Offit Kurman Blogs

Estates and Trusts

Equal Shares, Unequal Outcomes: Estate Planning Strategies for Parents and their Qualified Retirement Accounts

Typically, a parent wishes to treat their children equally in their estate plan and presumes they will achieve this goal by dividing all their assets into equal shares upon their death. Accordingly, they will designate their children as equal beneficiaries of their qualified retirement accounts, such as traditional IRAs and Roth IRAs. However, doing so without considering the individual circumstances of their children may be less tax efficient and may ultimately result in one child receiving more assets after the payment of taxes than their siblings. Traditional IRAs vs. Roth IRAs: Key Differences A traditional IRA is funded on a pre-tax basis, with the income taxes on any appreciation deferred until assets are withdrawn from the account. Traditional IRAs are subject to requirement minimum distributions (RMDs) when the account holder attains the age of 73. A RMD is the minimum amount that must be withdrawn from the IRA each year. Contributions to a Roth IRA, on the other hand, are made with after-tax dollars, and the distributions are withdrawn tax-free. In addition, there is no RMD requirement for a Roth IRA during the lifetime of the account holder. The Ten-Year Rule When the account holder dies, most beneficiaries must take distributions pursuant to the “ten-year rule,” which requires that the beneficiary withdraw the account assets in full within ten years from the date of death of the original account holder. During this withdrawal period, the beneficiary must take RMDs in each year that the inherited account is open. As these withdrawals are made, the beneficiary must pay the deferred taxes based on their individual income tax bracket. Notably, withdrawals from a Roth IRA account remain income-tax free to the beneficiary, and are not subject to the RMD requirement. Tax Benefits for Eligible Designated Beneficiaries (EDBs)  A beneficiary that is deemed an “eligible designated beneficiary” (“EDB”) is not subject to the ten-year rule and may take distributions from the inherited account over their lifetime. Thus, the account assets may continue to appreciate tax deferred over a significantly longer period of time. EDBs include beneficiaries that are not more than ten years younger than the original account holder, surviving spouses, beneficiaries that are deemed disabled or chronically ill, and minor beneficiaries.[1]. It will be inherently more tax efficient for a parent to name an EDB as a beneficiary of their qualified account because of the extended withdrawal period the beneficiary will have to take distributions from the account. Therefore, if a parent has two or more children, one of whom is deemed an EDB, and names each of them as an equal beneficiary of their IRA account, the child who is an EDB will ultimately receive significantly more assets than their siblings because the assets in the account will have significantly more time to appreciate tax-deferred. In addition, because of the extended withdrawal period, the beneficiary has more flexibility in choosing when to take distributions from the account to avoid getting bumped into a higher marginal income tax bracket. Accordingly, if the parent wishes that each of their children receive as nearly equal shares of their assets as possible, and one or more of their children are deemed EDBs, it may be better to provide a greater share of their qualified accounts to the EDB beneficiaries, and the non-EDB beneficiaries with a greater share of their other estate assets. Case Study: Tax Efficiency and Equalizing Shares What if the account holder does not have any beneficiaries who will be deemed an EDB? Even then, the account holder should still consider their children's individual income tax circumstances. Suppose the account holder is single with a Roth IRA with $1,000,000 in assets and a traditional IRA with $2,000,000 in assets. The account holder has two children: Alex, who is a stockbroker, and Jamie, who is a public school teacher. We can presume that Alex has more taxable income than Jamie and that Alex has a higher earning potential in their career. If Alex and Jamie were named equal beneficiaries of the traditional IRA, it is likely that the distributions from the account would bump Jamie into a higher income tax bracket in the years that they are received, thus generating more income tax liability. Alex’s distributions are almost certain to be taxed at a higher marginal rate than Jamie's. If Alex and Jamie are named equal designated beneficiaries of the Roth IRA, the distributions would be tax-free in the year that they are received, leaving their respective income tax brackets unaffected. Therefore, naming Jamie as a primary beneficiary of the traditional IRA, where distributions will be taxed at a lower tax bracket, and designating Alex as the primary beneficiary of the Roth IRA is likely more tax efficient and most likely to ultimately result in each child receiving equal shares of the assets after payment of income taxes. As this example illustrates, naming each child as an equal beneficiary of a qualified account may not result in equal distributions after the payment of taxes, frustrating the intentions of a well-meaning parent. Therefore, careful consideration must always be given to the individual circumstances of an account holder’s intended beneficiaries. [1] Minor beneficiaries become subject to the ten-year rule once they attain the age of 18.

January 23, 2025

Commercial Litigation

Five Things to Take into Consideration When Negotiating and Settling a Case

Settling a case is hard. Negotiating the terms and coming to an agreement can take weeks or months. But once the parties agree to the general terms of a settlement (e.g., the amount of money changing hands and the timing of the settlement payment), there are a number of other considerations for putting the settlement agreement in writing. Here are five things to know when you are negotiating to settle your case: You Can Protect Your Privacy Even though the documents filed in the lawsuit will remain public, the settlement details don’t have to be public. One effective tactic is to separate the settlement agreement from the “stipulation of discontinuance.” This allows the terms in the settlement agreement to remain private, with the only document being filed with the court simply stating that the parties have agreed to discontinue the case. You Can Set the Rules for After the Lawsuit A settlement agreement can also be useful for clarifying what the parties can and cannot do after the lawsuit. Often, parties agree to include a provision in the settlement agreement requiring the parties to keep the settlement terms confidential and not to disclose those terms to anyone. Some parties may even agree to a non-disparagement provision, requiring them to refrain from saying anything negative about each other. Although these are provisions that often can be overlooked when negotiating a settlement, they can help to permanently put the dispute to rest and assist the parties with moving past the lawsuit. Plan for What Happens if Someone Breaches the Agreement You may be feeling optimistic that you are finally settling your case. Not so fast. Contemplate what may happen if something still goes wrong: what if the settlement payment doesn’t come through? Or what if someone breaches some other part of the agreement? The settlement agreement should provide a roadmap for what happens next. You may want to include whether the breach of the agreement goes back to the court you were in or whether the dispute goes to arbitration. You also may want to have a provision stating that if the other side breaches the agreement, you are entitled to additional damages and that the other side has to compensate you for your attorneys’ fees. Including these terms in the agreement can save you resources and avoid the frustration of going back to court if the other side breaches. Don’t Overcomplicate It Lawsuits are stressful. Don’t add to that stress by making the settlement more complicated than it needs to be. Include the terms you need to wrap up the case and exclude those other terms that often don’t apply to your case or that you don’t need. Prioritize being clear with the terms you include, as sometimes a settlement agreement can go on for dozens of pages when just a fraction of that can suffice. Once You Sign, the Settlement is Final Before you sign a settlement agreement, make sure you understand each piece of the agreement. If you don’t understand some portion of the agreement, you may be taking on obligations you don’t know about or waiving rights that leave you worse off. Settling a case requires careful attention to detail, and drafting a settlement agreement that clearly reflects the parties’ intentions is critical to avoiding future disputes. By addressing these key considerations in your negotiations, you can ensure the settlement process is effective and that your interests are protected.

January 22, 2025

Estates and Trusts

The Hidden Cost of Failing to Plan

The Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients Mistake #3:  The Hidden Cost of Failing to Plan Art and collectibles, while beautiful and culturally significant, can pose significant estate planning challenges. At the time of death, these assets are subject to estate taxes based on their fair market value. Without proper planning, federal and state estate taxes—combined with the costs of selling the assets—could erode over 50% of a collection’s value. Art, as an alternative investment, began emerging in the 1970’s and has only boomed as a result of digitalization. Art as a profitable investment now consistently outperforms other asset classes such as the FTSE 100 and S&P 100.  According to 12 Wall Street Journal article, "The Art of Passing Along Art," highlights an unexpected problem faced by many collectors, particularly those who acquired their art in the 1950s and 1960s. These octogenarian collectors are discovering that their art collections have appreciated significantly more than their liquid assets. As a result, their estates often lack sufficient liquidity to cover estate tax obligations. For example, consider a New York estate with $40 million in liquid assets and $100 million in art. That New York estate will potentially incur a $63.5 million tax bill, forcing the executor to sell some or all of the art within nine months to satisfy the obligation. Such rushed sales often lead to undervalued transactions, significantly reducing the collection's realized value. In extreme cases, the entire collection might be sold for a fraction of its worth simply to meet the estate's federal and state tax liabilities. Strategic Solutions for Collectors Fortunately, there are various strategies to reduce the estate tax burden on art and collectibles. These include: Charitable Contributions: Using art to fulfill philanthropic goals can provide both estate tax relief and personal fulfillment. Lifetime Gifting: Strategic gifting of art during the collector's lifetime can shift value outside the taxable estate. Estate-Freezing Techniques: These methods help move highly appreciated (or soon-to-appreciate) assets out of the taxable estate. Moving the Collection out of state: Using limited liability companies and other entities can eliminate the potential for state estate taxes by changing the location of the assets. When considering these options, it’s essential to evaluate whether the collection holds more value as a cohesive whole or as individual pieces. Each strategy should be tailored to the collector's goals, ensuring that both financial and sentimental value are preserved for future generations.  Make sure you speak with a trusted estate planner who specializes in planning for large collections of art and other intangible assets.

January 21, 2025

Estates and Trusts

Ethical Wills: The Heart of Your Estate Plan

When most people think of estate planning, Trusts and Last Wills and Testaments usually come to mind. I have spent my career espousing the essential tools for ensuring an efficient transfer of assets from one generation to the next, planning for taxes and incapacity, and outlining health care desires. However, the standard estate plan does not capture something equally valuable: the values, lessons, and hopes that many wish to document for their loved ones. That is where an ethical will comes in. Ethical wills, also known as “Letters of Intent, or “Legacy Letters” are non-legal documents that convey the intangibles like morals, beliefs, and reflections on your life - both the highs and the lows.    What is an Ethical Will? A traditional Last Will and Testament or a trust directs how your tangible assets will be distributed upon your death. An ethical will instead can serve as heartfelt advice and guidance to your loved ones and future generations. While it is not legally binding, an ethical will can be deeply personal and meaningful. Ethical wills are not new. In fact, there is mention of an ethical will in the Book of Genesis in the Bible and they were traditionally recited orally to family members. It was not until the Middle Ages when they were recorded in writing with the hope that the message would be preserved and shared with future generations. Do you need an Ethical Will? The short answer is no. But considering the fact that in creating a traditional estate plan, most put significant time, thought, and energy into who should inherit and in what proportion, it likely would be appreciated and helpful to share your reasoning behind how you came to those decisions, or what you hope the beneficiary might consider when living their lives and using what you left to them. Content of an Ethical Will: Values:  Leaving your worldly goods, your home, and other financial assets to the next generation is certainly important, but your ethical will might explain to your beneficiaries the values that you lived by that enabled you to acquire those assets. It can provide a platform for you to share with your beneficiaries your principles, your beliefs, and the lessons learned in doing so. Strengthening Family Connections: The event or ceremony of sharing your ethical will together can be a truly powerful experience for a family. A document containing stories, anecdotes, and your successes and failures can help family members feel connected to your story and to each other during your life or long after your death. Clarifying Intentions: Sadly, the decisions and bequests made in a traditional will or trust can be misunderstood and lead to conflict within a family – having the opposite effect that you intended. An ethical will provides you with the opportunity to explain your reasoning behind the content of your legal estate planning documents, reducing the likelihood of misunderstandings or hurt feelings. Providing Comfort and Guidance: An ethical will should be a sort of love letter to your family in which you provide words of encouragement, share the joy you felt with your loved ones, and impart wisdom and advice for their future reference.  For those with religious beliefs, many choose to share how faith served as a touchstone if a parent or loved one is no longer here. Ethical wills can also provide a great source of comfort and strength during times of grief.   Get started: The best part of an ethical will is that you don’t need to hire a lawyer to start. Reflect on Your Life.  Consider the experiences that shaped you over the course of your life. What life lessons do you think are worth sharing with your loved ones for years to come?  Tell them to “take that risk” because it served you well. Do you have hopes for your loved ones for their lives? Now is the time to share those hopes for their higher education, or creating a family in the future. Is there something specific that you want to be remembered for? If so, convey what that is and why it’s important to you. Be Honest and Authentic.  This is not a formal legal document; you should write in your own voice. The whole point of an ethical will is to be heartfelt and a reflection of you. Get personal and write it as though you are having the most heartfelt conversation with your loved ones. Do not be concerned with form, grammar, or the legality of it all. It’s ok to be vulnerable and share your failures and your regrets. Nothing is Forever.  Let’s face it, things change and because of that, you can always revise and update your ethical will. Just as I tell clients that legal wills and estate plans should be updated, your ethical will should also be updated. Relationships, net worth, health, values, and perspective are not permanent. Do not be afraid to reconsider and revise.  Sharing is Caring.  In most cases the ‘reading of a will’ is only something made for TV. With an ethical will, the choice is yours: you may decide that you want your ethical will read prior to revealing the contents of your legal will to set the stage for how your assets are to be distributed, or choose to share your ethical will during your life. Whether it is something left behind to be read after your death, or if you prefer gathering your family together to foster a discussion about legacy and lessons, there are no rules how you share.  Combining an Ethical Will with Traditional Estate Planning.  While an ethical will is not a substitute for a legal will or trust, it certainly can complement your estate plan by adding an emotional, encouraging, loving, and sometimes spiritual dimension. Work with your estate planning attorney to ensure your proper legal documents are updated and in place and consider crafting an ethical will to share with your lawyer so that they can better understand what is important to you and how to help you accomplish your goals. Creating an estate planning does not just have to be about the legality of moving assets from one generation to the next, it can be much more. Including an ethical will in your plan may ensure that your lessons, love, and legacy are preserved for future generations.

January 21, 2025

Labor and Employment

Better Call Sarah: Political Speech in the Workplace

Dear Sarah, Help! After this last election, it seems everyone at the office has something to say about politics, and I’m caught between my mission to keep the peace and the very real risk of stifling free speech. Is there a way I can manage these heated political discussions without turning our office into a debate club or accidentally infringing on anyone's rights? Sincerely, Politically Puzzled in HR Dear Politically Puzzled in HR, Political discussions at work intersect with various labor and employment laws, including anti-discrimination regulations, the National Labor Relations Act (NLRA), state laws on mandatory meetings[1], and voting leave policies. Political conversations can also give rise to claims of discrimination, harassment, or retaliation under federal, state, and local anti-discrimination laws. By being mindful of both your right as an employer to set boundaries on political expression and employees’ rights in this area, you can comply with the law and maintain a positive workplace culture. Misconceptions About Free Speech in Private Workplaces Many people assume that the First Amendment guarantees unlimited free speech rights in all workplaces, but it actually applies mainly to government regulation, not to private employers. This means that, generally, private companies have broad discretion to manage political speech at work. However, federal laws like the National Labor Relations Act (NLRA) and anti-discrimination statutes create important limits on this authority. Protected Activities Under the National Labor Relations Act (NLRA) The NLRA, for instance, protects employees—even in non-union settings—when they engage in “concerted activities” related to workplace conditions, such as discussions about pay or safety. If political discussions are directly related to these issues, they may also fall under protected activity. Employers should take care in addressing such conversations, especially as recent guidance from the National Labor Relations Board (NLRB) suggests that protected discussions may now include social justice or other political topics related to employee rights. Risks of Political Speech Leading to Discrimination Claims Even though political views themselves are generally not protected under anti-discrimination laws, discussions that touch on protected characteristics (e.g., race, gender, national origin) may lead to complaints of harassment or discrimination. For example, political debates on topics like immigration or reproductive rights could be seen as targeting certain groups, creating a hostile work environment. Employers should handle any related issues consistently and fairly to prevent claims of biased or discriminatory treatment. State and Local Laws Offering Additional Protections Additionally, some states have laws that prevent employers from disciplining or restricting employees based on their political affiliations, views, or party associations. In some cases, state protections extend beyond traditional political speech to cover social justice advocacy and other issues. Employers must also be aware that state and local laws often provide greater protections for employees than federal laws. For example, some states offer protections similar to First Amendment rights for private employees. Employers should also be familiar with the differences between federal EEO laws and state-level EEO regulations to ensure compliance. Developing Clear and Inclusive Policies Employers should develop clear, effective policies that align with legitimate business interests while minimizing ambiguity around what political activities and expressions are allowed. The policy must consider activities and communications protected under the NLRA as well as relevant state and local laws. To reduce the risk of discrimination, harassment, or bullying claims, employers may want to discourage supervisors from engaging in political discussions with subordinates, as supervisors are not protected by the NLRA. However, these policies must also be carefully crafted to comply with state-specific laws. Additionally, employers should consider implementing a social media policy to set clear expectations for online behavior. Political statements—especially on social media or in public spaces—can have a direct impact on your company’s reputation. Public backlash can arise if an employee, visibly linked to the organization, expresses controversial views. In today’s digital landscape, social media posts are just as influential as in-person comments, so it’s essential to handle online expression carefully. Many states protect employees’ privacy, meaning employers generally cannot demand access to personal social media accounts. If disciplinary action is needed, verify that any content was publicly accessible and relevant to workplace conduct to avoid legal risks. A policy on social media use, drafted in line with state and federal regulations, can help clarify expectations for how employees express their views online. Managing Off-Duty Conduct Employers should be mindful of employees’ rights to engage in political expression outside of work. In California, Colorado, New York, and North Dakota, laws protect employees from adverse actions based on lawful political activities conducted outside of work hours. Employers should exercise caution when considering disciplinary actions for off-duty conduct to avoid violating state-specific protections. Fostering a Respectful and Inclusive Workplace Culture Addressing political speech in the workplace requires a careful balance. A comprehensive, consistently applied policy that values respect and inclusivity can help maintain a positive work environment while respecting employees’ rights. By fostering a respectful culture, employers can reduce potential conflicts and support a productive, harmonious workplace. In the current polarized climate, taking proactive steps to handle political speech thoughtfully can strengthen workplace morale and protect the company from legal risks, ensuring a fair, respectful environment for all.  [1]Mandatory employer-sponsored or so-called “captive audience” meetings are those an employer convenes during working hours to educate employees on certain topics, particularly the employer’s views on unionization. Although the NLRB has yet to issue a formal ruling on this issue, it is anticipated that the agency may take a strong stance against these types of meetings.

January 17, 2025

Estates and Trusts

Maryland’s 2025 Budget Proposal: Changes to Estate Taxes and What They Mean for Estate Planning

Recent Maryland proposed budget cause for close estate planning review before the sunset of the federal Tax Cuts and Jobs Act. This week, Maryland Governor Wes Moore released his proposed 2025 budget to the public and submitted House Bill 352 to the Maryland Assembly for review and approval. The proposed changes in the budget have a significant impact on estate planning, especially as it relates to Maryland’s death taxes. Maryland is the sole state in the union that assesses both an estate and inheritance tax against the estates of resident decedents. The governor’s budget proposed abolishing Maryland’s Collateral Inheritance Tax on probate and non-probate transfers and inter vivos gifts made within two years of the date of death. The proposed budget does not abolish Maryland’s Estate Tax, but significantly reduces the exemption amount.  Maryland’s current estate tax exemption is $5,000,000 per individual and $10,000,000 per married couple. The newly proposed budget would reduce the estate tax exemption by more than half to $2,000,000 per individual and $4,000,000 per married couple. Under the terms of the budget, the changes to Maryland’s Estate Tax exemption will go into effect in July 2025. Should the proposed budget and changes go into effect, many Marylanders will need to take a renewed look at their estate planning to mitigate the impacts of the changes to the new state estate tax threshold.

January 17, 2025

Adopting the Moving Van Approach

The Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients Mistake #2: Adopting the Moving Van Approach When it comes to estate taxes, the Internal Revenue Service (IRS) expects all tangible personal property to be properly reported on Schedule F of Form 706. This includes any valuable assets such as art collections, antiques, or other collectibles owned by the decedent. Failing to report or undervaluing these items is a common audit trigger and can turn what might have been a clean estate tax return into a costly investigation. But what happens when a client suggests they intend to "make their valuable art collection disappear" to avoid estate tax inclusion? A Word of Caution No Statute of Limitations on Tax Fraud Tax fraud—including estate tax fraud—is not bound by a statute of limitations. If an art collection or other personal property goes unreported on Form 706, the IRS retains the authority to pursue unpaid taxes, interest, and penalties indefinitely. Moreover, these liabilities can extend to the decedent’s heirs, potentially creating financial and legal challenges for the next generation. Impact on Provenance and Marketability Beyond tax considerations, failing to accurately value and report an art collection can undermine its provenance. Provenance—the documented history of ownership—is critical for determining an item's authenticity and value in the marketplace. Without proper documentation, including accurate estate tax filings, selling items at their fair market value can become difficult, if not impossible. Practical Advice It's essential to educate clients on the long-term consequences of attempting to sidestep estate tax obligations. Transparency and compliance not only minimize audit risks but also preserve the integrity and marketability of valuable collections for future transactions. By taking a proactive and informed approach, you can guide clients toward strategies that align with both their financial goals and legal responsibilities.

January 15, 2025

Construction

How Should Construction Contracts Approach Potential Tariffs?

As an initial primer: tariffs typically work as a tax, charged on goods purchased and imported to the United States from a foreign country.  The tariff is charged as a percentage on the price paid for the foreign good.  Tariffs are collected at the ports where the goods enter the country.  Typically, the tax is paid by the importer directly to the US Customs and Border Protection Service.  And, typically, the tax is required to be paid to release the good from the port, although there are some methods to slightly adjust that timing by satisfying certain conditions. A tariff on construction materials would likely result in additional costs for the project.  Intuitively, a tax on the imported materials simply causes the goods to cost more.  Also, tariffs on imported goods might cause increased demand for specific alternatively sourced materials (whether that be domestic or non-tariffed foreign sources), which then leads to increased costs for those alternative sources. As a general rule of thumb, and reflected in most standard construction contracts, the contractor is responsible for providing the labor and materials for the construction project at the agreed upon contracted price, and the contractor is not entitled to any adjustment to the price on the basis of changes in taxes or laws, unless there is a contract clause specifically affording such relief.  For example, the AIA A201-2017 section 3.6 General Conditions provides that the contractor is responsible for all taxes on the work.  In most standard contracts, there is no specific clause that affords the contractor relief or adjustments in the event of changes in taxes, laws, or tariffs.  Depending on the specific contract, perhaps one could argue that a tariff is an unforeseeable event beyond the control of the contractor; however, most contract clauses would afford limited or no relief, typically an extension of time at best, but not compensation.  An example of this difficulty is the force majeure clause that might exist in a contract.  Under most contracts, tariffs are not specifically identified in the force majeure clause, and most force majeure clauses provide an extension of time as the remedy and do not afford additional compensation to cover the costs.  Some contractors might be tempted to argue that relief should be afforded under the doctrine of commercial impracticability.  That too, is a difficult path.  Commercial impracticability sometimes affords relief to a contractor when circumstances on a project have changed so drastically that the performance of the contract is commercially impractical.  Theoretically, if a tariff increased the costs so astronomically to make the job financially impossible, there could be an argument under the doctrine.  But these circumstances are relatively rare, and courts are rather critical of this argument. On public federal projects, an argument could be made that a contractor is entitled to equitable relief and an adjustment to the contract price under FAR 52-229.3, which provides for an equitable adjustment for new taxes that arise during a project.  It is unclear, however, whether this argument would succeed, because it is uncertain whether a tariff constitutes a new tax under FAR 52-229.3.  There is a dearth of decisional law on this point, and a 2022 Armed Services Board of Contract Appeals decision rejected this argument. Thus, a tariff on construction materials is likely to increase the costs, and there is no obvious straightforward right to relief in most default contracts.  A contractor should consider negotiating a specific clause to address the cost item.  A list of potential approaches, including specific negotiated clauses, including the following: Price escalator clauses for either tariffs or specified categories of materials; Contingencies or allowances for materials of concern or tariff costs; Greater flexibility for substitutes or alternatives to allow for sourcing of differing materials; Segregated pricing by agreement for time-and-material budgets for carved-out scope packages that might be more volatile; Prompt procurement, buy-out administration, and warehousing of goods in advance to avoid potential volatility on specified goods; Value-engineering during the preconstruction phase to identify different materials; Increased buffers in the contract price to account for the risk of potential tariff impositions. When negotiating and drafting custom contract clauses to address risk on projects, or if litigating claims for equitable adjustments or change orders, 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 contractors, owners and developers, construction managers, design-builders, design professionals, subcontractors, and suppliers on construction contracts, risk, and project disputes.

January 14, 2025

Family Law

Why Divorce Lawyers Are Busy After the Holidays

The holiday season, with its emphasis on family gatherings, goodwill, and celebration, might seem like an unlikely time to consider divorce. However, for many couples, the stress and emotional intensity of the holidays often bring underlying marital issues to the forefront. As a result, divorce lawyers frequently see a surge in inquiries and new cases at the start of the new year, making January a peak season for divorce consultations and filings. The "New Year, New Start" Mentality For some individuals, the beginning of a new year represents a fresh start. This "New Year, New You" mindset often leads people to reevaluate their lives, including their relationships. Couples who have been struggling may view January as an opportunity to break free from an unhappy marriage and start anew. Holiday Stress Magnifies Marital Strains The holiday season is a time of high expectations. Families aim to create perfect celebrations, but the financial pressures, packed schedules, and family dynamics can amplify tensions in already strained relationships. Disagreements over money, parenting, or extended family obligations may come to a head, leaving one or both partners feeling that divorce is the only solution. Staying Together "For the Kids" Many parents delay divorce proceedings until after the holidays to avoid disrupting their children’s celebrations. They prioritize giving their kids one last holiday season as a united family, even if the marriage is irreparably broken. Once the holiday decorations are packed away, these couples often proceed with reaching out to divorce attorneys. The Role of Social Media and Comparison During the holidays, social media feeds are flooded with images of seemingly happy families enjoying picture-perfect moments. For individuals in struggling marriages, these posts can deepen feelings of dissatisfaction and loneliness. The stark contrast between their reality and the idealized versions of others’ lives may push them toward seeking a divorce. Preparing for the Surge Divorce lawyers and family law firms are well aware of the post-holiday uptick in divorce cases. Many firms use December to prepare for the influx, ensuring that their teams are ready to handle consultations, paperwork, and court filings. Some even offer informational sessions or promotional campaigns in January to assist potential clients during this challenging time. Moving Forward For those considering divorce after the holidays, it’s important to approach the process thoughtfully. Consulting with an experienced divorce lawyer is a critical first step in understanding your rights and options. Additionally, seeking support from therapists or counselors can help individuals and families navigate the emotional complexities of divorce. While the start of a new year can be a difficult time for couples ending their marriage, it also represents an opportunity for growth and a chance to create a more fulfilling future. Divorce, while challenging, can ultimately lead to a healthier and happier life for all involved.

January 13, 2025

Estates and Trusts

Prudent Investing in Uncertain Economic Conditions

The Prudent Investor Rule is a legal principal that requires fiduciaries to act in the best interests of a beneficiary and exercise reasonable care, skill, and caution when making investment decisions, which was codified in Maryland in 1994 by Md. Estates & Trusts §15-114.  The Rule applies to fiduciaries, including trust companies, investment managers or advisors, and individual trustees who make a valid §15-114(g) election to be governed by the statutory standards for investing and includes fiduciary assets under management, including trusts, guardianships, and custodians.  Under the Rule, a fiduciary must consider the best interests of the beneficiary in diversifying investments and investing and managing assets as part of an overall investment strategy.  In doing so, the fiduciary may take into consideration the general economic conditions at the time. Any regime change in government brings a degree of economic uncertainty to market conditions.  Currently, the market is experiencing uncertainty due to the US presidential election, a number of rising geopolitical tensions, natural disasters, and uncertainty surrounding economic policy and regulatory framework that could impact investment and spending decisions. Under the Prudent Investor Rule, a fiduciary is authorized to invest and manage assets to incorporate both risk and return objectives and to pursue an investment strategy that considers both the production of income and the safety of capital, utilizing a portfolio theory of investing.   The directive to fiduciaries to diversify investments is intended to mitigate risk to the beneficiary of investment decisions made by the fiduciary.   For Trustees and other fiduciaries, reliance on the advice and guidance of knowledgeable, experienced, and informed advisors is never more important than in the face of uncertain economic conditions. 

January 13, 2025

Intellectual Property

Branding the Produce Aisle: Appealing to Consumer Tastes

Brands are taking over the produce aisle at the grocery store. They have already conquered the cereal aisle, the soda aisle, the chips aisle, and the cookie aisle (my favorite). While there have always been produce brands (Chiquita ® bananas or Dole pineapple), branded fruits and vegetables are proliferating. Newly branded fruits include the Elefante Green Gold pineapple, the Pink Elephant mango, and Cotton Candy grapes. The question is, why is there such a push to put stickers with a brand name on fruits and vegetables? Product Recognition and Differentiation From a legal point of view, product recognition and differentiation is the main reason to adopt a brand name. A brand name helps consumers identify a product, and helps that product stand out from other similar products. Which item are you more likely to remember—an apple or a Jazz apple? A banana or a Chiquita banana? It is possible for branding to be so successful that the brand name loses its ability to differentiate products. This is what happened to brands like aspirin and escalator, and it is something that brands like Xerox and Google fight against. Avoiding consumer confusion—or making sure that a brand name differentiates one party’s goods or services from another’s —is the whole point of trademark law. If consumers can distinguish one party’s brand from another’s, then there is no trademark infringement. If consumers think that the brands are related or associated with each other, then there is infringement. This is why the infringement analysis generally looks beyond the marks being used and the goods or services they are used on to other factors, such as price point, where the goods or services are being sold, and whether there was an intent to confuse consumers. Brand Loyalty Strong, dependable brands can encourage brand loyalty (repeat business). If you buy Cotton Candy grapes and love the way they taste, you are more likely to purchase them again with the expectation that you will be able to experience that great taste again. A negative experience, though, can cause a consumer to search for another brand of product. Brand loyalty can be a powerful driver of business. Think about it. How many times have you gone to the store and purchased something because you (or someone you know) used it before and it worked well? Sometimes brand loyalty is the result of an emotional connection to a brand. Perhaps you remember a brand from your childhood, or interacted with that brand when you were a child. Maybe you had a certain brand of drink with lunch in elementary school, or you remember your grandfather giving you a particular type of candy when you would visit. It could even be that you remember liking the advertising for a product when you were younger. This is one of the reasons why people often try to “revive” defunct brands, a practice that raises all sorts of questions about the ownership of the brand and the goodwill associated with it. Branded Items Seem More Exclusive The fashion industry has long since learned that branding can make a product seem more exclusive. One reason is that branded items can command a higher price. The store brand is almost always less expensive than the branded equivalent, whether in the grocery store or the department store. In some cases, the fruits are considered luxury items. This can be because they are genetically engineered, like Del Monte’s Pinkglow pineapple, which has white flesh, an edible core and low acidity, or the Cotton Candy grape, which is sweeter than a usual grape and tastes like cotton candy. In other cases, it is because small quantities are grown. To protect the names of these new fruits, growers seek trademark protection. After spending years to develop the fruits themselves (intentionally bred varieties of fruit trees and nut trees can be protected by a plant patent in the U.S., and genes, traits, methods, and plant parts can be protected by a U.S. utility patent), there is little reason not to protect the brand name, especially since that is what customers will ask for at the grocery store. Currently there are issued registrations or pending trademark applications for the following: COTTON CANDY, for grapes (Reg. No. 4109691)   ELEFANTE GREEN GOLD, for pineapples (Reg. No. 7492189) PINKGLOW, for pineapples (Reg. No. 6330579) RUBYGLOW, for pineapples (Reg. No. 7507675) , for melons (Reg. No. 7154543) Branding is Everywhere It shouldn’t really be much of a surprise that brands are coming to the produce aisle. Branded items have been coming home with us from stores for a long time, and various factors drive the success and longevity of a brand. Without protection, though, a brand’s prospects for longevity are diminished and the brand is subject to appropriation or misuse by others. Trademark protection can help ensure the continued vitality of any brand, whether that brand appears on the most fashionable catwalks, in movie theaters, in a stadium, or in the grocery store.

January 8, 2025

Estates and Trusts

Not Knowing the Tax Implications of How Your Client is Classified

The Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients Mistake #1: Not knowing the tax implications of how your client is classified Navigating the tax landscape for art dealers, investors, and collectors can be a complex endeavor, but proper classification is key to maximizing tax savings and avoiding pitfalls. Professionals working with clients in the art world must understand how classifications affect income tax treatment, as well as practical steps to ensure clients benefit from the most favorable outcomes. This guide outlines the critical distinctions, tax implications, and actionable strategies to support clients. Understanding the Classifications The IRS recognizes three primary classifications for individuals engaged in art-related activities: dealers, investors, and collectors. Each carries distinct tax implications: Dealers: These individuals are in the trade or business of buying and selling art for profit. To be classified as a dealer under Internal Revenue Code Section 1221(a)(1), a client must demonstrate continuity and regularity in their activities and a primary purpose of generating income or profit. For example, an artist selling their own creations may qualify as a dealer. Investors: Clients who buy and sell art primarily for investment purposes fall under this category. Unlike dealers, investors do not actively market art as part of a trade or business but instead hold it as a capital asset Collectors: This classification applies to those who acquire art for personal enjoyment or aesthetic purposes. Collectors are not considered engaged in a business or investment activity and face the most restrictive tax treatment. Tax Implications The tax treatment of gains, losses, and deductions varies significantly depending on classification: Dealers: Gains are treated as ordinary income, taxed at rates up to 37%. Losses are ordinary losses, fully deductible against other income. Expenses incurred in the trade or business, such as storage or marketing, are deductible as ordinary and necessary business expenses on Form 1040. Note: For artists classified as dealers, the basis of their artwork is typically limited to the costs of their materials, often resulting in significant gains upon sale. Investors:Gains on the sale of collectibles are taxed as capital gains, subject to a maximum rate of 28%. Losses are capital losses, deductible against capital gains, with a $3,000 annual limit for net losses against ordinary income. Ordinary and necessary expenses for holding the art for income production are deductible. Collectors:Gains are taxed at the same 28% capital gains rate as investors. Losses are considered personal and cannot offset other income. Expenses related to collecting activities are generally nondeductible unless the client can demonstrate an investment intent. Practical Steps for Professionals Helping clients achieve the most advantageous classification involves careful analysis and documentation. Here are actionable strategies: Identify the Appropriate Classification: Evaluate the client’s level of activity, intent, and historical practices. Consider whether the client’s actions align with IRS criteria for a trade or business (e.g., continuity, regularity, and profit motive). Document Investment Intent:For collectors seeking reclassification as investors, gather evidence such as:Businesslike records of transactions. Consultation with art experts or advisors. Efforts to publicly display the collection. A history of profitable investments in similar areas. Educate Clients on Tax Treatment:Explain the impact of classification on their tax liabilities, including applicable rates and deduction limits. Highlight the importance of meeting the profit presumption test (three profitable years out of five) for activities presumed to be for profit. Leverage Deductible Expenses:For dealers and investors, ensure all ordinary and necessary expenses, such as insurance, storage, and advisory fees, are properly documented and claimed. For collectors, explore opportunities to demonstrate investment intent for potential reclassification. Monitor Changes in Activity:Reassess clients’ classifications periodically as their circumstances and activities evolve. A client who begins as a collector may transition to an investor or dealer over time with proper adjustments to their approach. Conclusion Proper classification of collectible and art-related activities can have a significant impact on a client’s tax liabilities, deductions, and overall financial outcomes. Professionals who understand these distinctions and proactively guide clients can unlock substantial tax savings and help avoid costly errors. By identifying the appropriate classification, documenting intent, and leveraging allowable deductions, you can ensure your clients are well-positioned to navigate the complex intersection of art and taxation. For tailored advice and support, consult a tax professional experienced in the unique considerations of art-related activities.

January 7, 2025

Labor and Employment

New Employment Laws Become Effective on January 1, 2025

The following is a summary of new employment laws which become effective on January 1, 2025.  All States Minimum Wage Increases Employers should check their state statutes and local ordinances to determine whether the minimum wage has been increased. Failure to do so could lead in underpayment to employees and potential fines and penalties. State minimum wage increases, effective January 1, 2025: California: $16.50/hour Delaware: $15/hour New Jersey: $14.53–$15.49/hour$15.49 (employers with six or more employees) $14.53 (seasonal employers and employers with fewer than six employees) New York: $15.50–$16.50/hour$16.50 per hour (New York City, Long Island and Westchester County) $15.50 per hour (rest of the state) Also, in some states, like California, the salary test for exempt employees is dependent on the state’s minimum wage. Failure to increase an exempt employee’s salary would result in breaking the exemption and entitling exempt employees to overtime and other requirements for non-exempt employees. California Seven new employment laws in California took effect on January 1, 2025. Changes to the Fair Employment and Housing Act The Fair Employment and Housing Act was amended as follows: Government Codes § 12920 was amended to state that employers may not discriminate against employees based upon any combination of characteristics protected under the Fair Employment and Housing Act. Government Code § 12926 is amended to define “race” as including traits associated with race (rather than historically associated with race), such as hair texture and protective hairstyles. Any city, city and county, county, or other political subdivision of the state will be able to enforce local law prohibiting discrimination in employment against classes of persons covered by the Fair Employment and Housing Act if certain requirements are met, including a requirement that local enforcement is pursuant to a local law that is at least as protective as the act. The Civil Rights Department will promulgate regulations governing local enforcement pursuant to those provisions. Changes to Leave Laws There are two amendments to statutes related to employee leaves of absence: Paid Sick Leave – Employers must provide sick leave to agricultural employees to avoid smoke, heat or flooding conditions created by a state of local emergency. Paid Family Leave – Employers can no longer require that employees take up to two weeks of earned vacation leave prior to using paid family leave. California Worker Freedom from Employer Intimidation Act The California Worker Freedom from Employer Intimidation Act prohibits employers from retaliating against employees who decline to attend employer sponsored meetings or to listen to employer communications that have the purpose of communicating the employer’s religious or political opinions. Workplace Violence Law Employers may seek a temporary restraining order against an individual who has harassed employees or engaged in workplace violence or threats of violence against employees. Worker’s Compensation Notices Employers will be required to include the following in the notice to employees: The employee has the right to consult with an attorney The attorney’s fees will be paid in most cases This is a good reminder to update your employment posters effective January 1st of every year. Prohibition on Requiring Employees to Provide Driver’s License Employers cannot require applicants to have a driver’s license unless the employer reasonably expects driving to be one of the job functions and an alternative form of transportation would not be comparable in travel time or cost to the employer. Freelance Worker Protection Act This Act requires the following for contracts with a freelance worker, defined as a person, that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than $250: Contracts between a hiring party and a freelance worker be in writing and the new law requires a hiring party to retain the contract for no less than 4 years. A hiring party to pay a freelance worker the compensation specified by a contract for professional services on or before the date specified by the contract or, if the contract does not specify a date, no later than 30 days after completion of the freelance worker’s services. The law prohibits a hiring party from discriminating or taking adverse action against a freelance worker for taking specified actions relating to the enforcement of these provisions. The law authorizes an aggrieved freelance worker or a public prosecutor to bring a civil action to enforce these provisions. Delaware Healthy Delaware Families Act The Healthy Delaware Families Act requires that employers with ten or more employees must enroll in the paid leave program and begin paying the following contributions: The contribution rate for medical leave benefits as a percentage of wages is 0.4%. The 2025 contribution rate for family caregiving benefits as a percentage of wages is 0.08%. The contribution rate for parental leave benefits as a percentage of wages is 0.32%. Employers may deduct up to 50% of premiums from employees’ wages. New York Equal Protection The New York Constitution, and specifically Article 1, § 11 (the equal protection law) is amended to also prohibit discrimination based upon: Ethnicity National origin Age Disability Sex, including:Sexual orientation Gender identity Gender expression Pregnancy Pregnancy outcomes Reproductive healthcare and autonomy Paid Prenatal Leave Private sector employers must provide pregnant employees with twenty (20) hours of paid prenatal leave per year. The twenty hours must be made available upon hire. Pregnant employees can use this leave for healthcare services received by the employee during the employee’s pregnancy or related to such pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussing with the employee’s health care provider related to the employee’s pregnancy. Prenatal leave may be taken in one-hour increments. Prenatal leave is not paid out when an employee leaves their employment. Pennsylvania Fair Contracting for Health Care Practitioners Act The Fair Contracting for Health Care Practitioners Act prohibits non-compete agreements exceeding one year for doctors, Certified Registered Nurse Anesthetists (CRNAs), Certified Registered Nurse Practitioners (CRNPs), and Physician Assistants (PAs). Disclaimer: This list is not intended to provide a comprehensive overview of all employment laws effective January 1, 2025, across the United States. Instead, it highlights significant employment law updates in jurisdictions where Offit Kurman serves clients. This content is for informational purposes only and does not constitute legal advice. For personalized guidance, please consult with an attorney.

December 31, 2024

M&A Nuggets

M&A Nugget: Letter of Intents should be neither a Gimme nor an Obstacle

The letter of intent is the first significant document signed by the target and potential acquiror in a merger transaction. Many times over the years, clients have first contacted me after signing a letter of intent to sell or purchase a business. That is usually a mistake. The letter of intent should set forth the parties’ expectations of the business deal and the most core legal issues. Accomplishing that, while not allowing the letter of intent to bog down the progress of the deal, is a fine balance and takes professionals who have been through the process many years. Some clients hurry through a letter of intent because they are under a misconception that the letter of intent is non-binding. However, the letter of intent is in fact a legally binding document in part. Although most letters of intent do not create a legal obligation to close the transaction, letters of intent do typically contain clauses that bind the seller and the purchaser, including, a) a no-shop clause prohibiting the seller from seeking or negotiating with other buyers; b) a confidentiality provision; c) a statement that from the signing of the letter of intent through the termination of the letter of intent, the seller will operate in the ordinary course of business; d) the date the letter of intent expires; and e) a statement of which State’s law governs the letter of intent. The primary purposes of these binding clauses are 1) to ensure the buyer who will be expending time, money and resources investigating the seller, that the seller will operate ordinarily and not seek to negotiate against the buyer, and 2) to give the seller with comfort that its willingness to sell its business will remain confidential and that there will be a date to move on if the parties agree on the terms of a definitive agreement. Since the letter of intent sets the parties’ expectation of the business terms, a rushed letter of intent can miss the boat on key business terms that, if thought of later, are difficult to incorporate into the deal. While the letter of intent must be dealt with expeditiously to move on to the next steps as quickly as possible, one side will be very unhappy later if a key business term is missed.

December 18, 2024

Bankruptcy

2024: Year in Review: Third-Party Releases After Purdue Pharma

"Lately I’ve been, I’ve been losing sleep Dreaming about the things that we could be" - Counting Starts, One Republic The most notable decision in the bankruptcy world in 2024 was the Supreme Court’s decision in Purdue Pharma. Harrington v. Purdue Pharma, L.P., 144 S. Ct. 2071 (2024). At the heart of the fight in Purdue Pharma were nonconsensual third-party releases where Purdue’s chapter 11 plan released all opioid crisis-related claims against the Sackler family[1]. Why are third-party releases important? A third-party release is a provision in a chapter 11 plan that can eliminate future liability for pre-bankruptcy conduct of non debtors like affiliates and officers and directors of the company that sought bankruptcy protection. For many years, debtors have used third-party releases as an important restructuring tool in chapter 11 cases. Bankruptcy lawyers and judges have been losing sleep over strategies to preserve this tool Circuit courts were divided on whether bankruptcy courts had the authority to grant nonconsensual third-party releases. The Second and Seventh Circuits permitted nonconsensual third-party releases when the particular release is essential and integral to the reorganization itself. Third Circuit permitted nonconsensual third-party releases in limited circumstances when the releases were fair and necessary to the reorganization. The Fourth, Sixth, and Eleventh Circuits approved third-party releases and applied a multifactor test[2] to decide the merits of third-party releases. The Fifth, Ninth and Tenth Circuits, however, held that nonconsensual third-party releases were not permitted by the Bankruptcy Code. The Bankruptcy Code does not include any explicit language that would permit third-party releases in most cases, but courts would approve them under §1123(b)(6) of the Bankruptcy Code, which allows bankruptcy courts to approve any “appropriate” provision in a chapter 11 plan that is “not inconsistent with the applicable provisions of this title.” Some courts also relied on §105(a) of the Bankruptcy Code which allows the bankruptcy court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. The Supreme Court’s Purdue Pharma decision eliminated nonconsensual third-party releases. However, Purdue Pharma did not dispose of consensual third-party release and left open the question what would be considered consensual releases and what is going to be the fate of efforts to stay litigation against non debtor parties. In Purdue Pharma, the majority of the creditors voted for the final iteration of the plan which provided for a release of all opioid-related claims against the Sacklers in exchange for a several billion-dollar contribution to the bankruptcy estate. Under the terms of the plan, Purdue would reorganize as a benefit corporation with the purpose of ameliorating the opioid crisis. The United States Trustee objected to the third-party releases arguing that the Bankruptcy Code does not permit the nonconsensual release of claims against non debtors and raising concerns about the victims’ due process rights. In a five-to-four majority opinion written by Justice Neil Gorsuch, the court held that the Code did not permit nonconsensual third-party releases. The Court reasoning was premised on the text of Sections 1123(b) and 524 of the Bankruptcy Code.  Section 1123(b)(6) specifically states that a debtor may include in its plan “any other appropriate provision not inconsistent with the applicable provisions of this title.” The Court reasoned that because “[p]aragraph (6) is a catchall phrase at the end of a long and detailed list of specific directions,” it must be interpreted within the context of the rest of the subsection. Thus, because paragraph (6) follows a list of provisions relating to the rights, relationships, and responsibilities of the debtor to its creditors, the majority interpreted § 1123(b)(6) to only permit the bankruptcy court to grant orders concerning the relationships between the debtor and its creditors, and not any relationships between non debtors and the creditors. In addition, the Supreme Court reasoned that the discharge provisions under § 524 limited discharge to the debtor and did not permit the discharge of third parties. The Court noted that § 524(g) already provides an exception to the discharge provisions by authorizing nonconsensual releases of third-party claims under limited circumstances in asbestos-related cases. Accordingly, if Congress intended to broadly authorize nonconsensual third-party releases, it could have included language to that effect. The full impact of Purdue remains to be seen but several bankruptcy courts grappled with what constitutes a consensual release. In the first opinion on the topic since the Supreme Court’s Purdue decision in late June, Bankruptcy Judge Christopher M. Lopez of Houston confirmed an opt-out chapter 11 plan with non debtor, third-party releases. The U.S. Trustee objected to the opt-out plan and argued that the releases were coercive and that the releases should be given only by creditors who opt in. Any creditor who voted in favor of the plan could not opt out, and creditors who did not vote would be bound by the releases. In addition, creditors who opted out could not sue unless the bankruptcy court were to determine that the claims were colorable. Judge Lopez started his analysis by emphasizing that Purdue explicitly dealt with non-consensual third – party releases only and did not change the law in Fifth Circuit. What constituted consent, including opt-out features and deemed consent for not opting out, had long been settled in this District and hundreds of chapter 11 cases have been confirmed with consensual third-party releases with an opt-out.  The debtor gave extensive notice about the opt-out provisions in the plan. About 100 creditors opted out, Judge Lopez said in his opinion. Judge Lopez overruled the U.S. Trustee’s objection and confirmed the plan because “the third-party releases are consensual and narrowly tailored.”  A New York judge in the Bankruptcy Court for the Western District of New York, Chief Bankruptcy Judge Carl L. Bucki of Buffalo, N.Y. denied confirmation of an opt out plan in a case where the corporate debtor offered $300,000 for distribution among creditors with more than $282 million in unsecured claims. The proposed plan called for releasing not only the debtor but also the debtor’s officers, directors, shareholders and agents. Non debtor releases were also earmarked for the debtor’s and the committee’s professionals, among others. Unless a creditor affirmatively opted out, they would be deemed releasing claims. In re Tonawanda Coke Corp., ___ B.R. ___,. No. BK 18-12156 CLB, 2024 WL 4024385, at *2 (Bankr. W.D.N.Y. Aug. 27, 2024.) Unlike Purdue, the released non debtors were not making financial contributions toward the payment of creditors’ claims.  Applying section 5-1103 of the New York General Obligations Law, Judge Bogucki held that an opt out plan does not satisfy the requirements for consent under New York law because an agreement to “discharge” an “obligation” had to be in writing and signed by the party against whom it would be enforced. Judge Craig T. Goldblatt of Delaware held that an opt-out provision is permissible only if the creditor was on notice that it would be subject to a third-party release and the creditor took an affirmative act, such as voting on the plan, but failed to exercise the opt-out right.  A review of cases even pre-dating Purdue on what constitutes a consensual release shows that there is a case to support every view. Some cases apply state law contract principles (usually to deny approval of opt-out releases), and others apply federal bankruptcy principles (usually to approve them). “[C]ourts are markedly split on the issue, with some categorically finding that a release cannot be consensual absent an affirmative act to opt in, and others finding that opt-out mechanisms that (as is the case here) provide adequate notice and a simple opt-out process can result in a consensual release. In re: LAVIE CARE CENTERS, LLC, et al., Debtors., No. 24-55507- PMB, 2024 WL 4988600, at *12 (Bankr. N.D. Ga. Dec. 5, 2024). The consensual third-party releases will continue to be the main focus next year and the issue will continue to percolate in the bankruptcy and higher courts. [1] The Sackler family owned and controlled Purdue Pharma, the maker of oxycontin, which contributed to the opioid crisis. Empire of Pain, written by investigative journalist Patrick Keefe recounts the story of Purdue and the investigations and legal proceedings into the marketing practices of oxycontin. There are numerous criminal and civil proceedings initiated by the federal and state governments, foreign authorities and individual victims. Hulu’s Dopesick and Netflic’s Painkiller illustrate the impact of oxy in a more easily digestible format. [2] The Courts in these circuits take into consideration the following factors: (1) There is an identity of interests between the debtor and the third party, usually an indemnity relationship, such that a suit against the non debtor is, in essence, a suit against the debtor or will deplete the assets of the estate; (2) the non debtor has contributed substantial assets to the reorganization; (3) the injunction is essential to reorganization, namely, the reorganization hinges on the debtor being free from indirect suits against parties who would have indemnity or contribution claims against the debtor; (4) the impacted class, or classes, has overwhelmingly voted to accept the plan; (5)the plan provides a mechanism to pay for all, or substantially all, of the class or classes affected by the injunction; (6)the plan provides an opportunity for those claimants who choose not to settle to recover in full ;and  (7) the bankruptcy court made a record of specific factual findings that support its conclusions.

December 18, 2024

Family Law

Dividing Christmas Ornaments and Other Personal Property in a Divorce Case

Divorce is a challenging process, and dividing personal property often adds emotional complexity. While big-ticket items like homes and retirement accounts might take center stage, sentimental belongings—such as Christmas ornaments, family heirlooms, and collectibles—can be just as contentious. Understanding the legal framework and adopting practical strategies can help ensure a fair and amicable resolution. Legal Considerations Marital vs. Separate Property: Generally, items acquired during the marriage are considered marital property and subject to division. Property inherited by or gifted to one spouse during the marriage typically remains separate property, as long as it has not been commingled with marital assets. If Christmas ornaments were acquired before the marriage or gifted individually, they might be classified as separate property. State Laws on Property Division:Community Property States: In these states, marital property is divided equally. Equitable Distribution States: Property is divided based on fairness, which may not always result in a 50/50 split. Sentimental vs. Monetary Value:Courts may not assign monetary value to sentimental items, but they may recognize their importance to both parties. If the parties cannot agree, a judge may make the final decision. Practical Strategies for Dividing Sentimental Items Create an Inventory: Begin by making a detailed list of all personal property, including Christmas ornaments, holiday décor, and other sentimental items. Include photographs or descriptions to avoid disputes over the condition or identity of specific items. Identify High-Priority Items:Each spouse should separately identify items that hold the most sentimental value to them. This process can help pinpoint areas of potential compromise. Negotiate and Trade:Consider trading items of comparable value. For example, one spouse might take the Christmas ornaments while the other keeps another collection of sentimental value, such as photo albums. Use larger assets, like furniture or electronics, to balance out inequities in sentimental property division. Collaborate During the Holidays:If children are involved, consider creating a shared holiday tradition, such as alternating who uses certain ornaments or decorations each year. Split ornaments into meaningful categories (e.g., “childhood,” “collected during marriage”) to ensure an equitable distribution. Use a Neutral Mediator:Mediation can be a helpful tool for resolving disputes over sentimental items. A neutral third party can provide guidance and help diffuse emotionally charged discussions. Tips for Minimizing Conflict Focus on the Big Picture: Remember that sentimental items, while important, are part of a larger process. Keeping the focus on achieving a fair overall settlement can reduce tension. Consider Duplication:In some cases, items like photographs or digital holiday keepsakes can be duplicated, allowing both parties to retain a copy. Consult an Attorney:An experienced family law attorney can provide insight into how local courts handle personal property disputes and guide negotiations. Conclusion Dividing Christmas ornaments and other personal property in a divorce requires a balance of legal knowledge, emotional intelligence, and practicality. While these items may not have significant monetary value, their emotional worth can be immense. By approaching the process with fairness, flexibility, and empathy, divorcing spouses can navigate this delicate aspect of property division with dignity and respect.

December 18, 2024

Family Law

Hanukkah and Parenting Time: Balancing Tradition and Family Dynamics

Hanukkah, also known as the Festival of Lights, celebrates the miracle of the oil that lasted for eight days in the Holy Temple in Jerusalem. During Hanukkah, many families gather to light the menorah, exchange gifts and enjoy latkes and sufganiyot. For divorced families, Hanukkah can present unique challenges when it comes to parenting time and holiday schedules. Balancing the celebration with the needs and expectations of all parties involved requires thoughtful planning, flexibility, and understanding.  Some elements to consider include: Open Communication, Flexibility and Compromise: Open and clear communication between parents is essential for planning a holiday schedule that addresses where the children will stay, which traditions will be celebrated and ensures everyone feels included. Flexibility ensures both parents can share in the festivities, allowing children to connect with both sides of the family. Creating New Traditions: If one parent cannot be present for certain nights of Hanukkah, it’s a great opportunity to start new family traditions that blend the needs of both households. This could include pre-recorded video calls to participate in the menorah lighting or sending gifts in advance to ensure children feel that both parents are present, even if physically apart. Respecting Religious and Cultural Sensitivities: In families where different parents or stepparents come from various religious backgrounds, it’s important to be sensitive to any religious observances or practices. Finding ways to include both religious and secular elements in the celebrations may provide a path toward mutual respect and understanding. Children’s Needs: The needs and emotions of the children are central to any co-parenting plan. For younger children, maintaining familiar rituals is important for security and consistency. If children are older, their involvement and input in holiday arrangements may play a significant role in the decision-making process, particularly if they have developed strong connections to specific traditions or people. Holiday Gift Giving: The exchange of gifts is common during Hanukkah and ensuring that both parents can contribute to the gift-giving experience is important. Some families opt to give all gifts on one particular night, while others may stagger the presents over the course of the eight days. In a co-parenting situation, planning gift-giving ahead of time avoids overlap or competition while ensuring the children feel equally valued. Consider the Impact on Extended Family: Hanukkah often brings extended family together, including grandparents, aunts, uncles, and cousins. Making special arrangements to include one side of the family while ensuring the other is not left out may require flexibility, understanding, and some negotiation. Amidst the logistical challenges of co-parenting during Hanukkah, it’s important to focus on creating a positive and meaningful experience for the children. While the children may not fully understand the complexities of the co-parenting arrangement, they will remember the joy of celebrating the holiday with their loved ones. Ultimately, Hanukkah offers an opportunity for families to come together and reflect on the values of light, joy, and resilience—values that can be celebrated by all, regardless of the circumstances.

December 17, 2024

Labor and Employment

Better Call Sarah: Inappropriate Behavior at Office Parties - What You Need to Know

Mistletoe and Missteps: Ensuring a Safe and Fun Holiday Party Dear Sarah, I’m looking to keep our company’s annual holiday party lighthearted and fun and make sure it doesn't turn into a legal disaster (nobody wants a sexual harassment lawsuit under the mistletoe, right?). So, what's the best way to ensure our holiday festivities stay friendly and fun, without crossing any lines? And, just in case things do get out of hand, how should we handle any complaints or potential allegations of misconduct that may arise after the party? Cheers to no awkward lawsuits, The Mistletoe Monitor Inappropriate Behavior at Office Parties: What You Need to Know Dear Mistletoe Monitor, As much as the holiday party is a time for celebration, it's also a time when employer liability can become a concern.  When alcohol is involved, workplace boundaries can become blurred, increasing the risk of inappropriate behavior—whether under the mistletoe or at the office party in general—which could lead to serious legal consequences. So, what should you do if something goes awry? Here are a few steps to mitigate liability and protect your business if an issue arises. 1. Respond Promptly to the Complainant. If an employee comes forward with a complaint, act quickly. Start by talking to the employee and assuring them that the complaint will be investigated thoroughly. Document all conversations and begin your investigation right away. This demonstrates that you take such matters seriously and are committed to creating a safe workplace. 2. Consider Having an Attorney Direct the Investigation. One option is to bring in legal counsel—either in-house or external—to guide the investigation. Having an attorney involved ensures that the process is handled appropriately and can help protect communications under attorney-client privilege. This is particularly important when dealing with sensitive situations that could lead to legal exposure. If you're unsure about the process or legal ramifications, consulting with an attorney early on is always a good idea. 3. Consider Protective Measures Pending the Investigation. Depending on the nature of the complaint and the circumstances, you may need to take interim actions. This could include modifying work assignments, adjusting schedules, or even placing the alleged harasser on leave. The goal is to maintain a safe environment while the investigation is ongoing. For example, if the situation involves two employees from different departments, you could temporarily change their work assignments to prevent further interaction until the investigation is completed. 4. Tailor the Response to the Situation. Remember that each case is unique, and your response should be proportional to the situation at hand. For serious allegations, you may need to take more immediate action, including suspensions or temporary leave for the accused party. Always consult with legal counsel to determine the most appropriate course of action based on the facts. 5. Keep the Event Safe and Enjoyable. Of course, the goal is to prevent these situations from occurring in the first place. You can minimize the risk of harassment claims by being proactive, setting clear expectations, and monitoring the party. Have policies in place to promote respectful behavior and remind employees that although they are at a social event, they still represent the company. If someone gets out of hand, don't hesitate to step in to prevent further issues. Your office holiday party should be a time for celebration, but it’s important to be prepared in case something goes wrong. By following these best practices, setting clear expectations, and consulting legal counsel, when necessary, you can reduce the chances of a party mishap turning into a legal nightmare. Happy holidays (with boundaries!).

December 17, 2024

Estates and Trusts

The Impact of California Assembly Bill 2016 (AB2016) on the Probate Process

In April 2025, California bill AB2016 will take effect, significantly impacting the state’s probate process. Currently, probate is required if a decedent’s property exceeds a certain value, and AB2016 will raise this threshold considerably. AB2016 amends six sections of California’s Probate Code and repeals one. Starting on April 1, 2025, and lasting through March 31, 2028, the threshold for a real property to qualify for disposition without a full probate administration will increase to $750,000. As a result, more estates will be subject to probate, and the obligation to notify all heirs and devisees could lead to a rise in estate disputes. In the wake of AB 2016, it's crucial to understand the California probate process and consider planning strategies to avoid it. All too often the reasons provided to clients are probate avoidance or circumventing the Medi-CAL recovery. With the imposition of the new law set to take effect on April 1, 2025, the value for probate avoidance for real properties per Probate Code section 13151 will rise to $750,000 for a primary residence and then the additional small estate of personal property at $166,250. Of note, the law provides that the “primary residence” is not limited to the decedent’s residence at the time of their death. This provides a total exclusion anticipated for April 1, 2025, to be $916,250. However, Probate Code section 13100 is set to be adjusted for inflation every three years and based on the date of the enactment of this law, it is likely that the value will need to be adjusted upward with planners estimating a value of one million ($1,000,000.00) can be excluded aside from jointly held assets or payable on death accounts. This is a significant change in the basis previously required court involvement. Now, if not otherwise designated in an estate planning instrument, the assets below the threshold in the Probate Code can go through a shorter form procedure with the Probate Court in the determination of a real property of small value.  Although this will still expose family assets to the public, it prevents many of the expensive aspects of probate. For starters, the statutory fees associated with probate will no longer apply. This means that neither a personal representative nor any counsel would receive compensation based on the values of the statutory estate. Instead, the work performed could be calculated at an hourly rate or other agreed upon compensation.  While the law is meant to extend the notice to all potential heirs and beneficiaries, it does not address the notice requirements to governmental agencies such as the Department of Victims Compensation Board, the Franchise Tax Board, and the Department of Healthcare Services. or instance, under the Welfare and Institutions Code section 14009.5, the Department of Healthcare Services is only notified for a Medi-CAL recovery claim when there is a decedent’s estate as set forth in Title 42 of the United States Code. Pursuant to Section 1396p(b)(4)(A) of Title 42 of the United States Code, estate “shall include all real and personal property and other assets included within the individual’s estate, as defined for purposes of State probate law[.]” These techniques, as set forth in the Probate Code, provide an exclusion for the formal Probate Estate Administration procedures in California. This will eliminate a large sector from the reporting requirements for Medi-CAL recovery claims.  While AB 2016 brings about significant changes to estate planning and probate law that could affect how estates are managed in California, the fundamental reasons for estate planning remain unchanged. Instead, it is a stark reminder of why practitioners advise in planning early. While AB 2016 provides a partial fix for transference of wealth after passing, it does not eliminate the concerns during a client’s lifetime.  A properly executed estate plan can mitigate the need for court involvement during any period of incapacity. Further, it can provide for a mitigation of risk for abuse by others taking advantage of you as an elder with a truster contact named as a successor representative.

December 13, 2024

Immigration Law

Exploring Proposed Policies for Mass Deportations and Ending Birthright Citizenship

In a far-ranging interview with “Meet the Press,” President-elect Donald Trump confirmed his intention to begin mass deportations of individuals in the county without status and repeatedly stated a desire to end so-called “birthright citizenship.” Mass Deportations and Efforts to Combat Undocumented Immigrants Undertaking a mass deportation effort would be an enormous challenge, with approximately 13 million individuals living in the United States without lawful immigration status. The American Immigration Lawyers Association submitted a statement to the Senate Judiciary Committee regarding “mass deportations” that highlighted the staggering economic impacts such an initiative would entail: "From an economic perspective, immigrants sustain American businesses through their work in every industry and economic sector. In particular, undocumented individuals represent 4.8 percent of the overall U.S. workforce; in the agricultural industry, 13.7 percent of the workforce; in construction, 12.1 percent; and in hospitality, 7.1 percent. The majority pay taxes that, in turn, fund the local education systems and social services in the communities in which they live. A report by the American Immigration Council concluded that deportation of approximately 13 million people who are likely to be targeted by the incoming administration would result in massive labor shortages and a dramatic reduction in the U.S. gross domestic product by over $1.1 trillion. Furthermore, such widespread enforcement actions would dramatically reduce U.S. tax revenue: In 2022, undocumented individuals paid $46.8 billion in federal taxes and $29.3 billion in state and local taxes." See Statement of the American Immigration Lawyers Association Submitted to the Senate Judiciary Committee for the December 10, 2024 hearing “How Mass Deportations Will Separate American Families, Harm Our Armed Forces, and Devastate Our Economy” December 10, 2024 The economic impact of a mass deportation would also be felt at home. Many individuals, families, and communities rely on jobs and industries sustained by undocumented workers. Removing these workers would disrupt industries critical to the nation's economy and leave countless households and communities facing financial instability and uncertainty – not to mention the human cost. If a full mass deportation plan is extremely difficult—both economically and logistically—what concrete actions can we expect in 2025? An increase in enforcement actions by the Immigration and Customs Enforcement (ICE) service is likely. ICE has broad authority to search for and detain individuals in violation of status, and all indications point to increased enforcement efforts both in homes and workplaces. Can President-elect Trump deport U.S. citizens who have undocumented family members? In short, it would be extremely challenging for President-elect Trump to deport U.S. citizens with undocumented family members. United States citizens cannot be deported; they would first have to have their citizenship taken from them via a court process known as “denaturalization.” The prior Trump administration tried to start denaturalization cases (with limited success) but had larger aims to target over 700,000 individuals. Historically, denaturalization was reserved for individuals who lied about their past to obtain United States citizenship, such as criminals, war criminals, etc. The question is could that power be expanded? In theory, yes, but in practical terms denaturalization remains a limited-in-scope federal judicial proceeding, and it is not currently unlawful to have an undocumented individual living with you. As with all judicial actions, however, individuals without access to counsel would be at greater risk. Birthright Citizenship in the United States Turning to the issue of birthright citizenship, an effort to end birthright citizenship would see the Republican party undermine one of their greatest accomplishments: the passage of the 14th Amendment to the Constitution after the conclusion of the Civil War. Adopted in 1868, the 14th amendment is a critical part of United States civil rights laws that ensures due process and equal protection under the law to all persons. The Citizenship Clause of the 14th Amendment states the following: “All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” This provides for all children born in the United States to be U.S. citizens. President-elect Trump’s focus on so called ‘birthright citizenship” has developed from recent narratives of so-called “anchor babies” and “chain immigration.” The various reasoning used to decry the citizenship clause of the 14th amendment fails to consider the reality of the United States immigration system. There is no demonstrable link between birthright citizenship and unlawful immigration. Further, all individuals born to foreign parents on United States soil cannot start the process of sponsoring their parents for legal permanent residence and ultimately citizenship until they turn 21. That is an extremely long time, and under the current law, the United States citizen child must also demonstrate their own income to sponsor their immediate relatives. President-elect Trump also repeatedly stated that the United States is the only country with birthright citizenship. That is incorrect. Among the dozens of countries that provide birthright citizenship are our immediate neighbors: Canada and Mexico. But what can the President-elect do to end birthright citizenship? A President cannot unilaterally amend the Constitution. Further, any attempt to use executive action or orders to restrict the 14th Amendment would likely be struck down by the courts. The 14th amendment does provide some exceptions to the citizenship clause, but the existing exceptions apply specifically to the children of foreign diplomats and could not easily be expanded. By its nature, the 14th amendment is a cornerstone of civil rights in the United States, and any federal court would be at odds with precedent to change it. If the political will continues in this area and repeated challenges are made, it is possible some erosion of the amendment could occur. But any such challenge would take years and would be a political issue the Supreme Court may not want to get involved with. Amendments to the constitution require a two thirds majority vote in the United States House and the Senate. This kind of majority is extremely unlikely to exist given the current very tight balance in the legislature. Amendments also require state legislature support as well. Turning to the States, an unused but possible option is for the states to request a Constitutional Convention in which an amendment could be passed. There has never been a Constitutional Convention, and it requires two thirds of the states to agree. What about stopping pregnant mothers from entering the countries? United States Customs and Border Protection oversees the border and has the discretion to review or deny entry for travelers into the country. We could see increased enforcement in this area and directives for visa issuance for pregnant women. However, in practical terms, nearly all airlines restrict heavily pregnant travelers from flying to the country. The impacts on the immigration system remain to be seen from the above stated political aims. It is likely that actions will be taken to limit and slow legal migration through policy, regulation, and enforcement action. It is imperative to fully understand one’s immigration status and be proactive in protecting it.

December 12, 2024

Estates and Trusts

The Ultimate Gift: Estate Planning for Your Loved Ones

When we think of holiday gift-giving, we are dazzled with images of homes adorned with holiday decor, beautifully wrapped packages tied with ribbons under an equally beautiful tree, and even cars draped with giant bows waiting in the driveway for the most appreciative recipients. Yet one of the most profound gifts you can give your loved ones is not parked in your driveway nor does it fit under a tree; it is the gift of estate planning. Ensuring your estate planning is complete, I would argue, is the most thoughtful, intentional, and responsible act that provides clarity, security, and peace of mind for those you care about most.  Why Estate Planning is a True Gift:  1. Eases Emotional Burdens    Losing a loved one is one of the most difficult experiences of one of life. Without a clear plan in place, grieving family members are left to navigate complicated legal and financial decisions while coping with their heartache. Estate planning removes the undue stress of figuring out your wishes, allowing your beloveds to focus on healing and celebrating your life.  2. Prevents Family Conflict  Unclear or contested estates are among the leading causes of family disputes. Clearly outlining your wishes in a carefully constructed estate plan, minimizes the potential for misunderstandings, disagreements, and legal battles. This proactive step can preserve family harmony during an emotionally challenging time.  3. Protects Your Legacy  You have worked hard to build your life and accumulate assets. Estate planning ensures that your legacy reflects your values—whether that means leaving an inheritance, supporting a favorite charity, or safeguarding family traditions, your wishes must be documented. More importantly, the documents must comply with your state’s requirements that govern last wills and testaments, and trusts.  4. Provides Financial Security  For families with young children, estate planning provides financial stability by appointing guardians and setting up trusts for those minor children. If you do not properly document who should step in to care for your minor children in the event of a tragedy, a court proceeding is sure to follow. Additionally, it is essential you decide who the best person is to manage your minor children’s inheritance until they are old enough to handle it themselves. For adult children, a properly constructed plan ensures that your assets are distributed according to your wishes. You should also consider how, exactly, those funds should be left to your adult child to ensure that such an inheritance matches the ability of the recipient to manage those funds.  5. Empowers Your Voice  Through advance healthcare directives and powers of attorney, you maintain control over medical and financial decisions, even if you are unable to articulate your wishes. Having proper documentation in place that nominates a person to speak for you and outlines the type of care you want spares your loved ones from guessing or making agonizing medical decisions on your behalf.  The Five Easy Steps to Provide Your Estate Planning Gift   1. Take Stock of Your Assets  Make a comprehensive list of your assets, including property, investments, savings, insurance policies, and sentimental items.  2. Choose Trusted Representatives  Identify the people in your life who will carry out your wishes. It is imperative that you choose those in your life whom you trust most to make informed financial decisions in your best interest and health care decisions that are reflective of your wishes.   3. Consult Professionals  An estate planning attorney can you help draft documents and navigate complex legal requirements. Financial advisors can assist you with maximizing the value of your estate to assist you in planning for your legacy. Accountants can assist you in determining the most tax efficient strategies that should be employed.    4. Communicate with Your Loved Ones  Discuss your plans with family members or those closest to you to ensure they understand your wishes. Opening a dialogue about such important issues can often bring clarity to your wishes and communication is an integral part of ensuring your plan is effectuated. A carefully drawn plan that is communicated in advance can reduce confusion and set expectations for those around you.  5. Revisit Your Estate Plan  Estate plans should be reviewed annually, especially when there are law changes, new presidential administrations, and updated tax policies. As I have shared before, in addition to those issues, the 5Ds apply, as well so in the event of Death (of a loved one or beneficiary),  Distance when a loved one or trusted person moves away, the Divorce of a loved one (or your own divorce,) the Disability of a loved one (or your own disability), and upon the arrival of new Descendants such as the birth of a child or grandchild. The 5Ds can really impact your estate plan.   A Lasting Gift for Generations   Estate planning is not just about the practicalities of distributing assets; it’s a profound act of love. By taking the time to plan, you give your family and loved ones the ultimate gift: peace of mind, financial security, and a clear roadmap for navigating a difficult time.  This holiday season, or any time of year, consider sitting down to create or update your estate plan. It’s a gift that will resonate far beyond the moment, ensuring that your love and care continue to guide your family and loved ones for generations to come. 

December 11, 2024

Commercial Litigation

Why Is Estate Planning So Important?

‘Tis the season! It’s that time when we look back on everything we accomplished or failed to accomplish over the past year and, at least for some of us, resolve to do better. Lose weight, get in shape, declutter, get organized, and plan for our own death or loss of sufficient mental or physical capacity to make decisions or care for ourselves. Admittedly, this last one, “estate planning,” as some lawyers no doubt euphemistically dubbed this general category, is a perennial dark horse in the “most likely to top the list of year-end resolutions” category. Excuses range from “I don’t have enough to need an estate plan” to “I’m never gonna die” to “I’ll be dead, so it won’t be my problem.” Not much, if anything, can be done for the ones with delusions of infallibility or those truly relishing the idea of looking back from beyond the grave, eating popcorn and enjoying the misery left in their wake. Undecided? Unconvinced? You’ve got questions, and I have some answers… Q: Why should I care about estate planning? A: Estate planning is essential for ensuring that your assets and personal wishes are properly carried out after you’re gone. Creating and regularly updating a personalized plan unique to your life circumstances is not just about redistributing wealth after you pass away—it’s about protecting your family, minimizing tax burdens (!), and avoiding legal confusion. Without a clear plan, the state decides what happens to your property, which often results in costly, but otherwise avoidable, legal disputes, delays, and unintended results. Q: What’s the biggest mistake people make with estate planning? A: The biggest mistake is simply not planning at all. Last year, I shared my list of the top five estate planning mistakes that I see in my litigation practice (when my clients are routinely forced to dispute and/or litigate over an unintended and unforeseen aftermath).  The number one takeaway remains as obvious today as it was last year (and the year before that!) -- failing to plan is the most costly mistake you can make. Failing to plan (or to update an existing plan) leaves your family and loved ones vulnerable and can complicate things emotionally and financially during an already difficult time. Q: Do I really need an estate plan if I’m young and healthy? A: Absolutely! Estate planning isn’t just for the elderly or those with significant wealth—it’s for anyone who wants to make sure their wishes are carried out after they’re gone. We may want to believe we’re infallible and will live forever.  Unfortunately, life is unpredictable, and having a plan in place provides peace of mind, ensuring that your family is taken care of no matter what happens. My first boss after college taught me to plan for tomorrow as if the person upon which you are depending tragically gets hit by a bus tonight.  It was admittedly a dark life lesson (thank his lifetime of military service!), but he wasn’t wrong to suggest we never know what “bus” might be looming around the next corner. Q: Is estate planning a one-time thing? A: Estate planning should be an ongoing process. Life changes—marriage, having kids, career changes, etc.—are all good reasons to review and update your estate plan regularly. A plan that’s right for you now may be completely unsuitable for you when life changes happen . . . and they do happen!  So it’s important to revisit your plan regularly as your life evolves. Q: How does one get started with estate planning? A: Start by consulting with an experienced estate planning attorney who can guide you through the process. I’m not an estate planner myself, but I am fortunate to work with some incredibly talented individuals (in whom my wife and I have entrusted our own planning needs!). I’ll be happy to provide a threshold assessment and introduce you to a colleague with whom I believe you’d be a good match. From there, you will work to outline your goals, create a will, set up a trust, and/or designate “attorneys in fact” to protect your interests and exercise authority as you deem appropriate under powers of attorney. Proper estate planning benefits your loved ones and you both now and after your gone. The key is not to wait—resolve to take action today to protect your future and your loved ones.  I have a client who travels a fair amount, and for years now has joked how I’m the last person he thinks of as his plane is about to takeoff as he is again reminded that he hasn’t done his estate plan. Trust me when I say the money you spend (and don’t short-shrift the old adage “you get what you pay for!”) will repay itself multiple times over for your family when the time comes. Do yourself and your loved ones a favor. Give yourself and them some added peace of mind. Don’t just resolve to plan…just do it.

December 10, 2024

Labor and Employment

Better Call Sarah: Reducing Liability While Hosting a Holiday Event

Dear Sarah,  Planning our holiday party and I’m a little ‘shaken’  with concern—what are my liabilities if employees overindulge? Am I responsible if someone gets hurt, causes a scene, or drinks and drives? Should I be worried about potential legal fallout, or is it on them to know when to stop? How can I keep the fun flowing without the liability risk? Cheers (responsibly), HR in a Holidaze Dear HR in a Holidaze, While employees are generally responsible for their own actions, as an employer, you still have a duty to provide a safe environment and take reasonable steps to manage risks. Even without alcohol, social gatherings can lead to issues such as bullying, sexual harassment, other misconduct, and accidents and injuries. If alcohol is provided at your holiday party, however, you could be held liable if an employee’s intoxication leads to injury, damage, or misconduct, particularly if it occurs during or shortly after the event. For example, an impaired employee causing a workplace accident or an incident of harassment could result in legal exposure for the company. Additionally, employers need to be aware that providing alcohol brings with it legal liability—similar to what your local tavern owner faces. Courts have frequently held event sponsors responsible for tragedies involving impaired individuals, particularly when those individuals are involved in accidents. The entity providing the alcohol takes on some risk for the individual’s actions while intoxicated, including the possibility that alcohol may end up in the hands of minors. While it’s impossible to eliminate all risk, there are best practices employers can follow to reduce liability at holiday events. These aren’t meant to be a buzzkill but are steps to ensure that your event is safe and fun while limiting legal exposure. Consider Not Providing Alcohol at All: One viable risk management option is to simply avoid alcohol at company functions. While some employees might miss out on the drinks, offering gifts or prizes instead can offset this.  Especially in events where children are present, excluding alcohol can prevent minors from gaining access and create a more relaxed, enjoyable atmosphere for everyone. Provide Plenty of Non-Alcoholic Options: straightforward and effective way to manage risk is by providing a variety of non-alcoholic beverages. Avoid putting your employees in a situation where their only options are alcoholic drinks. Offer a selection of sodas, iced tea, lemonade, sparkling water, and even a signature mocktail to encourage moderation and create an inclusive atmosphere for everyone. Use a Professional Caterer or Bartender: For more formal or elaborate events, consider using a third-party vendor to manage alcohol service. Professional servers are trained to identify intoxicated individuals and can limit consumption. If you go this route, make sure to carefully review the vendor contract, request liability insurance, and consider a “hold harmless” agreement to protect your business. Plan for Safe Transportation: One of the most important considerations is ensuring safe transportation home for employees who may overindulge. Consider arranging taxis, ride-sharing, or designated drivers to help those who may not be in condition to drive. It’s also helpful to have key members of management refrain from drinking and monitor the event to spot potential problems early. Set Clear Expectations for Behavior: Let employees know that, although alcohol is provided, they’re expected to act professionally. Remind everyone that they are still representatives of the company at the event, and inappropriate behavior won’t be tolerated. Make it clear that if someone’s actions put others at risk (such as driving while intoxicated), the company will take steps to ensure their safety—including potentially involving law enforcement if necessary. Limit Alcohol Consumption: Consider implementing a drink ticket system to limit the amount of alcohol each attendee can consume. A couple of drinks per person are generally sufficient for a fun evening. This can help prevent overindulgence and manage the alcohol flow in a controlled manner. By implementing these precautions, you can significantly reduce the chances of liability while hosting a fun and safe holiday event. Consulting with legal counsel to ensure your event policies are solid and well-documented is also a smart move. Ultimately, the goal is to create an enjoyable and memorable event without putting the company at risk. So, to answer your question: yes, employers can be held responsible for incidents that occur during or as a result of company-sponsored events. However, with proper planning, clear communication, and safety measures in place, HR can minimize the risks while still fostering a festive and inclusive environment.

December 10, 2024

Family Law

Will the Denial of Gender Affirming Care for Transgender Youth Become the Law of the Land?

On December 4, 2024, the U.S. Supreme Court is scheduled to hear U.S. v. Skrmettii, perhaps the most important trans rights case the justices have ever heard. The landmark case asks whether discrimination against people based on their gender identityii violates the Constitution, a question the Court has never answered. A decision against the trans plaintiffs in Skrmetti could potentially upend the entire legal framework protecting Americans from gender discrimination of all kinds and have a widespread impact on the availability of care for all youth, regardless of sex, nationwide.iii Last year, on March 22, 2023, the Tennessee House of Representatives passed HB1, a law amending the Tennessee Code banning gender-affirming care for transgender minors with a diagnosis of gender dysphoriaiv. The law also criminalizes healthcare providers who administer treatment for transgender youth. More than half of the United States – 26 states, in fact – have passed such bans in recent years.v Tennessee’s Law prohibits all medical treatments that allow a minor to identify with, or live as an individual inconsistent with their assigned sex, and treat the discomfort or distress from a discordance between their biological sex and asserted identity.vi Tennessee’s ban does permit these same hormone medications when they are provided in a way that Tennessee considers “consistent” with a person’s sex designated at birth. Tennessee’s ban has now forced transgender youth who were being treated with puberty blockers and hormone therapy to halt all such care. Transgender teens are now forced to detransition and experience the unwelcome physical effects of puberty that may be mentally and physically debilitating and ultimately destructive, not to mention arduous to later change. Skrmetti comes to the Supreme Court five years after the Court decided a case entitled Bostock v Clayton County, Georgiavii. The Court in Bostock ruled that the 14th Amendment to the U.S. Constitutionviii (the “Equal Protection Clause”) bars discrimination in employment based upon an individual’s “sex,” interpreting the word “sex” to include one’s sexual orientation and gender identity. In its decision, the Court declared that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”ix The Skrmetti plaintiffs’ argument opposing the ban created by Tennessee is based on already existing constitutional law; namely that Tennessee’s ban restricting gender-affirming care for transgender adolescents is a clear example of discrimination on the basis of sex, making it a violation of the Equal Protection Clause of the 14th Amendment of the Constitution. Tennessee’s argument in support of the ban is based on the continuation of historical legal and moral traditions.x The state argues that the Court should ignore their own precedent in Bostock and pay no attention to the Equal Protection Clause; that the Court should expand on its ruling in Dobbs v. Jackson Women's Health Organization, which overturned Roe v. Wade and permitted states to ban abortion. Skrmetti will be a major test for the Court; are they willing to stretch Dobbs to allow states to ban other health care? The court’s ruling could serve as a stepping stone toward further limiting access to abortion, IVF, and birth control.xi Although the decision that is ultimately issued by the Supreme Court in Skrmetti will be confined to Tennessee,xii it will have ramifications country-wide. Potential Outcomes There are a range of different outcomes that are foreseeable in a final ruling.xiii A ruling in favor of the Skrmetti plaintiffs could return the case to the lower courts to apply the appropriate standard of review for improper sex-based classifications. A ruling in favor of the Skrmetti plaintiffs that determines that the Bostock definition of “sex” applies, and that the Tennessee ban discriminates on the basis of sex (which violates the Equal Protection Clause), would result in the law being found to be unconstitutional and the Court would strike it down. If the Court upholds the ban, the Tennessee law would remain in effect, depriving trans minors from receiving hormone therapy, greenlighting similar bans already enacted in other states, and potentially emboldening even more states to pass similarly restrictive laws and perhaps even more draconian bans.xiv If the Court agrees that there is discrimination based on transgender status but that that does not fit within the definition of discrimination based on sex, there would be significant damage to any future case regarding transgender rights. However the case is decided, it is likely to have a significant impact on how much deference courts give to bans on medical care to treat gender dysphoria. Conclusion Twenty-six (26) of the fifty (50) states in our union have banned youths from receiving essential medical care for gender dysphoria, throwing the lives of the young people in those states into shambles. What will happen in the months following the December 4th oral argument resulting in the Court’s decision in Skrmetti we must all wait anxiously and expectantly. In the meantime, it is useful to ponder the following facts: Every major medical association including the American Academy of Pediatrics, the American Medical Association (the “AMA”), and leading world health authorities have supported gender affirming care as evidence-based care that transgender people should be able to access (i.e., medically necessary health care), and a best practice. The AMA itself has undertaken a myriad of studies indicating that the failure to provide gender-affirming care can lead to (among other things) dramatic increases in suicide attempts, as well as increased rates of depression and anxiety. While the Supreme Court will specifically address whether transgender youth can be banned from accessing hormone therapy, puberty blockers, and similar medications, the case does not address surgery for transgender youth, which is rarely performedxv. The Court will only determine the challenge to Tennessee’s transgender health care ban under the Equal Protection Clause of the Constitution. It will not decide that portion of the case that argues it is the due process right of parents to make health care decisions for and with their children without governmental hindrance. The Supreme Court’s determination to hear Skrmetti comes after a number of states have enacted restrictions on school sports participation for transgender people, bathroom usage and drag shows. At least 24 states now have laws barring transgender girls and women from competing in certain women’s or girls’ sports competitions. At least 11 states have adopted laws barring transgender girls and women from girls’ and women’s bathrooms at public schools and, in some cases, other government facilitiesxvi. If the Supreme Court agrees with Tennessee’s ban, there is nothing stopping states from banning or restricting other kinds of health care – like what gets covered under Medicaid. A Supreme Court ruling endorsing Tennessee’s ban just because it disagrees with who that treatment is being given to — would enable the government to control people’s health decisions and enact other blatantly discriminatory policies.xvii i Awaiting U.S. Supreme Court citation. Underlying proceedings (i) preliminary injunction granted in part and denied in part, L.W. v. Skrmetti, 679 F. Supp. 3d 668 (M.D. Tenn. 2023); and (ii) preliminary injunction stayed, L.W. v. Skrmetti, 83 F.4th 460 (6th Cir. 2023). ii Transgender, is defined as “[a]n internal sense of being male, female or something else." American Psychological Association, 49 Monitor on Psychology, at 32. iii https://www.vox.com/scotus/385198/supreme-court-transgender-united-states-skrmetti iv As defined by the Mayo Clinic “gender dysphoria is different from simply not conforming to stereotypical gender role behavior. It involves feelings of distress due to a strong, pervasive desire to be another gender.” https://www.mayoclinic.org/diseases-conditions/gender-dysphoria/diagnosis-treatment/drc-20475262 v Over the past two years, the number of states with laws/policies denying gender affirming care has increased from four (4) to twenty-six (26) states (AL, AR, AZ, FL, GA, IA, ID, IN, KY, LA, MO, MS, MT, NC, ND, NE, NH, OH, OK, SC, SD, TN, TX, UT, WV, WY ). vi Tennessee-2023-HB0001-Chaptered.pdf vii 140 S. Ct. 1731 (2020) viii No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. ix See Bostock. x That Tennessee has a duty to protect the bodily integrity and health of its residents, especially vulnerable individuals, particularly children, which duty includes the protection of such individuals from harmful and avant- garde medical impositions. And that Tennessee also has a responsibility to its residents to “hold steady, the law’s proper and vital recognition of an objective sexed human nature . . . that male and female are not interchangeable constructs, but divinely ordained realities. See, https://tennesseestands.org/commentary/preserving-the-created-order-reflections-on-usa-v-skrmetti.” xi https://www.aclu-nj.org/en/news/supreme-court-case-trans-health-care-explained xii The State of Kentucky is also a party to the case, so the Court’s decision will effect Kentucky residents as well. xiii https://yaledailynews.com/blog/2024/11/18/law-school-hosts-panel-on-how-united-states-v-skrmetti-puts-transgender-healthcare-on-the-line/ xiv https://lambdalegal.org/lw-v-skrmetti-faq/ xv A recent Journal of the American Medical Association showed 3,600 procedures for transgender patients ages 12 to 18 over the past decade; by contrast, 229,000 U.S. teens had surgical procedures to affirm their cisgender identities in a single year, including breast reductions for boys, or breast augmentation for girls. xvi https://www.lgbtmap.org/equality-maps/youth/sports_participation_bans xvii Comments from Michael Ulrich, associate professor of health law, ethics and human rights at Boston University’s School of Public Health and School of Law at https://19thnews.org/2024/10/how-the-supreme-court-case-on-trans-youth-could-affect-health-care-for-all-americans.

November 25, 2024