fees paying your attorney, investment banker, accountant, M&A advisor(s), and any other professionals involved in your team. After all, the sale of your business likely will be the largest financial transaction of your lifetime. Then, move all that to the back of your mind and prepare yourself for the biggest question ahead: what you’ll do with all that money after you close?
October 17, 2024
Family Law
Creative Co-Parenting Ideas for a Memorable Halloween Celebration
Halloween is a magical time for kids, filled with costumes, candy, and spooky fun. However, for co-parents, it can also pose challenges when it comes to sharing the holiday. With a little planning, it's possible to ensure that Halloween remains special for your children while also making co-parenting during this festive season easier for both parents. Here are some creative custody arrangements to consider: Split the Day: One parent can take the morning and early afternoon with the kids, filled with activities like Halloween crafts, pumpkin carving, or a spooky movie marathon. The other parent can then take over for trick-or-treating in the evening, letting each parent create special memories. Alternate Years: One year, the kids spend Halloween with one parent, and the next year, they switch. This arrangement allows each parent to create their own unique traditions every other year, ensuring everyone gets their turn to enjoy the holiday. Double the Fun: If you and your co-parent live nearby, consider splitting the trick-or-treating route. Start in one neighborhood and finish in the other, allowing both parents to share in the excitement while creating a seamless and fun experience for the children. Host a Joint Halloween Party: If you have a friendly co-parenting relationship, why not throw a joint Halloween party? This allows both parents to celebrate with the kids together, fostering a fun and inclusive environment while building positive memories as a family. Halloween Week: Extend the festivities! One parent could focus on pre-Halloween activities like haunted house visits or costume shopping while the other takes charge on Halloween night. This gives the kids a full week of fun and ensures both parents get quality time to enjoy the season. The key is to create an arrangement that works best for your family. Open communication and flexibility are crucial in ensuring your children have a fun and memorable Halloween, regardless of where they celebrate. Even if co-parenting presents its challenges, thoughtful planning can make Halloween a joyful and fun occasion for everyone. Wishing you all a Happy Halloween filled with wonderful memories!
October 15, 2024
Labor and Employment
Top California Court Rules Gig Workers are Independent Contractors
In a recent ruling, the Supreme Court of California has allowed Prop 22 to stand, meaning more than 1.4 million Californians who work as app-based gig workers for companies such as Uber, Lyft, DoorDash, and Instacart can continue to be categorized as independent contractors as opposed to employees. This is just the latest development in the evolution of employee classification in the state, and it surely will not be the last. In this case, the Court upheld Prop 22, a 2020 voter-approved law allowing gig economy platforms to classify drivers as independent contractors rather than reclassify them as employees in California. The Court rejected claims brought by drivers and a labor union that the law is unconstitutional, citing interference with lawmakers’ authority over matters dealing with workers’ compensation. Prop 22 defined a new classification for workers entitled to limited benefits, including healthcare subsidies, occupational accident insurance, disability insurance, and a net earnings floor based on the state minimum wage, but not necessarily all rights granted to full-fledged employees. Numerous challenges have been raised to the legislation, which was reversed in 2021 and then reinstated in 2023 by the courts. The July 25, 2024 Supreme Court ruling ends the long legal fight over Prop 22 for now and is a significant win for rideshare giants Uber and Lyft, which have fought to classify their workers as contractors. While this ruling permits gig-work companies to treat their California drivers as independent contractors, it's important to note that there is still the possibility of future legal challenges to Prop 22. The potential for further legal action adds an element of intrigue to the ongoing debate about the classification of gig workers, which has been scrutinized in several state legislatures recently. However, this decision applies specifically to rideshare drivers in California.
October 14, 2024
Business
What Message Are We Sending When We Say, “We Are Busy?”
Have you been busy lately? I’ve been busy. We’ve all been busy. Everyone, it seems, is really busy—super busy, incredibly busy—so, so busy. It’s become something of a greeting, in fact: “How are you?” “I’m all right—really busy.” “How’s work?” “Oh, you know, work’s been busy.” “How’s your family?” “Well, with school, and the kids, and the dog… things are busy!” Frequently, we’re not just busy but “swamped” or “crushed” by our daily activities and obligations. It’s almost as if we take pride in how out of control it all seems or how overwhelmed we feel. And yes, busyness is a feeling. So, why do we frequently tell others we’ve been “busy” or “swamped?” If I had to guess, I think we use these terms as a means of communicating success. No one wants to say they have no work or no clients—or no life, for that matter. Busyness also (conveniently) obfuscates the choice to prioritize one thing over another. Consider how often “I’ve been busy” follows “I’m sorry.” But just as “sorry” loses meaning with repetition, “busy” can’t insulate us from the consequences of our decisions. Nor can it affect how our words are received by others. If you’re not careful, a client may hear “I’m busy” as “I don’t have time for you” or “I can’t give you my best effort.” I’ll give an example. A few weeks ago, I approached a landscaping business. I knew the current season—late spring, early summer—would be a busy time for the company, but I figured they would be prepared for it and happy to take my business. The company was too busy to take my work. So, I went with a competitor. I wonder how the owner of the first business will feel when January comes around, and the business is not so busy. Missed opportunities are one of the many risks the always-busy face. I recently heard about a company that lost a multi-million dollar award because the would-be customer thought the organization lacked the time and capacity to handle the work. Employees had transmitted the company’s busy status to the prospect—a couple of offhand remarks was all it took. Of course, if you run a business, there will be times—many times—when your company is unable to meet a certain deadline or deliver results within a given timeframe. In these circumstances, the wise move is not to turn clients or customers away or stunt the conversation with a blanket “I’m busy” but to manage expectations. Take a moment to think past your current feelings of stress and consider the other party’s needs: Can the project wait a week? Would the client be willing to pay rush fees? Use that busy period as an opportunity to negotiate, consider your boundaries, learn, grow, and establish better lines of trust and communication. You should never promise what you can’t deliver, but that doesn’t mean you always have to say “no.” The old saying holds true: make hay when the sun is shining. When there is business, work harder and work longer. There is no guarantee a customer or client will come back if you turn them away now. Every relationship is important, and work arrives when it arrives—not always when it’s convenient. And remember: words have meaning. The next time someone asks how things are going, try something besides “I’ve been busy.” How about “business is good?” It is the truth, after all. Originally posted 6/13/2019, no content changes
October 10, 2024
Commercial Litigation
Does Neurodiversity Matter?
Is your organization “neurodiverse?” Do you care? Should you? I recently caught a podcast promoting "neurodiversity" and “neurodivergence” - terms with which I was not previously familiar. If you, like me, are new to the concepts, I commend you to the following vocabulary lesson: Neurodivergent & Neurodiversity: Meanings & Examples (exceptionalindividuals.com). Seems my ADHD affliction casts me unexpectedly among an often-marginalized minority group of "exceptional individuals." Trust me, the dual entendre is not lost on me. I've not yet fully looked into the naming decision. However, I am confident the dual meaning of "exceptional" was purposefully adopted. As a newly self-aware neurodivergent and one serving on our law firm’s DEI Steering Committee, I now find myself questioning the measures and manners of diversification we choose to promote (and how many more we consciously choose or unknowingly fail), both individually and collectively, to recognize. How narrowly or broadly should we be promoting diversification of our firm’s workforce? Much like the LGBT community itself has struggled and still struggles today to determine and agree upon who to welcome under the tent, to be true to its name, ought, perhaps, those promoting DEI initiatives take a moment to appreciate and address the reality that the pillars of the movement, focusing for the moment only on diversity and inclusion, might be more narrowly or broadly defined. How many cynics and skeptics pre-disposed to reject DEI initiatives as inappropriate race, sexual preference, and/or gender-based proxies might soften their opposition if the storyline were recast so as to avoid altogether a "we-they" lens and be contextualized instead by the guiding concept that a heterogeneous workforce benefits everyone? President John F. Kennedy self-deprecatingly credited his success to having surrounded himself with a diversity of opinions, believing that a cabinet of like-minded “yes-men” would be self-defeating (and mostly redundant). Leaving for another day a more thoughtful look at the inequities sought to be addressed by the “E” in our collective DEI efforts (and noting in this context as well, the separate quest of some to expand such initiatives and their overarching acronym to recognize a “B” for Belonging, where everyone is not only invited to have a seat at the table but also is made to feel welcome to do so), encouraging and promoting diversity and inclusion ought, fundamentally, be founded upon a conscious effort to achieve a sum greater than its parts by bringing together those of differing perspectives. As another exceptional individual shared with me on this point, it’s not a “zero-sum” situation where one group’s loss is another’s gain. Everyone benefits! So, I ask again . . . is your organization neurodiverse? Should you care? Hopefully, we can all agree, at least, that knowing and appreciating what neurodivergence means is a good first step in answering the question. Understanding the potential value of incorporating neurodivergent individuals in professional work environments and, in turn, harnessing such potential virtually assures “group-think” avoidance. What naturally flows from this recognition is an appreciation that diversity, in general, is a favorable objective. Striving to achieve a more diverse and inclusive work environment is important because, just as a rising tide lifts all boats, diversity, by definition, brings a broader depth of experiences, perspectives, and ways of looking at problems, everyday situations, and, yes, even legal issues and arguments. Whether to consider and promote diversity -- neurodiversity or otherwise! -- is not simply an objective (or subjective!) question of doing the right or wrong thing. Nor, I suggest, is promoting a DEI agenda necessarily a matter of identifying and overcoming biases or prejudices (although these certainly play an unfortunate and unacceptable role in environments developed absent DEI considerations). Rather, I believe caring about issues such as neurodiversity and diversity more generally leads to avoiding tendencies towards like-mindedness and “group-think,” and, speaking apolitically, I believe that President Kennedy had it right when he made a point of assuring that a diversity of opinions informed his ultimate decision-making. Should you care if your organization is neurodiverse? Of course you should.
October 7, 2024
Business
What M&A Buyers Lose by Keeping Their Closing Checklists to Themselves
I recently represented a group of business owners in the sale of their company. As with any merger or acquisition, the transaction demanded tremendous patience, effort, and commitment from all people involved. For my clients, however, the deal was far more onerous than it needed to be — because the buyer’s attorney chose not to work from a closing checklist. A closing checklist can be thought of as a shared roadmap for an M&A transaction. It lays out all the steps that must be taken to bring the deal to fruition, specifying the roles and responsibilities of the buyer, the seller, and any other participants. Checklists cover everything from sophisticated legal and financial considerations (e.g. intellectual property searches, lien releases, third-party consents) to minute particulars such as signatures and wiring instructions. Whatever its level of detail, any checklist is better than none. Deals without closing checklists sometimes waffle as parties experience distrust, restlessness, and confusion over priorities. While this transaction fortunately did go through, my clients faced significant friction and frustration. At times, a collapse appeared likely. Instead of providing a closing checklist, the buyer essentially assigned us several dozen to-dos, which was just a rundown of tasks we needed to complete in order to satisfy their pre-closing requirements. It was a one-sided, opaque way of doing business. It left us feeling as though we were operating in a vacuum and never working fast enough. This kind of approach not only strains the lines of communication between a buyer and seller, but also tends to dissolve any kind of meaningful negotiations. When you’re rushing through line items without the larger context of the deal in mind, you give up your leverage. A closing checklist is essential because it situates parties within the same universe and keeps their attention oriented on a shared goal. It’s a common point of reference for discussions and perspective — a constant reminder that all that labor and stress is in service of a mutually beneficial transaction. If you don’t have a closing checklist, you become blind to the other side’s objectives as well as your own. What is particularly baffling about the decision to keep the seller in the dark is that it creates more work for the buyer. Closing checklists are generated in almost every transaction. They flow naturally from the buyer’s documentation and due diligence. There’s no additional effort or risk to making them generally available to the other party. By refusing to share their checklist, the buyer chooses instead to dole out the information in a piecemeal manner, potentially causing errors and slowing down the deal. It’s the difference between telling a seller what you aim to accomplish and telling them what to do. It’s turning what should be a partnership into a managerial relationship. And ultimately, it’s unproductive. Few owners can put up with being bossed around—especially when they’re in the middle of exiting their business. Originally posted 09/26/2019 - no content changes.
October 3, 2024
Family Law
Navigating Family Law Matters During Rosh Hashanah: Insights from a Family Law Attorney
As Rosh Hashanah approaches, Jewish families prepare to usher in a new year filled with hope, reflection, and renewal. This sacred holiday is an opportunity to consider how we can strengthen our relationships and align our actions with our values. For those facing family law matters—whether divorce, custody disputes, or estate planning—Rosh Hashanah is a meaningful moment to reassess, reset, and renew our commitment to family harmony. A Time for Reflection and Reconciliation Rosh Hashanah's themes of introspection and reconciliation resonate deeply in family law. This period encourages us to reflect on the health of our family relationships. Are there unresolved conflicts that need attention? For example, if you're navigating a divorce or custody dispute, consider initiating open dialogues or seeking mediation to address these issues constructively. Reflecting on how to approach these matters with empathy and understanding can provide clarity and pave the way for more amicable resolutions. Embracing Teshuvah in Family Law The concept of teshuvah (repentance or return) is central to Rosh Hashanah and can guide the resolution of family law matters. In a legal context, teshuvah may involve mediation or collaborative divorce, where both parties work together to reach a fair agreement. For separated or divorced parents, teshuvah can mean recommitting to co-parenting with kindness and respect. Common challenges, such as difficulty communicating or differing parenting styles, can be addressed through parenting coordination or counseling. These approaches not only reduce conflict but also model positive behavior for the next generation. Renewal Through Estate Planning Rosh Hashanah is also an ideal time to consider the future. For many, this season of renewal is an opportunity to review or update estate plans. Stephanie F. Lehman, Executive Advisor to the Family Law Practice Group at Offit Kurman, highlights the importance of regularly revisiting these plans: "Life changes—such as marriage, divorce, birth, or death—often require adjustments to wills, trusts, or guardianship designations." Schedule a review with your attorney to ensure your estate plan reflects your current wishes. Common updates might include changing beneficiaries, adjusting asset distributions, or revising guardianship designations. Prioritizing Clear Communication and Harmony As families gather during Rosh Hashanah, it's a good time for open, honest conversations about important issues like prenuptial agreements or future care plans for aging parents. These discussions, grounded in mutual respect, can prevent misunderstandings and foster a sense of security and peace of mind. Addressing potential concerns early, such as planning for long-term care or discussing financial responsibilities, can help avoid conflicts and ensure that everyone's needs are met. Focusing on the Best Interests of Children For families navigating divorce or custody disputes, Rosh Hashanah serves as a reminder to prioritize the best interests of the children. This holiday offers a chance to reassess parenting plans and schedules to ensure they meet the children's needs. It's also a time to model forgiveness, flexibility, and cooperation, demonstrating to children that even amid conflict, their well-being remains paramount. Strategies such as regular parenting plan reviews or involving a child specialist can help align parenting arrangements with children's evolving needs. Moving Forward with Hope Rosh Hashanah teaches us that every ending is also a new beginning. For those facing challenging family law issues, this holiday encourages us to create positive change, find common ground, and move forward with hope. Whether resolving disputes amicably, planning thoughtfully for the future, or nurturing our most important relationships, Rosh Hashanah inspires us to embrace renewal. Shanah Tovah Umetukah—Wishing you a Good and Sweet New Year filled with renewal and harmony.
October 2, 2024
Elder Law and Advocacy
Elder Abuse Exposed: Understanding the Crisis and Lessons from Stan Lee’s Story
Elder abuse is a widespread issue that impacts millions of elderly individuals worldwide. It often manifests in different forms, including physical abuse, emotional or psychological mistreatment, neglect, and, most commonly, financial exploitation. Vulnerable older adults—particularly those experiencing cognitive decline, frailty, or social isolation—are particularly at risk. Among the most high-profile cases of elder abuse in recent years involves Stan Lee, the legendary creator of Marvel Comics. Understanding Elder Abuse Elder abuse can happen anywhere, including in homes, nursing facilities, or even public spaces. A common factor among these cases is that the abuser is generally someone trusted by the elder, such as caregivers, significant others, or family members. In fact, statistics reflect that nearly 60% of financial abuse is committed by a spouse, significant other, or family member. According to the World Health Organization (WHO), one in six people aged 60 and older has experienced some form of abuse in community settings within the past year. The actual numbers are likely much higher, as many cases of elder abuse go unreported due to fear or shame. Stan Lee: A Victim of Elder Abuse Stan Lee, the co-creator of iconic superheroes like Spider-Man, the X-Men, the Avengers, and many other beloved superheroes, passed away in 2018 at the age of 95. His final years were overshadowed by a deeply troubling elder abuse scandal. After losing his wife and advocate of 70 years, Lee's physical and mental health deteriorated significantly, leaving him increasingly dependent on others to manage his personal, financial, and creative affairs. Allegations emerged that Lee fell victim to financial and emotional abuse at the hands of his former business manager, who had become a trusted confidant. As with most elder abuse cases, the manager allegedly isolated Lee from his family and longtime associates, seized control of his finances, misappropriated millions in assets, coerced him into public appearances, and restricted access to family members and those who had supported Lee for decades. Furthermore, this manager even relocated Lee into a new home without informing his only child. The Financial Exploitation of Elders Lee's case is not an isolated incident; financial exploitation is the most common form of elder abuse. While Lee's situation is noteworthy due to the unusual occurrence of financial exploitation among wealthy individuals with significant assets, elders of all economic backgrounds—especially those with diminished mental capacity—are at risk of manipulation and exploitation. In Lee's case, the exploitation was particularly egregious, given his status as a global pop culture icon with a multimillion-dollar estate. Although Lee experienced rapid exploitation within a year following his wife's death, most financial abuse unfolds slowly and subtly. It is important to keep in mind that this financial abuse can manifest as forgery, coercion in managing finances under the guise of assistance, or through more sophisticated and deceptive schemes involving multiple perpetrators. Sadly, statistics indicate that abuse and exploitation disproportionately affect elders with more modest means—those least equipped to handle economic setbacks in their later years. Alarmingly, nonwhite elders are particularly vulnerable, with reports showing they are 200% more likely to suffer from elder abuse compared to their white counterparts. Legal Protections and Reporting Cases like Lee's illustrate the urgent need for improved legal protections and reporting mechanisms for elder abuse. Although laws aimed at combating elder abuse exist, enforcement is frequently lacking. Most elderly individuals lack the capacity to seek help, which is often what makes them vulnerable in the first place. Alarmingly, those who might normally report such abuse are often perpetrators themselves. These factors, combined with the shame and fear associated with reporting, severely hinder the prosecution of these crimes. While many elder abuse units exist within law enforcement, significant gaps remain in the system due to a lack of resources and, from my perspective, a lack of empathy for senior victims. What We Can Learn from Stan Lee's Story The tragic story of Stan Lee's elder abuse serves as a powerful reminder that even the most celebrated individuals can fall victim to exploitation in their later years. It underscores the critical need for planning ahead and vigilance from both loved ones and legal authorities to protect vulnerable elders from abuse. For those caring for elderly loved ones, staying engaged, monitoring financial activities, and advocating for their well-being is essential. Preparation for potential incapacity can also help prevent victimization. Aging loved ones should have the proper legal documentation in place, such as a Power of Attorney and Trust instruments, which empower them to designate trusted individuals prior to their incapacity. Proper legal authority and the appointment of reliable individuals in positions of trust reduce the risk of exploitation by bad actors. Preparing for potential incapacity can also help prevent victimization. Aging loved ones should have essential legal documentation in place, such as a Power of Attorney and Trust instruments, which empower them to designate trusted individuals before they become incapacitated. Proper legal authority and the selection of reliable individuals in positions of trust reduce the risk of exploitation by bad actors. Despite the flashy headlines of Mr. Lee's case, elder abuse remains a largely hidden crisis. Greater societal acknowledgment of its existence, coupled with stronger legal protections, will better ensure that our elderly population can live with dignity and security. Protecting elders from exploitation is a moral imperative that requires collective awareness, legal guidance, and action. Whether famous or not, senior adults deserve respect, care, and protection in the twilight of their lives, allowing them to age with dignity.
October 2, 2024
Intellectual Property
It’s a Plaintiff, it’s a Baby, it’s SUPERBABIES!
Able to cancel 4 trademark registrations in a single filing, a comic book company called Superbabies Limited has done what once seemed impossible: They have achieved the cancellation of trademark registrations for SUPER HERO and SUPER HEROES, registered since as far back as 1967 and jointly owned by comic behemoths Marvel and DC Comics. Superbabies claimed that SUPER HERO and SUPER HEROES are generic, and also that Marvel and DC had abandoned any trademark rights by failing to use the terms as trademarks. Although Marvel and DC entered an appearance in the Trademark Trial and Appeal Board (TTAB) proceeding, they never answered the petition for cancellation, leading Superbabies to file a motion for a default judgment. The TTAB, noting that Marvel and DC Comics did not contest the motion, ordered the cancellation and faster than Spiderman can scale a skyscraper, the registrations were canceled the same day. It's safe to say that Marvel and DC did not miss two deadlines by accident. Rather than bring out the Avengers to fight this tooth and nail, it is likely that they realized they couldn't win and instead opted for truth (that the marks are generic), justice (SUPER HERO and SUPER HEROES should be free for all to use), and the American way (allowing the judicial process to make the determination). Superbabies' Petition for Cancellation is fun. The first allegation is: "We live in a world of superheroes. For the better part of a century, superheroes and the superhero genre have ruled the imagination and inspired millions to achieve greatness." From there, it contains snippets of comics, including Marvel and DC comics, in which the heroes and villains alike make use of the legal system to achieve their means. It goes on to demonstrate why Superbabies believes that SUPER HERO and SUPER HEROES are generic. When Marvel and DC saw this, they probably realized that this was the sixth Infinity Stone and that their claim of trademark ownership had turned to dust.
September 27, 2024
Page 15 of 35
About the Blog
Receive timely content, newsletters and event information delivered to your inbox.
