Contractor's Corner
The Crucial Importance of Shareholder Agreements
When expanding your current FedEx business or embarking on a new business venture, individuals often join together to share resources instead of going at it alone. When forming a corporation that involves more than one shareholder or adding a shareholder to a single-shareholder entity, it is crucial to establish a shareholder agreement between all parties involved. Below are some reasons why creating a shareholder agreement is so important and why it’s especially essential when adding shareholders. Clarifying Roles and Responsibilities A shareholder agreement clarifies each shareholder’s roles, responsibilities, and expectations. It outlines the rights and obligations of each party, including how decisions will be made and how the company will be managed. Shareholder agreements also safeguard minority shareholders from being outvoted by the majority. Dispute Resolution Shareholder agreements make it easier to resolve potential disputes between shareholders. The agreement can establish a dispute resolution process, such as mediation or arbitration. The process will help ensure that any disagreements do not escalate into legal battles that could jeopardize the business. Protection for Minority Shareholders Minority shareholders need to protect themselves from being disadvantaged compared to the majority shareholders. Shareholder agreements can assist with this by establishing clear rules and outlining the rights of minority stakeholders. For example, it might ensure that no major decisions or changes can be made without the approval of all shareholders. Preparing for the Future Shareholder agreements can help prepare for the future. It can establish processes for adding new shareholders and outline the terms and conditions of any future sale of the company. Being prepared for future possibilities can provide a sense of control and stability that benefits everyone involved with the company. Compliance with State Laws In many states, shareholder agreements are legally required. But even in cases where it’s not required by law, it’s vital to have one in place. In some cases, not having a shareholder agreement could lead to significant disputes that could seriously impact the business. Conclusion: Shareholder agreements are intended to establish clear expectations, ensure fair treatment of minority shareholders, provide a roadmap for dispute resolution, and prepare for future possibilities. It is essential for business owners to create a well-thought-out shareholder agreement that is comprehensive, detailed, and legally binding. By doing so, business owners can protect their investments, minimize the risk of disputes, and help guarantee the company’s long-term health.
July 12, 2023
Family Law
Adult Guardianships – Protecting Your Loved One
When a family member loses the capacity to effectively manage his or her affairs, it may become necessary to ask the court to appoint a guardian to protect that person’s interests. In Maryland, there are two different types of adult guardianships: (a) guardianship of the person, and (b) guardianship of the property. In many instances, both forms of guardianship are necessary. The court will appoint a guardian of the person when it finds that: A person lacks sufficient understanding or capacity to make or communicate responsible personal decisions, including provisions for health care, food, clothing, or shelter, because of any mental disability, disease, habitual drunkenness, or addiction to drugs; and No less restrictive form of intervention is available that is consistent with the person’s welfare and safety. The court will appoint a guardian of the property if it determines that: The person is unable to manage effectively the person’s property and affairs because of physical or mental disability, disease, habitual drunkenness, addiction to drugs, imprisonment, compulsory hospitalization, detention by a foreign power, or disappearance; and The person has or may be entitled to property or benefits which require proper management. Failure to seek appointment of a guardian for a family member who lacks the capacity to manage his or her affairs can have serious, irreversible ramifications for a person’s finances and health. For example, persons who lack the capacity to manage their finances can easily fall prey to scams seeking to take advantage of the elderly. Persons who lack capacity can also mismanage money to the point that all their assets are depleted. A loved one who lacks capacity might also neglect to seek necessary medical care or attend to the day-to-day tasks necessary to ensure that they are safe and healthy. To ensure that a loved one is not put in harm’s way, family members should act with urgency in seeking the appointment of a guardian. The process of seeking appointment of a guardian can be complicated and emotional, but an experienced guardianship attorney can explain the process, prepare all the pleadings that must be filed, and represent you during the trial in which the court determines whether a guardian should be appointed.
July 12, 2023
Family Law
I did not want to get too much “in the weeds…”
I did not want to get too much “in the weeds…” As of July 1st, Maryland became the 21st state where recreational cannabis sales are legal. Anyone over 21 can purchase dried flower, pre-rolled joints, and vape cartridges containing THC and edibles. All it takes is a government-issued ID and a trip to a licensed dispensary. There are about 100 dispensaries across the state open for recreational sales. More are coming. Authorities are a bit concerned about safety on the road, and police have been trained to determine if a driver is under the influence of marijuana. And remember that Federal rules still apply! While marijuana has been a factor in family law cases for decades, the legalization in states like Maryland will take away a parent’s argument that the using parent is criminal. However, the courts may still consider a parent’s use and possession of marijuana in custody cases. This would be similar to the court’s consideration of a parent’s use of alcohol. The court may look at things like the purpose a parent is using marijuana, the amount the parent is using, and the impact of the parent’s use on the children.
July 10, 2023
Family Law
Who Will Pay for Private School After We are Divorced?
The answer is… it depends. Isn’t that a lawyer’s answer to everything? In an ideal world, the parties agree on where their child will go to school, and they have endless funds to cover the child’s educational expenses, so there is no need for lawyers and courts. If that is not the case, the next best thing is to try and reach an agreement regarding the child’s education. In many states, the court may order a parent to contribute to all or a portion of their child’s private school tuition. In deciding on education, the court is to consider what is best for the child. Factors to be considered and weighed by the court may include, but not be limited to, the child’s educational history, the child’s educational needs, the school’s resources, the parent’s ability to pay, the parent’s decision regarding the child’s education while married, and the child’s educational performance history. Absent the court’s interference, the parties may come to an agreement on which school they want their child to attend and how it is to be paid. In some instances, the child is so young the parties may come to a written agreement on a process for determining which school their child should attend. Whether via court or an agreement, finances are typically a large factor. How was tuition paid during the marriage? Are there enough funds to support two households and private schools? Are third parties, like grandparents, contributing to private school expenses? And the list of questions to be considered goes on and on depending on the facts of each family. With the help of a lawyer who understands your child’s needs and your educational goals, ideally, you can come to an agreement on terms that are best for your child. Sometimes, the controversy is so high between the parents that a resolution outside of court is not tenable, and you will want an attorney who is prepared to address the factors to the court to most benefit your child’s educational needs.
July 10, 2023
Family Law
You Want to Get A Divorce? Here’s What You Need to Know
Originally posted 7/6/2020, no content changes. Does anyone go into a marriage thinking about getting a divorce? Doubtful. According to the Centers for Disease Control and Prevention’s National Marriage and Divorce Rate Trends, the rate of divorce in the United States in 2018 was 2.9 divorces per 1,000 people. As with anything, doing your due diligence and finding a great lawyer is going to be step one. What are some ways to find a “great” lawyer? When interviewing your lawyer, don’t be afraid to ask as many questions as necessary to ensure you are comfortable. It is important for you to make sure your lawyer practices family law regularly. Your lawyer should take a reasonable amount of time to listen to your issues and thoroughly discuss your options and the process with you. After going through your options, and you’ve decided to proceed with a divorce, the next step is for you to retain that attorney. Then, your attorney will begin gathering additional information and documentation from you. You should expect your attorney to request that you provide documents reflecting your and your spouse’s income, assets, expenses related to your family, tax returns, pay stubs, appraisals, business records, and more. Don’t worry if you do not have all of this information. Your attorney will help you obtain the information and documents needed. Following the information and documentation gathering stage, your lawyer may discuss the options of settlement, mediation or filing with the court. Should you decide to file with the court, your lawyer will create a Complaint outlining the issues to be determined by the court (ex. custody, access, child support, alimony, division of marital property and attorneys’ fees) and your request as to what you’d like the court to award you. Your Complaint will likely have to be filed with a Financial Statement. The Financial Statement is a detailed document required by the Court, which your attorney should assist you with completing. Even after filing with the court, settlement is always possible and strongly encouraged through discussions between counsel or mediation. With thorough preparation, mediation can be successful, even if not with just one session. Should you be able to settle your matter through counsel or mediation, you will have a brief, uncontested divorce hearing. Should you be unable to settle before trial, you will proceed with a trial, wherein your attorney will present your case to the court for a judge to make a ruling. It should be noted that most cases settle. For instance, we settle over 90% of our cases. The lawyer you choose will help drive the direction of your case, and it’s important to find a lawyer who doesn’t just tell you what you want to hear. You need a lawyer who will explain your options and make a recommendation so you can make an informed decision.
July 6, 2023
Contractor's Corner
Legalized Marijuana and DOT Regulations: What Contractors Need to Know
The legal status of marijuana in the United States has been changing rapidly over the last decade. This quick evolution has led to various questions and concerns for business owners, especially those who operate fleets of commercial trucks and employ truck drivers. Nowadays, marijuana is legalized for medical or recreational use in many states across the United States, which raises concerns about how this will impact the transportation industry. The legalization of marijuana for medical and recreational use in many states creates a bit of uncertainty for those that operate fleets of commercial trucks and employ truck drivers. The Department of Transportation (DOT) requires that drivers undergo regular drug testing, and marijuana use can cause a failed test, disqualification of a commercial driver’s license (CDL), and possible termination. Employers need to know the legal ramifications of marijuana use for commercial motor vehicle employees. It’s a good idea to review your company’s drug and alcohol policy to ensure that your policy is compliant with the DOT’s drug and alcohol testing regulations. If an employee tests positive for drug use, including marijuana, while on duty, the law stipulates that the employer must immediately remove the driver from duty. In this case, the DOT requires drivers to complete a Return-to-Duty process, including treatment plans and drug testing. After an employee meets all requirements, the DOT may allow the employee to return to work. When an employer is well informed regarding what is required under the law, they can act quickly to comply, which is crucial for safe operation and complying with timing requirements under the DOT, especially after an on-duty accident. It’s important to recognize and outline restrictions over the use of marijuana so that employees know their obligations. Employees cannot use marijuana on the job and must understand that using marijuana or CBD products is strictly prohibited under federal law for truck drivers. It’s critical to educate employees regarding the importance of abstaining from marijuana use while on duty and the potential consequences of failing a drug test. Often, employees operate under false assumptions about marijuana usage based on headlines around legalization and employee protections. While several states protect employees’ off-duty marijuana usage, they all have exemptions for federally mandated drug testing and sometimes for safety-sensitive positions. Although marijuana is legal in many states, it remains illegal under federal law, which could impact a driver’s ability to cross state lines with marijuana products. Ultimately, drug testing falls under the jurisdiction of the DOT and supersedes state laws on marijuana legalization. Therefore, business owners must follow DOT drug and alcohol testing regulations to avoid non-compliance issues and maintain a safe workplace. Conclusion: Contractors should prioritize compliance with DOT drug and alcohol testing regulations to maintain a safe workplace and avoid non-compliance issues. By ensuring your employees understand the importance of abstaining from marijuana use and educating them on the Return-to-Duty process, you can streamline your policies and minimize your legal exposure. Working with legal counsel and keeping abreast of the regulations will go a long way toward creating a safer, more informed workplace and preventing attrition based on misinformation.
July 6, 2023
Business
Top Ten Things Every Property Manager Should Know
Here are ten things I believe every property manager should know. These ten things will help you make your job easier and ensure that you are in compliance with the applicable laws. Keep Complete and Accurate Records. I cannot stress the importance of this enough. Keeping complete and accurate records is not only good business practices but it is necessary for evidentiary purposes. Property managers and staff should document conversations and other interactions they may have with tenants, complete incident reports, when necessary, keep track of invoices and work tickets or maintenance requests. Doing these things can help you defend and defeat potential claims that may arise throughout the course of litigation and at trial. This one goes hand in hand with keeping complete and accurate records. It is important that management and staff have regularly scheduled meetings to keep everyone apprised of what is going on in the apartment community and address any outstanding issues. This is important to ensure that everyone is on the same page. Keeping complete and accurate records aids in ensuring that everyone is on the same page, and nothing is overlooked or missing. Be familiar with the terms of the lease. It is important to familiarize yourself with the terms of the lease. Although North Carolina General Statutes (NCGS) Chapter 42, the Residential Rental Agreements Act, governs residential agreements such as leases, some of the provisions in it are default provisions that are only applicable in the absence of an express lease provision. For example, NCGS §42-3 outlines the notice requirements for issuing a notice for nonpayment of rent; however, leases may contain forfeiture clauses that waive this notice requirement. So, if there is ever a question about notice or whether something is permissible, the first thing you should look at is the lease. Does the lease waive notice? Is this conduct prohibited by the lease? Nail down the facts. Generally, cases in which a complaint in summary ejectment are filed are fact specific. Did the tenant tender rent according to the terms of the lease? Did the tenant engage in activity which is prohibited by the lease? What evidence do you have to support what is being alleged in the complaint? Cases like these, specifically summary ejectment actions, turn on the occurrence of specific events. It is important that you are aware of everything that happened and any communication with the tenant (another reason why keeping complete and accurate record is important). For example, was some time of agreement entered given the tenant additional time to pay, are there any pending maintenance requests, did the tenant make any formal complaints, etc. You want to ensure that in the event you go to court, there are no surprises. Be organized. I recommend having a system in place to eliminate any confusion about who should be doing what and what course of action should be taken if certain events occur. Having a clear plan in place, outlining the steps management should take when looking to file a complaint, in summary, ejectment makes the process a lot smoother. You should always have a signed copy of each tenant’s lease on file and a current ledger so you and your attorney can easily determine what type of notice should be issued, if any, and the amount of past due rent owed. These two things should always be readily accessible. Always Follow Up and Follow Through. You should always follow any phone conversation or conversation you have in person with a tenant with an email summarizing what you discussed and what action will be taken if any is necessary. Always ensure that tenants execute all the necessary documents, such as signing the lease, completing a move-out receipt, and signing a release if applicable. Pay Attention to Detail. Because summary ejectment actions are fact specific, it is important that you pay close attention to the details. Please ensure that any notice you issued complies with the terms outlined in your lease, list the correct address, and names all leaseholders. For example, does your lease require that all notices be signed? Does it require that all notices are sent via email, US mail, or some other carrier? Does the lease require that any notices to be sent to address other than the address of the leased premises? For summary ejectment actions, sometimes, the devil can be in the details. If in doubt, ask questions and seek advice. There may come a time when a tenant asks you a question or a situation arise where you don’t have the answer or don’t know what you should do. That’s ok! If you are unsure, tell the tenant that you will have to get back to them and reach out to someone in a supervisory role or to an attorney to get some guidance. Be consistent. Be consistent in enforcing the rules and regulations. This will make your job a lot easier and help curb any discrimination claims and fair housing issues. Are you prepared to offer what you offered one tenant to every tenant who asks? Stay informed. Things are constantly changing; legislation is being passed, new case law is being introduced. It is important that you stay informed of any changes and how they can affect the processes if you have in place.
June 29, 2023
Estates and Trusts
Trusts and Estate Planning Tips for the LGBTQ+ Community
Pride Month is an important time for celebrating the LGBTQIA+ community and promoting equality, acceptance, and visibility. Estate planning is a crucial aspect of personal financial planning for individuals and families, regardless of their sexual orientation or gender identity. Here are six trusts and estate planning tips for the LGBTQ+ community that may be particularly relevant during Pride Month: Wills and Trusts: Creating a will or a trust is essential for ensuring that your assets are distributed according to your wishes after your passing. Without a valid will or trust, your estate will be subject to intestacy laws, meaning New York State will determine who will inherit from you and in what proportion. The rules of intestacy may not align with your intentions or benefit your chosen beneficiaries. By creating an estate plan, you have the opportunity to specify how you want your assets to be distributed, including to your chosen family, friends, or organizations. Beneficiary Designations: Review and update your beneficiary designations on all of your financial accounts, including retirement accounts, life insurance policies, and other financial accounts. Ensure that the named beneficiaries reflect your current wishes. If you are in a relationship that is not legally recognized, it’s imperative that your loved one is designated as a beneficiary. Healthcare Directives: Consider creating advance healthcare directives such as a healthcare proxy and a living will. These documents allow you to appoint someone to make medical decisions on your behalf and outline your preferences regarding medical treatments and end-of-life care. Selecting a trusted person who will respect your wishes, including your chosen family or partner, is crucial to ensure your healthcare wishes are honored. If you do not have these documents in place, many states, like New York, allow your next of kin to make end-of-life decisions for you. Guardianship for Your Children: If you have children or dependents, it is vital to establish guardianship arrangements in case something happens to you. Ensure that your estate plan specifies who you want to care for your children and provide for their well-being. This is especially important for couples who are not legally married or who may face additional legal complexities in some jurisdictions due to the lack of protection or recognition of LGBTQ relationships. Your Local LGBTQ+ Laws: Understanding the laws and regulations regarding LGBTQ+ estate planning in your jurisdiction is so important. Laws can vary by country, state, or even local jurisdiction, and they may impact your ability to protect your chosen family, distribute assets, or claim inheritance rights. Consulting with an estate planning attorney who has experience in LGBT estate planning is imperative. Nondiscrimination Language: When drafting estate planning documents, you should consider including non-discriminatory language to ensure that your wishes are carried out without prejudice or discrimination based on sexual orientation or gender identity. This will help protect your loved ones from potential challenges to your estate plan based on discriminatory interpretations or actions. Please feel free to contact me to navigate the legal complexities of LGBTQ+ estate planning and to ensure that your estate plan aligns with your goals and values.
June 27, 2023
Intellectual Property
Supreme Court Limits First Amendment Protection in Trademark Parody Case
Decision Jack Daniel’s Properties, Inc. v. VIP Products LLC, No. 22-148 (U.S. 2023). This month, the Supreme Court clarified the interplay between the First Amendment’s protection of freedom of expression and the Lanham Act’s protection against trademark infringement in a case that dealt with a manufacturer of dog toys modeled off of famous liquor bottles. In Jack Daniel's Properties, Inc. v. V.I.P. Products L.L.C., No. 22-148 (U.S. 2023), the Supreme Court ultimately held that when analyzing the propriety of the use of another's trademark, the critical question is whether the trademark is being used for "source identification"—i.e., to communicate the maker, manufacturer, or creator of the work in question. If so, then there is no threshold First Amendment inquiry and an infringement claim can proceed as usual, regardless of whether the use of the trademark had been intended as a parody. Background of Case Jack Daniel's is a case about "dog toys and whiskey," Justice Kagan writes in the very first sentence of the Court's opinion. The dispute began when V.I.P. Products began manufacturing a dog toy primarily modeled after the famous Jack Daniel's Whiskey bottle called "Bad Spaniels." Although the toy largely borrowed the trappings of the iconic Jack Daniel's bottle and label, it altered the words "Jack Daniel's" to "Bad Spaniels," "40% ALC. BY VOL" to "43 percent poo," and "Old No. 7 Brand Tennessee Sour Mash Whiskey" to "Old No. 2 On Your Tennessee Carpet." The toy also disclaimed that it was "not affiliated with Jack Daniel's Distillery." Shortly after the Bad Spaniels chew toy hit the market, Jack Daniels demanded V.I.P. cease its sale. Rather than comply, V.I.P. sought a declaratory judgment in the District Court of Arizona, asserting: (a) it was protected from an infringement claim under the First Amendment according to the test set out for artistic works in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) (adopting a two-pronged threshold test for the Lanham Act to apply: (1) determining whether use has "artistic relevance"; and (2) if so, whether the use is "explicitly misleading" as to the source or content of the work); and (b) it was protected from a dilution claim because the toy was a parody and qualified as fair use under 15 U.S.C. § 1125(c)(3)(A). Jack Daniel's countersued, asserting trademark infringement (based on consumer confusion) and dilution. Lower Court Decisions At first, the District Court rejected V.I.P.'s arguments. It held that because the use of Jack Daniel's trademark identified the alleged source of V.I.P.'s product, First Amendment protections did not apply. The district court also refused the parody defense to dilution for essentially the same reason—i.e., the exclusion did not apply when the use of the mark identified the source of the alleged diluter's product. After a bench trial, the district court found “consumers were likely to be confused about the source of the Bad Spaniels toy and that the toy’s negative associations with dog excrement (e.g., “The Old No. 2”) would harm Jack Daniel’s reputation.” The Ninth Circuit reversed. The appellate Court determined the threshold First Amendment Rogers test did apply "because Bad Spaniels is an expressive work" and "communicates a humorous message." In addition to remanding the case on the infringement claim, the Court of Appeals also rejected the dilution claim, reasoning that since the work "parodies and comments humorously on Jack Daniel's," it was protected under the "exclusion for noncommercial use" per 15 U.S.C. § 1125(c)(3)(C). On remand, the District Court applied the Ninth Circuit’s analysis and granted summary judgment in favor of V.I.P. on the infringement claim. After the Ninth Circuit affirmed the second judgment, the Supreme Court accepted Jack Daniel's appeal on the infringement and dilution claims. The Supreme Court’s Decision Reversing and remanding, the Supreme Court largely agreed with the District Court's original analysis. Generally, it held that the threshold First Amendment Rogers test does not apply when someone uses a trademark as a trademark—that is, to identify the source of a product. In so doing, the Court provided several examples to help explain when trademark use is source-identifying versus when it is used to convey another expressive function. For example, the band Aqua's use of Mattel's trademark "Barbie” in the song "Barbie Girl" did not speak to the song's origin but was used to promote a message of positive body image. Another example is the use of "Louis Vuitton" in the film The Hangover: Part II, where a character uses the mark to describe his luggage but mispronounces the name. The use was to convey something about the character – he wants to be seen with the luxury brand but doesn't know how to pronounce its name. These marks were not used to identify the source of the goods but to perform another expressive function, and the Rogers test would apply. On the other hand, when the use "at least in part [is] for source identification," as here where V.I.P. has used trademarks and trade dress derived from Jack Daniel's registrations as a designation of the source to promote its products, then the First Amendment Rogers does not apply because the "defendant may be trading on the goodwill of the trademark owner." For similar reasons, the Court also rejected the Ninth Circuit's decision about the noncommercial exclusion to dilution for "parody" and "fair use." Ultimately, the Court held that neither the First Amendment nor the “noncommercial exclusion” exception to liability applied. Thus, the lawsuit was remanded for further proceedings. Key Takeaways Brand owners have kept a close watch on Jack Daniels, as many were concerned that the Court would significantly expand the immunizing power of parody and humor in trademark infringement cases, allowing a potential infringer to dodge litigation by invoking Rogers. The Court's decision quells those fears. By drawing a clear line under the applicability of the Rogers test in disputes involving trademarks that contain expressive elements, the Court upheld the central ten-ant of trademark law: those using a mark that is similar to or evokes another's trademark as a source identifier to promote its goods or services will be subject to the likelihood of confusion inquiry under the Lanham Act, even if the use is in parody or overtly humorous. The First Amendment considerations do not create a safe harbor for those who trade on the goodwill of another's trademark to gain an advantage. To be clear, the Court's holding does not eviscerate the role of parody. Jack Daniel's only makes the Rogers test unavailable as an escape hatch to achieve a summary dismissal of the infringement action. Satire remains a viable defense in the context of a standard likelihood of confusion inquiry. As the Court noted, "a parody is not often likely to create confusion. Self-deprecation is one thing; self-mockery, far less ordinary." In sum, Jack Daniels refocuses the inquiry on the likelihood of consumer confusion. Companies are encouraged to consider these considerations as they evaluate new trademarks or trade dress during product and brand development. This summary of legal issues is published for informational purposes only. It does not dispense legal advice or create an attorney-client relationship with those who read it. Readers should obtain professional legal advice before taking any legal action.
June 23, 2023
One Minute of Overtime
Home Healthcare
Welcome to One Minute of Overtime, where I will share insights on Labor and Employment Law topics, mostly related to minimum wage and overtime compliance issues. Compliance in this area of law is nuanced and technical, so it is critical for employers to audit and adjust their practices to remain compliant, so stop by to stay up-to-date and in-the-know. With limited exception for companionship services, most individuals hired to provide home health care services are likely to be considered non-exempt employees. Home health care providers should take care to ensure proper classification of their workforce.
June 21, 2023
Business
Foreign-Owned U.S. Entities Have Until June 30, 2023 To File Form BE-12 With The Bureau of Economic Analysis
This year, the Bureau of Economic Analysis (“BEA”) of the U.S. Department of Commerce is conducting a mandatory five-year survey on foreign investments in the United States for fiscal years ending in 2022. The survey covers financial and operating data of U.S. affiliates of foreign multinational enterprises. The survey is used to produce statistics on the scale and effects of foreign-owned business activities in the United States. Reporting on BEA’s direct investment surveys is mandatory under the International Investment and Trade in Services Survey Act (P.L. 94–472, 90 Stat. 2059, 22 U.S.C. 3101–3108, as amended). The act protects the confidentiality of the data that companies report. BEA is prohibited from granting another agency access to the data for tax, investigative, or regulatory purposes. A BE-12 report is required for each U.S. affiliate, i.e., for each U.S. business enterprise (including real estate held for non-personal use) in which a foreign person or entity owned or controlled, directly or indirectly, 10 % or more of the voting securities or equivalent interest of a U.S. business enterprise, at the end of the business enterprise's fiscal year that ended in the calendar year 2022. Certain private funds may be exempt from filing. Which BE-12 report to file depends on the size of the U.S. entity. See the chart on the BEA website. U.S. entities that were at least 10% owned by a non-U.S. entity in 2022 and whose total assets, sales, or gross operating revenues or net income did not exceed $60 million in 2022 must file BE-12C. Larger foreign-owned U.S. entities may need to file BE-12A or BE-12B. The forms are available online on the BEA website. Companies that did not file a hard copy of the BE-12 by May 31, 2023, can still file an electronic copy online via the BEA website by June 30, 2023. Failure to provide the required information may result in fines ranging from $5,580 to $55,808 and possible criminal penalties, including imprisonment. If you have any questions or need assistance with filing BE-12, please contact me at 212-545-1900 or mbloemsma@offitkurman.com. DISCLAIMER: The information contained in this blog alert is intended for informational purposes only; and should not be relied upon or construed as legal advice.
June 20, 2023
Immigration Law
Form I-9 Requirement Flexibility to End on July 31, 2023
The U. S. Immigration and Customs Enforcement (ICE) recently announced the end of COVID-19 temporary flexibilities for Form I-9, Employment Eligibility Verification.[1] Starting July 31, 2023, employers must complete in-person physical document inspections for employees whose documents were inspected remotely during the temporary flexibilities. Employers who have been using the COVID-19 flexibilities have until August 30, 2023, to complete the physical inspection of identity documents. The change does not impact the ability of employers to use 3rd party authorized agents to conduct the required in-person inspections.[2] The flexibility provisions allowed employers that are operating remotely to complete Form I-9 Section 2 document review remotely (e.g., electronically over video link, fax, or email) within three business days of hire. The flexibility provisions are for employees who are working remotely due to COVID-19 precautions “until they undertake non-remote employment on a regular, consistent, or predictable basis, or the extension of the flexibilities related to such requirements is terminated, whichever is earlier.” Employers who conducted remote Form I-9 document review are advised to begin implementing the in-person verification of identity and employment eligibility documentation for employees who were hired on or after March 20, 2020, and who presented such documents for remote inspection in reliance on the flexibilities first announced in March 2020. After documents have been physically inspected, the employer should add “COVID-19” and “documents physically examined” with the date of inspection to the Section 2 additional information field on the Form I-9, or to Section 3 as appropriate. A large number of employees now work remotely and are not in proximity to the employer. An authorized representative may be used for completing Section 2 of the Form I-9. Anyone other than the employee may serve as an authorized representative, subject to state law. Once the authorized representative completed Section 2, the employer must ensure that the form appears to be free of errors. The employer has liability for any paperwork deficiencies in the Form I-9 completed by the authorized representative. Immigration laws and regulations may change over time, so it's important to consult with an immigration attorney or refer to the official sources, such as the U.S. Citizenship and Immigration Services (USCIS) website, for the most up-to-date information. The I-9 form is used to verify the identity and employment authorization of individuals hired for employment in the United States. Previously, due to COVID-19 restrictions, the U.S. government temporarily allowed employers to inspect Section 2 documents remotely (e.g., via video conference) when completing the I-9 verification process. Since the remote inspection option will no longer be available, employers will need to resume in-person verification procedures as outlined in the I-9 instructions. Many third-party services are available to employers wishing to conduct inspections outside their geographic reach, employers may also use their law firms to do this.[3] Furthermore, Employers are required to conduct a physical inspection of original documents related to previous remote I-9s. Here are some key points to consider: In-person verification: Employees should present their original, unexpired documents in person to their employers or an authorized representative. The employer or representative must physically examine the documents to determine their authenticity. Timing: Section 2 of the I-9 form must be completed within three business days of the employee's first day of work. During this time, the employer must review and record the information from the employee's documents on the I-9 form. Acceptable documents: The employee must present acceptable documents that establish their identity and employment authorization. The USCIS provides a list of acceptable documents on the back of the I-9 form, which includes items such as a U.S. passport, driver's license, Social Security card, and permanent resident card (green card). Completing the form: The employer or authorized representative should complete Section 2 of the I-9 form, including recording the document title, issuing authority, document number, and expiration date (if applicable). The employer must sign and date the certification section. Annotation of compliance for prior remote I-9s: For prior completed I-9s under the remote rules Employers should annotate forms I-9 to verify the physical inspection.[4] The reverification should be added to the Additional Information field in Section 2. Best practice is to include the date and full name and title of the individual who completed verification. Review of information: Employers should establish a review process of all I-9s to make sure all forms are valid, and information is entered correctly. Errors happen and can be costly for employers, a simple review process can head off a lot of issues early on. Retaining and storing forms: Employers are required to retain I-9 forms for each employee and make them available for inspection by authorized government officials if requested. The forms should be stored securely and maintained for three years after the initial date of hire of the employee, or one year after the date employment ends, whichever is later. Consult the USCIS guidelines for details on retention and storage requirements. It’s important for employers to stay informed about any changes or updates to the I-9 verification process. Checking the USCIS website or consulting with an immigration attorney will help ensure compliance with the latest requirements. [1] https://www.ice.gov/news/releases/ice-updates-form-i-9-requirement-flexibility-grant-employers-more-time-comply [2] https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/complying-with-i9-and-everify-requirements-in-the-united-states.aspx [3] Many services have sprung up in this space that act as authorized agents for physical inspections - there are many like this out there: https://workforce.equifax.com/solutions/i-9-anywhere?utm_source=google&utm_medium=cpc&utm_campaign=https://workforce.equifax.com/solutions/i-9-anywhere?utm_source=google&utm_medium=cpc&utm_campaign=EWS_ES_I-9-Anywhere_2023&utm_term=&utm_content=&utm_term=&utm_content=&gad=1&gclid=CjwKCAjw04yjBhApEiwAJcvNoXj_RnOCaE4EaXxp9hrUXzgZSubb5HxDKKQypMMQL9nOFRrzZ3TQeBoCXFAQAvD_BwE&gclsrc=aw.ds https://dcmobilenotary.com/i-9. [4] Form I-9 Examples Related to Temporary COVID-19 Policies | USCIS
June 20, 2023
Intellectual Property
Chew on This – SCOTUS Rules that Dog Toy Parodying Jack Daniel’s Can’t Hide Behind First Amendment
On June 8, the US Supreme Court ruled unanimously in favor of Jack Daniel’s in Jack Daniel’s Properties, Inc. v. VIP Products LLC, overturning the decision of the 9th Circuit Court of Appeals. Justice Elena Kagan wrote the opinion, holding that VIP Products’ sale of a dog chew toy in the shape of a Jack Daniel’s bottle, which also has a label replacing “Jack Daniel’s” with “Bad Spaniels” and other parodying of the Jack Daniel’s label in a manner referring to dog defecation, was not sufficiently protected under the First Amendment to avoid liability for trademark infringement or dilution. The SCOTUS decision was not a complete victory for Jack Daniel’s. Having held that the “Bad Spaniel’s” chew toy was not protected from claims of trademark infringement and dilution, Justice Kagan sent the case back down to the US District Court for a determination of whether there is a likelihood of confusion and whether “Bad Spaniels” dilutes Jack Daniel’s trademarks. VIP Products’ position was that its “Bad Spaniels” chew toy was an expressive work that conveyed a humorous message and that, therefore, the First Amendment protects the use from a claim of trademark infringement. However, VIP Products had also claimed that “Bad Spaniels” and other parodying elements were trademarks owned by VIP Products. This contributed to VIP Products’ downfall: because VIP Products was using “a trademark to designate the source of its own goods—in other words, … used a trademark as a trademark,” as Justice Kagan put it, VIP Products was not entitled to special First Amendment protection. In making this ruling, Justice Kagan made a point of saying more than once that the parody aspect of the “Bad Spaniels” toy could factor into an analysis of the likelihood of confusion. In other words, where such content is a parody, consumers are less likely to be confused into thinking that the parodic products come from the same source as the product being parodied. SCOTUS also knocked down the 9th Circuit’s holding that there was no trademark dilution. Under federal trademark dilution law, owners of famous trademarks can sue users of identical and very similar trademarks even where there is no likelihood of confusion. The 9th Circuit said VIP Products’ use was “noncommercial” because it was a parody and conveyed a humorous message. Justice Kagan disagreed, finding that the 9th Circuit’s view was too expansive and noting that there are limitations in the dilution law where the parodying content is used as a source identifier of the accused product. What can we take away from this decision? This is by no means an absolute bar on selling items that may constitute a parody of a brand, even a famous one. However, creators of such products would do well to avoid treating the parodying elements as trademarks and avoid any content or action that could mislead the public into thinking there is a source connection between the parodied product and the parodying one.
June 13, 2023
Franchise Law
COVID-19 and State Franchise Renewals
Originally posted on June 12, 2020, content updated on June 12, 2023. This blog post may contain information that was accurate at the time of publication but could become outdated over time. We strive to provide relevant and timely content, but circumstances, facts, and data can change. Users are encouraged to verify the current status of any information presented and seek updated guidance where necessary. The COVID-19 pandemic disrupted the work of state franchise regulators as well as the franchisors they regulate and the franchise buyers who benefit from state regulation. The pandemic also affected accounting firms, sometimes delaying the completion of audited financials, resulting in late renewal filings. Several states took positive steps to ease their filing rules as a result of COVID-19. It’s worthwhile to reflect on these changes so that we can do even better in the face of future calamities, whether that means a recurrence of the pandemic before a vaccine is available or the outbreak of a different pandemic. Extended deadlines Some states extended their franchise renewal filing deadlines. As a result, franchisors that missed their renewal deadlines were not required to submit new initial applications for franchise registration. This would have increased their filing fees. At the time, the fee for an initial registration in New York, for example, was $750, while the renewal fee was $150. In the State of Washington, the initial fee was $600, while the renewal fee was $100. Of course, these extensions did not allow franchisors to sell franchises during the period in which the franchise registration had lapsed. California On March 22, 2020, the California Commissioner of Business Oversight issued a notice stating that, through June 30, 2020, the Department of Business Oversight would waive the additional $225 filing fee for franchise renewals that are filed after the registration has lapsed. At the time, the initial registration fee in California was $675, and the renewal fee was $450. Hawaii The Hawaii Department of Commerce and Consumer Affairs, which normally requires renewal filings within three months after the end of each year, at that time extended the deadline from March 31, 2020, to April 30, 2020. Illinois At that time, the Illinois Attorney General’s Office issued a notice stating that a franchisor whose registration was due to expire between April 1, 2020, and June 1, 2020, was automatically granted an extension of 60 days from its anniversary date to file a franchise renewal application without penalty. Indiana The Indiana Securities Commissioner announced on April 7, 2020, that “any franchise registration that was set to expire between March 16, 2020, and May 31, 2020, was automatically extended to June 30, 2020.” Maryland The Securities Commissioner of Maryland issued an order on March 17, 2020, stating that a franchisor whose registration was due to expire during the Coronavirus State of Emergency was granted an extension of that registration “for a period of time equal to 30 days after the date the Governor of Maryland declared the end of the Coronavirus State of Emergency.” Minnesota The Minnesota Commerce Department issued a Guidance notice on March 30, 2020, stating that the deadline for franchisors whose annual reports were due by April 30, 2020, was extended to June 30, 2020. New York New York law normally requires franchisors to file updated Franchise Disclosure Documents (FDDs) no later than four months after the end of each fiscal year. In a notice dated March 24, 2020, as revised on May 12, 2020, the Office of the Attorney General granted a filing deadline extension. Any registration renewal or amendment that was due between March 1, 2020, and June 6, 2020 (the “Relief Period”) was extended for 90 days from the end of the Relief Period. Virginia On March 17, 2020, the Virginia State Corporation Commission extended the renewal deadline for franchises whose registration was due to expire while the Judicial Emergency Declaration by the Supreme Court of Virginia remained in effect. The initial 21-day extension was extended on April 2, 2020, “to remain in effect during the pendency of the Judicial Emergency Declaration or any similar subsequent declaration, declaration extension or order of the Supreme Court of Virginia or such other time period as may be subsequently ordered by the Commission.” Washington The Washington Department of Financial Institutions issued a notice on April 8, 2020, stating that “applicants may pay the renewal fee of $100 to complete an application for franchise registration … for any offering that was previously registered and that expired, or that will expire, between March 1, 2020, through June 30, 2020, until further notice.” Electronic filings Paper and CD ROM filings can be a challenge when filers work from their homes. Online filings are usually the easiest and always the fastest way to file. For some states, franchise filings continue to be accepted electronically. Minnesota, Rhode Island and Wisconsin, for example, offer electronic filing. Indiana required franchise applications to be made electronically since January 1, 2020. California’s DocQNet self-service portal existed long before the pandemic, but in its notice of March 22, 2020, the California Commissioner of Business Oversight stated that “the Department is strongly urging” that all franchise filings be submitted electronically during the COVID-19 pandemic. In its notice of April 8, 2020, the Washington Department of Financial Institutions reminded filers that all franchise filings are now required to be submitted online through the Department’s electronic filing system. Hawaii also encouraged franchisors to file online using the state’s securities portal. New York never offered electronic franchise filings until New York City became the epicenter of the COVID-19 pandemic. But while New York’s COVID-19 notice required that all franchise filings “be submitted by email in addition to the required paper and/or CD filings,” the email submission must also contain a copy of the check that must still be mailed to the Department of Law. Remote Notarization and E-Signatures A few states required the franchisor’s certification to be signed by an officer of the franchisor before a notary public. It may have been impossible during a pandemic to find a notary or an officer willing to sign before a notary when almost everyone was sheltered in place. For this reason, Washington waived notary requirements “while social distancing directives remain in effect.” New York and Hawaii temporarily suspended the requirement that the notary be physically present at the signing. In other words, audio-visual technology was adequate. Of course, this worked only when the signing officer and the notary were present in the same state. California went a step further by announcing that it would accept documents “filed on DocQNet that are signed electronically using e-signature software, such as DocuSign, in which case notarization of signatures will not be required.” Final Thoughts Extending deadlines is a useful tool when special circumstances affect large numbers of filers. But electronic filings and e-signatures are helpful to everyone with or without a pandemic. We can hope that states that do not offer online filings may now see the need to move quickly and institute online alternatives to paper and CD-ROM requirements, and that more states allow e-signatures as an alternative to in-person notarization requirements.
June 12, 2023
Business
Paycheck Protection Program (PPP) Loan Forgiveness Primer
This blog post may contain information that was accurate at the time of publication but could become outdated over time. We strive to provide relevant and timely content, but circumstances, facts, and data can change. Users are encouraged to verify the current status of any information presented and seek updated guidance where necessary. Originally posted on 6/9/2020, no content changes. You applied for and obtained a Paycheck Protection Program loan. Now it is time to ask for the loan to be forgiven. Listen and watch here for a 30 minute presentation from the Offit Kurman CV-19 Business Response Team on the what, when and how to that apply to the loan forgiveness process, along with keen insights into that process. This presentation was recorded on June 5, 2020. For any updates to the loan forgiveness rules since then, please contact us.
June 9, 2023
Family Law
There is More Than One Way to Get Divorced
One of the most important decisions that a couple makes after they have made the difficult decision to separate and divorce is choosing which process to use to make the significant decisions about the terms of their separation. Many separating parties do not even realize this is a choice that can be made; instead, by default, they fall into a process without making an educated decision concerning their process options. There are five main process options that everyone going through a separation should be educated about: “Kitchen Table” Negotiation: “Kitchen Table” negotiation is characterized by two spouses having conversations and negotiating the terms of their separation directly with one another. One or both spouses may have an attorney in the background, with whom they may consult as needed and who may draft a written agreement. But the spouses primarily engage with one another in the negotiation process. Some spouses are able to negotiate some topics via this method, but not others. For example, spouses may be able to resolve how they are dividing their furniture and furnishings using the “Kitchen Table” method but then need to use another process option to resolve the remaining issues. Mediation: In Mediation, the two spouses work with a neutral mediator whose job is to help the spouses discuss the issues and reach an agreement. The mediator does not represent either spouse and cannot offer advice to either spouse. Either spouse may have their own attorney who they can consult with before and after mediation sessions. If the spouses agree, they may bring their attorneys to the mediation sessions. There are mental health professionals who specialize in mediating parenting issues. Some couples choose to work with a mental health professional-mediator to mediate their parenting plan and then use an attorney-mediator (or another process entirely) to facilitate the negotiation of financial issues. The Mediation process is often used in conjunction with other process options. The Collaborative Process: The Collaborative Process is an out-of-court dispute resolution process in which both spouses have their own Collaboratively trained attorney who represents them and advises them throughout the process. The spouses and their attorneys meet together to discuss the various issues and work together to brainstorm and agree on options that work for both spouses. At the start of the Collaborative Process, the spouses and the attorneys sign an agreement committing that they will only work together in settlement negotiations and that these attorneys will not represent the parties in a contested court litigation. This helps to ensure that both spouses and both attorneys are focused on and properly incentivized to reach an agreement. In the Collaborative Process, spouses commit to disclose all relevant information and documents that are necessary so that both spouses can make informed decisions. In addition, the spouses commit to maintain the status quo until they reach an agreement otherwise. This means that neither spouse can make any significant unilateral changes while in the Collaborative Process. The spouses can choose to retain mental health professionals and financial professionals to be part of the Collaborative team. In these cases, the mental health professionals typically take the lead on parenting issues and address emotional issues that are impeding a settlement. The financial professionals help the spouses gather their financial documents and then prepare cash flow projections and schedules of assets and liabilities to help inform the negotiations. Attorney-Led Negotiations: This is the most loosely defined “process” and can vary considerably, depending on the attorneys involved. In essence, each spouse retains an attorney to represent them in the negotiation. The attorneys communicate directly with one another, and any formal settlement negotiations are exchanged between the attorneys. Often, the attorneys facilitate an informal exchange of documents that both sides have the information they need to engage in informed settlement discussions. The spouses speak with their attorneys to create and respond to settlement proposals. Proposals are exchanged until an agreement is reached, and the attorneys draft a written agreement for the spouses to sign. This process is often used in conjunction with mediation or litigation. The process timeline can vary considerably. Litigation: The Court Process involves filing appropriate paperwork with the Court and asking that a Judge make decisions for you. In litigation, the parties are giving up control over the outcome. But, for parties whose settlement positions are so far apart that reaching an agreement will not be possible or practical, then it may be necessary to have a judge render a decision so that the parties can obtain a final resolution. Litigation is also the only process where you can force an unwilling party to engage; or, if they still won’t engage, then can obtain relief in the absence of their participation after fulfilling certain requirements. The Court process can be very difficult to navigate without legal representation. The financial cost associated with litigation often makes it the most expensive process. There is no one “right” process. In making a process choice, it’s important to consider your individual circumstances to determine which process(es) are most likely to be successful for you. Factors to consider in making this process decision include, but are not limited to, the dynamic between you and your spouse; the needs of your children; the emotional support you and your spouse will need; the technical complexity of the issues; and your financial resources/constraints. In any initial consultation with an attorney, you should be ready to inquire about these process options and engage in an individual conversation about which process(es) may work for you.
June 1, 2023
Family Law
The Current Approach to Adoption Records and Further Need for Change
New Jersey’s Current Policy New Jersey allows an adoptee access to only certain specific records and restricts who can view these records and what kinds of information may be redacted. In May 2014, the New Jersey State Legislature passed a law permitting individuals born and/or adopted in the State of New Jersey, who are at least 18 years of age, to be able to access their original birth certificate beginning in January 2017. In addition to the adoptee, a direct descendant or spouse of the adoptee, an adoptive parent or legal guardian, and/or an agency of the state or federal government may also access the original birth certificate. As the law was passed in May 2014 but not effective until January 2017, birth parents were permitted to submit a request to redact their name or other identifying information before December 31, 2016. Under this law, birth parents MAY submit a contact preference form to the State Registrar, which allows a birth parent to indicate whether or not they would like to, or prefer not to, be contacted by an adoptee. If a birth parent files a contact preference with the Registrar, they must simultaneously complete and submit a family history form. The form includes medical, cultural, and social history information regarding the birth parent. Any birth parent who requests no contact is asked for, but not required, to update their family history information every ten years until age 40 and every five years after that. The Problem With New Jersey’s Current Approach So – what’s the problem with this approach? First and foremost, a birth parent is not required to submit a contact preference form with the State Registrar, and if they choose not to, they have no requirement imposed upon them to complete and submit a family history form. This leaves all of the information and decision-making in the hands of the birth parent and may potentially deprive the adoptee of necessary and essential background information. Notably, a birth parent is not required to update their family history information. This means that if a birth parent submits a form and then in future years either learns of essential biographical or ancestral information or has a major change in health information, they have no duty to report this information. Additionally, an adoptee is not permitted to obtain their birth certificate until reaching age 18. Should any health concerns arise before said age, the adoptee has no opportunity to obtain necessary biological information. Although this legislative change demonstrates a shift in favor of unsealing at least some information, this approach still fails to provide an adoptee with information. It also fails to impose any duty on the birth parent to provide said information. A birth parent does not need to send said information to anyone directly. Still, a duty to file this information with the Registrar would at least allow an adoptee to access this information. New York’s Current Policy On November 14, 2019, Governor Andrew M. Cuomo signed a new bill which was memorialized in Public Health Law 4138 and went into effect on January 15, 2020. This law provides unrestricted access to original birth certificates for all adult-adopted persons. It also allows access to copies of original birth certificates for direct line descendants or legal representatives. The Problem With New York’s Current Approach While this law permits an adoptee access to their original birth certificate, there is no procedure in place or information provided regarding the use of contact registries or access to the background, biological, and medical information. In addition to the lack of awareness surrounding contact registries, this law creates no obligation on behalf of the birth parent to provide updated background information. Other states have made similar amendments to their respective laws in recent years, but the general, larger issue of access to information remains. Without requirements that birth parents file a detailed background and history with their State Registrar and have a continuing obligation to amend and update same, adoptees will lack essential information for their own lives and future generations.
May 31, 2023
Tax
Operating Agreements: The Power of the Partnership Representative
Recently, a colleague asked me to review an operating agreement (not one that my colleague had drafted) from a tax standpoint. The LLC was classified as a partnership for federal income tax purposes. Setting aside the tortured regulatory allocations (it was a service partnership, distributions were pro rata, and there was no 704(c) property (property with a built-in gain or loss at the time the property was contributed to the LLC)), it was fairly straightforward. But therein lies the problem. The often-overlooked section designating a partnership representative needed substantial work. Wait, what!? The Bipartisan Budget Act ("BBA") of 2015 made the centralized partnership audit regime applicable to all partnerships for tax years beginning after December 31, 2017. I frequently encounter many older operating agreements that refer to a "Tax Matters Manager," which came about under the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982. If your operating agreement is one of these, for the reasons discussed below, it needs to be updated. Under TEFRA, before the effective date of the centralized regime, partnerships could elect the centralized audit regime or have each individual partner audited. Obviously, large partnerships preferred the centralized regime, while smaller ones frequently elected to have an audit at the partner, not the partnership level. The BBA changed all that by taking away the election and making the centralized regime mandatory for partnerships with more than one hundred (100) partners, while partnerships with one hundred (100) or fewer partners can opt out of the centralized audit regime. IRC § 6221(b); Treas. Reg. § 301.6221(b)-1(b). Sadly, I have seen many small partnerships, or, more appropriately, the lawyer drafting the operating agreement, simply copy these provisions from an operating agreement they thought looked good without ever giving a moment's thought to the impact and consequences of these provisions. In fact, the LLC whose operating agreement prompted this particular column had less than ten (10) members. And as Professor Ted Seto, my partnership tax professor, drilled into us, partnership tax is the one area of tax law where the Code and Regs dictate the business deal. The power of the partnership representative is august, cannot be overstated, and definitely should not be overlooked. Under the BBA, the partnership representative is the sole person with authority to act on behalf of the partnership and its partners! Treas. Reg. § 301.6223-2(a). Further, "no partner, or any other person, may participate in an administrative proceeding without the permission of the IRS." Treas. Reg. § 301.6223-2(d). So, even if you wanted to participate, absent the Service's permission, you can't. The partnership representative's decisions are binding on each partner of the partnership. Treas. Reg. § 301.6223-2(a). Disagree with a decision made by the partnership representative in an audit? Tough. You're bound. Can't we limit the power of the partnership representative by including provisions in our operating agreement? As far as the Service goes, no. In fact, any such limits are prohibited by Treas. Reg. § 301.6223-2(c)(1), which states, "[n]o state law, partnership agreement, or other document or agreement may limit the authority of the partnership representative or the designated individual as described in section 6223 and this section." Yikes! The partnership must designate a partnership representative separately for each tax year, and the designation is effective only for the tax year for which it is made. Treas. Reg. § 301.6223-1(c)(1)). The designation is made on the partnership's tax return (IRS Form 1065) and is effective when the return is filed. Treas. Reg. § Regs. Sec. 301.6223-1(c)(2). The partnership representative need not be a partner. Also, the partnership representative does not have to be a person, though if the partnership representative is an entity, it is required to have a "designated individual" so the Service has an actual human being as its point of contact. Clearly, the regs say plenty of things a partnership can't do, which begs the question, what can a partnership do? What you can do is include provisions in your operating agreement that: (1) require the partnership representative to acknowledge it acts in a fiduciary capacity with respect to the partners; (2) requires the partnership representative to provide notice to each partner immediately upon the receipt of any notice (and provide a copy of any such notice) the partnership representative receives from the Service that seeks to make any adjustment or impose any penalty with respect to the partnership or its partners; (3) requires the partnership representative to employ experienced tax counsel to represent the partnership in connection with any audit or investigation of the partnership by the Service and in connection with all subsequent administrative and judicial proceedings arising out of such audit; (4) requires the partnership representative to get approval from the partners before taking any position or action with the Service, including but not limited to any decision: (i) to enter into a settlement agreement which purports to bind the partners other than the partnership representative (which, as noted above any decision will); (ii) to file a petition or request contemplated in Section 6227(a) of the Code; (iii) to enter into an agreement extending the period of limitations as contemplated in Section 6235(b) of the Code. Finally, under the BBA, the partnership can either pay an assessment or penalty at the entity level or pass it down to the partners to be paid pro rata by each partner. This election can be made with respect to each separate assessment or penalty, so to provide the most flexibility, the operating agreement should permit this decision to be made by the partners on a case-by-case basis, then communicated to the Service through the partnership representative. What's in your operating agreement? Scott Tippett is a principal at Offit Kurman, PA, where he concentrates his practice on corporate, partnership, and employee benefit tax matters. He is a member of the firm's Business Law Transactions and Intellectual Property groups. Offit Kurman PA is a national law firm that provides simple, clear solutions to complex business and tax issues. The views expressed herein are solely those of the author, are not intended as, and do not constitute legal or tax advice.
May 24, 2023
Estates and Trusts
Special Care with Special Needs Trusts (SNTs)
Providing Security and Care for our Disabled Loved Ones I was inspired to write about Special Needs Trusts (SNTs), a legal tool that can provide security and care for our disabled loved ones, as I was waiting to cross Madison Avenue. I stood beside a woman in a wheelchair as the traffic whizzed by, impatient pedestrians hovered and huffed to move around her chair and I thought of how vulnerable she must have felt at that moment – or maybe more accurately, how vulnerable I felt on her behalf. It made me think of so many of us when planning for our loved ones with special needs: financial security and long-term care can be especially triggering. Years ago, family members had to disinherit their disabled loved ones to ensure that their public benefits were not disturbed by an inheritance. Funds meant to support the disabled loved ones were left to someone else to manage, which often led to disaster. As a result, the concept of Special Needs Trusts (SNTs) was born. SNTs became a powerful tool to address these concerns and ensure that individuals with disabilities could maintain their eligibility for government benefits while maintaining access to the necessary financial resources. What is a Special Needs Trust (SNT)? A Special Needs Trust, also known as a Supplemental Needs Trust, is a legal document that holds funds for the benefit of a disabled person; the funds in an SNT are not “counted” by the government. The primary purpose of an SNT is to enhance the disabled person’s quality of life by supplementing government benefits without jeopardizing their eligibility for essential programs such as Medicaid and Supplemental Security Income (SSI). Three Types of Special Needs Trusts First-Party Special Needs Trust: A First-Party SNT is funded with the disabled individual’s own assets, such as an inheritance, personal injury settlement, or accumulated savings. The trust allows the individual to maintain eligibility for means-tested benefits. Upon the disabled person’s death, any remaining funds must reimburse the government for benefits received during the disabled person’s life. Third-Party Special Needs Trust: A Third-Party SNT is created and funded by someone other than the disabled individual. Parents, grandparents, siblings, or any other loved one can establish a Third Party SNT. Unlike a First Party SNT, there is no requirement to reimburse the government for benefits received upon the beneficiary’s passing – known as a “pay-back provision.” All remaining funds can be designated for the disabled beneficiary’s heirs, the third party’s heirs, or charitable organizations. Pooled Special Needs Trust: Pooled SNTs are administered by nonprofit organizations. Pooled SNTs allow multiple individuals with special needs to “pool” their resources into one SNT. Each beneficiary then has a separate account within the SNT, and a professional trustee from the charity manages the investment and disbursement of funds. This option is particularly beneficial for those without substantial assets or when family members cannot assume the responsibilities of managing a trust. Benefits of Special Needs Trusts Preserving Government Benefits: One of the primary advantages of an SNT is that it enables individuals with disabilities to continue receiving crucial government benefits. The assets held in a properly drafted SNT allow the disabled individual to maintain eligibility for these programs, thus ensuring access to vital healthcare services, income support, and other assistance like housing allowances. Supplementing Basic Needs: SNTs provide a supplemental source of funds that can be used to enhance the beneficiary’s quality of life. These funds may cover expenses not typically covered by government benefits, such as education, therapy, specialized equipment, home modifications, transportation, and recreational activities. Professional Management: Trusts require careful management to ensure compliance with legal and financial regulations. Professional trustees handle investment decisions, disbursements, and record-keeping responsibilities, alleviating the burden of family members and ensuring the trust is managed effectively and in the beneficiary’s best interest. Peace of Mind: By establishing an SNT, families gain peace of mind knowing that their disabled loved one will have the necessary financial resources and care even after they are no longer around. Establishing an SNT can provide a sense of security for both the beneficiary and their family. SNTs play a vital role in securing the future of individuals with disabilities by providing them with financial resources, care, and an enhanced quality of life. SNTs provide families a means to protect their disabled loved ones' eligibility for government benefits while supplementing those needs. If you would like more information on Special Needs Trusts (SNTs) and how these and other legal tools can provide security and care for your disabled loved ones, please feel free to contact me. If you want to learn more about how you can benefit your favorite charity while creating an income stream for you or your beneficiaries, check out my post on Charitable Remainder Trusts by clicking here.
May 23, 2023
Estates and Trusts
“de facto” Wills and the Harmless Error Rule - Part 2
Virginia maintains a signature requirement even for “de facto” wills With its added signature requirement, Virginia’s version of the Harmless Error Rule differs materially from the proposed uniform version of the Rule. The first part of the Virginia statute, Section 64.2-404(A), expressly permits writings not executed in compliance with the statutory attestation requirements [i.e., without all the whistles and bells] to be admitted to probate under the relevant circumstances. It was and remains the primary purpose of the Harmless Error Rule’s adoption and continued application. Virginia’s version of the Rule adds the language of Section 64.2-404(B), which (except in two very discreet situations) refuses to protect as harmless error “compliance with any requirement for a testator’s signature” and, in this respect, differs materially from the uniform code provision. The uniform code’s version of the Harmless Error Rule would overlook as “harmless” in appropriate circumstances not only the attestation requirements but also the signature requirement itself. Virginia legislators were collectively unwilling to be nearly as forgiving in this regard. With the addition of Section 64.2-404(B) and its signature requirement, the General Assembly clearly circumscribed the list of potentially “harmless errors” capable of being overlooked to allow an otherwise non-compliant will document to be accepted for probate. In one of several litigated matters relating to the Estate of Marvin Sacks, an Arlington circuit judge had occasion to address multiple facets of the statute, including not only alterations to an existing will but also to the Section 64.2-404(B) signature requirement itself. At the threshold, the respondent in Sacks sought to prevent the probate of a “de facto will” by challenging the testator’s failure to execute the document in compliance with all the attestation whistles and bells. As the Arlington court recognized, however, although Section 64.2-404 specifically references a “testator’s signature” requirement, it would be self-defeating for the statute to require “execution” of the writing in question by the testator as would otherwise be mandated by Section 64.2-403 (i.e., the whistles and bells section). Had the General Assembly intended the “testator’s signature” reference in Section 64.2-404(B) to mean a document “executed in compliance with § 64.2-403,” they would have thereby negated the purpose of the Harmless Error Rule itself. Failure to satisfy the attestation whistles and bells can only be corrected if a judicial ruling is sought within one year from the testator’s death. The right afforded under the Harmless Error Rule statute to have a court intervene to deem a non-compliant will legally enforceable has a limited lifespan. The protections otherwise afforded under Section 64.2-404(B) only survive the testator by one year. There is no exception. With the addition of subpart B to the Harmless Error Rule statute, the General Assembly saw fit to impose a time limit, what is known as a statute of limitation, by which time a proponent of a non-compliant will could otherwise seek the help of the court in having such a will declared legally enforceable is limited to the first anniversary of the testator’s death. In other words, an attestation error, otherwise deemed harmless and correctable under the Rule, ceases to be harmless one year after death. What constitutes clear and convincing evidence in this context? Prior to the 2007 adoption of the Harmless Error Rule in Virginia, all wills and changes to wills had to meet all the statutory attestation whistles and bells to be legally enforceable. Section 64.2-404 opens the door to allowing potentially harmless errors from preventing enforceability but affords such allowances only if the proponent of a will without all the requisite whistles and bells meets an elevated burden of proof regarding the testator’s intentions reflected therein and the signature appearing thereon. So what evidence is needed to meet the elevated clear and convincing standard? I include here a non-exhaustive list of factors to consider when evaluating whether a document without all the attestation whistles and bells might nevertheless be upheld as a “de facto” will. One should consider evidence of the following factors along with any other evidence tending to support or refute whether the document in question truly reflects the decedent’s testamentary intentions (and not merely draft considerations) at the time the document was made: (i) the preparation and signing of the document itself (how, where, and under what circumstances did the document come into being and/or come to be signed); (ii) witnesses to the de facto will (did they formally “witness” (i.e., sign) or were they mere coincidental observers); (iii) the temporal proximity of the de facto will to the onset of testator’s terminal condition or death; (iv) questions or concerns regarding capacity of the testator (including age of the testator and possible undue influence); (v) motivation(s) and/or (dis-)incentive(s) for the de facto will proponent to lie; (vi) the level of independence of the source of information to be considered; and (vii) the status of the documentation of testator’s most recent prior known testamentary disposition(s). Additionally, evidence of consistencies and/or inconsistencies with the following are all potentially relevant considerations as well: (i) the de facto will provision(s) compared to the testator’s previously articulated intentions; (ii) the manner of document creation compared to prior testamentary dispositions (e.g., typed or holographic; physical or mental impairments impacting writing); (iii) the manner of document creation compared to current changed circumstances (e.g., typed or holographic; physical or mental impairments impacting writing); and/or (iv) the manner of maintaining/storing the de facto will be compared to prior known testamentary disposition documentation (e.g., nightstand v. bank safe deposit box). 10 “clear and convincing” evidentiary factors: Testator Capacity/Undue Influence Testator Age/Health Signature Circumstances Witnessing Formalities Temporal Proximity – Will/Death Proponent’s Self-interestedness Source(s)’ Independence Prior Will(s) (In)consistencies – time, place, manner, and intent Finality When setting forth one’s intentions regarding the disposition of one’s property when one dies, certain formalities are expected to be followed, and with good reason. At least two witnesses together in the same place at the same time to observe the signing of a will is not an unreasonable expectation when the resulting document is intended to affect the disposition of property only upon the death of the person willing it to be so. It is, after all, for the testator’s own protection that we generally require all the whistles and bells, all the pomp and circumstance, associated with a formal will signing because the testator will not be around to answer questions about their intentions after they are dead – the only time the language of the will actually has any legal impact. When such formalities have all been adhered to, we can be sufficiently certain that the resulting document validly reflects with sufficient certainty the final wishes of the testator. The Harmless Error Rule, as set forth in Virginia Code Section 64.2-404, is there as a safety net for when things don’t always go exactly as planned or for circumstances when, despite the best of intentions, people make changes to a will without understanding or appreciating that any such edits might serve to nullify the formalities they had previously paid to achieve. This work is intended for the non-lawyer wondering whether to involve a lawyer in the preparation of one’s will or a change to one previously made (you absolutely should!) and for family members or friends of departed loved ones who discover a document which you think might or could have been an attempt by the dearly departed to express their testamentary wishes in a form and manner that may or may not be legally sufficient to be accepted as the final will of the decedent. If you happened upon this article while conducting online legal research on the subject, I commend you to the prior publication. The earlier piece was intended for legal practitioners, complete with case and statutory citations and cross-references to scholarly sources upon which I relied at the time. Since publishing the original work, I have continued to be involved in cases with ever-evolving fact patterns of situations where proponents and opponents legally battle over the legal enforceability of documents which may or may not have been intended as testamentary dispositions, i.e., will documents seeking to dispose of one’s property at death.
May 22, 2023
One Minute of Overtime
Computer-Related Exemptions
Welcome to One Minute of Overtime, where I will share insights on Labor and Employment Law topics, mostly related to minimum wage and overtime compliance issues. Compliance in this area of law is nuanced and technical, so it is critical for employers to audit and adjust their practices to remain compliant, so stop by to stay up-to-date and in-the-know. Computer systems analysts, computer programmers, software engineers, and other similarly skilled workers in the computer field may qualify for an FLSA exemption when both compensation requirements and job duties requirements are met. In contrast, IT help desk employees are generally non-exempt.
May 17, 2023
Litigation
House Bill 551 – What Will This Mean for Landlords?
In my very first newsletter, I provided commentary on the recent uptick in evictions and summary ejectment proceedings in North Carolina. I went on to cover a local story involving corporate housing tenants who were pushing for legislatures to act and introduce a bill concerning rent control, hindering landlords' ability to unilaterally increase rent by imposing a rental cap. One month later, enter House Bill 551, which was filed on April 3, 2023, and sponsored by Representatives Bradford of District 98, Hardister of District 59, K. Hall of District 91, Crutchfield of District 83, F. Jackson of District 45, McNeely of District 84, Ward of District 5, and Warren of District 76. Unfortunately, it appears that legislatures are doubling down regarding their position on rent control. As stated in my March newsletter, NCGS § 42-14.1 provides that "no county or city may enact, maintain, or enforce any ordinance or resolution which regulates the amount of rent to be charged for privately owned, single-family or multiple residential or commercial rental property." House Bill 551 further enforces this and introduces an act that would prohibit counties and cities from adopting ordinances, rules, and regulations that would prohibit landlords from refusing to rent to tenants because a tenant's lawful source of income to pay rent includes funding from a federal housing assistance program. The bill also addresses the regulation of support animals and service animals in residential tenancies and expands litigation costs, in summary, ejectment matters and homeowner's associations. Currently, under NCGS 42-46, landlords are able to recover some fees and costs related to the filing of a complaint in summary ejectment and, although limited, attorney's fees. The statute currently does not provide for recovery of appeals of summary ejectment matters. House Bill 551 modifies NCGS 42-64 to include the following language: "all actual reasonable attorneys' fees paid or owned for any appeals of summary ejectment matters." Lastly, with the addition of NCGS 42-47 regarding support and service animals, the bill also modifies NCGS 42-53, which permits landlords to charge a reasonable, nonrefundable fee for pets kept on the premises by the tenant to exclude service and support animals as defined in newly added NCGS 42-47. House Bill 551 passed its third reading on April 27, 2023, with 87 representatives voting in favor of its passage. The bill will now be sent to the Senate. What do you think about this bill? Is this legislation necessary? Do you think the passage of this bill will have a positive or negative impact? House Bill 551 is one of many that have been filed and introduced during the 2023-2024 legislative session that addresses landlord tenant related issues. Click on the following link to access a copy of House Bill 551: House Bill 551 (2023-2024 Session) - North Carolina General Assembly (ncleg.gov)
May 16, 2023
Estates and Trusts
LGBTQ+ Home Care Law Set to Go Into Effect in New York Next Month
It is no surprise to LGBTQ+ individuals and their allies that nine out of ten of those who identify as LGBTQ+ fear discrimination in medical settings. According to Services and Advocacy for Gay, Lesbian, Bisexual, and Transgender Elders (SAGE), LGBTQ+ people are two times as likely to age alone and four times less likely to have children who might otherwise serve as caregivers and advocates. This means the LGBTQ+ population is even more vulnerable as they age. As a result, and at long last, Governor Hochul signed a law that is intended to address this discrimination related to the medical care received by the LGBTQ+ community in the home care and nursing home setting. Beginning next month, New York State will require that all home health aides, certified nurses’ aides, and personal care aides – essentially the backbone of a senior’s long-term care team– will receive training focused on providing care to patients of diverse sexual orientations, expressions, and gender identities. This ambitious and much-needed law includes several components that will be incorporated into the training program. Much of the training relates to the education of the caregivers to provide comprehensive explanations of various terms related to the LGBTQ+ community. It provides an understanding of why patients with diverse sexual orientations and gender identities or expressions may conceal their identities. The goal of the training is, of course, to incorporate the concerns of these patients and ensure that they receive “person” directed care and to address the unique healthcare needs of LGBTQ+ patients. In light of the nearly 400 anti-LGBTQ+ legislative actions pending in the states across the country, it’s heartening that New York is taking the lead to combat this discrimination, especially for the most vulnerable in the LGBTQ+ population.
May 15, 2023
Estates and Trusts
Charitable Remainder Trusts: A Way of Giving Back by Paying it Forward
Many of our clients look to explore the ways in which they can give back to their favorite charities. One of the avenues worth considering is using a charitable remainder trust (CRT). CRTs are an excellent way to support your favorite charities in the future while providing an income stream now for yourself and your heirs and reducing the estate tax burden to your heirs in the future. How Charitable Remainder Trusts Work A CRT is an estate planning document, similar to a trust, that you might create to manage your assets and avoid probate. To set up a CRT, you transfer the chosen asset(s) to the trust, which a trustee then manages. You can serve as the trustee of a CRT; you could also appoint your spouse, your child, or even the charity. The trustee is responsible for investing or managing the donated assets and distributing income to you and your other income beneficiaries for your lifetime or a specified period. At the end of the trust term, the remaining assets are transferred to the charitable organizations of your choice as a charitable contribution. Types of Charitable Remainder Trusts There are two primary types of CRTs: charitable remainder annuity trusts (CRATs) and charitable remainder unitrusts (CRUTs). A CRAT pays a fixed income stream based on the initial value of the trust assets, while a CRUT pays a variable income stream based on the value of the assets determined each year. Which type of trust you choose will depend upon your personal financial goals and circumstances. A CRAT may be a better option if you want a fixed income stream and are more concerned about the stability of that income. In comparison, a CRUT may be a better option if you wish to add assets over time, are more comfortable with fluctuations in income, and wish to potentially benefit from increases in the value of the trust assets over the trust term. Benefits of Charitable Remainder Trusts Clearly, one of the primary benefits of a CRT is that you can receive income from the trust while also benefiting your favorite charity. The reason why CRTs are particularly useful is because many of our clients have highly appreciated assets with a low-cost basis, such as stocks or real estate. Instead of selling those assets, paying capital gains taxes, and then donating what is left of the proceeds to the charity, a CRT allows you to donate the highly appreciated assets to the CRT and have the CRT sell the asset, thus avoiding the capital gains tax entirely. Moreover, you are entitled to take federal and possibly a state income tax deduction for making the charitable donation to a CRT. Additionally, CRTs can provide significant estate planning benefits. Because the assets in the trust are ultimately transferred to a charitable organization, they are removed from your estate, reducing estate taxes for your heirs. CRTs can be an excellent way to support a charity while also receiving financial benefits. If you are interested in setting up a CRT, it is important to work with a qualified estate planning attorney who can help you determine the best course of action for your individual circumstances.
May 12, 2023
Family Law
Smart Home Devices and Domestic Abuse
Originally Posted 5/13/2019, no content changes. Modern homes are increasingly powered by internet-connected devices, from speakers to televisions, from thermostats to door locks, from security cameras to baby monitors. For some, this so-called “smart” technology can make life a little more convenient. For survivors of domestic violence or abuse, however, it’s fast becoming a vector for physical and psychological torment. The American Academy of Matrimonial Lawyers (AAML) recently published an article about the myriad ways abusers are weaponizing smart home devices. AAML notes that such devices “are set up by one spouse/partner but used by both spouses/partners.” It’s a situation that can create an uneven—and, at times, terrifying—power dynamic when the couple splits up and the person who has moved out of the house “wishes to destroy the emotional or mental calm of the other spouse.” In one example, an ex changed their partner’s alarm time on an Echo device from 7 am to 2 am. In another, a man spoiled his ex-wife’s food by switching off the refrigerator. Other reported incidents involve people surveilling their exes through speakers and TVs and turning up the heat remotely during summer months. In some cases, abusers seek to damage not only the psyches of their victims but survivors’ credibility as well. An article in domesticshelters.org offers a horrific pair of anecdotes: “Another abuser would repeatedly unlock a survivor’s home and car doors remotely. When the survivor tried to report it, the abuser petitioned the judge in their children’s custody case that this was a security issue he was worried about, making the survivor appear as an unfit mother. Another abuser would unlock a survivor’s electronic front door, go inside and take just one item from her home at a time, like a bracelet or a pair of shoes. The survivor kept thinking she was losing things and, in some respect, her mind along with them. She knew reporting these missing items to the police without any proof of a break-in would sound outrageous.” What can you do to protect yourself? First, make a list of all smart devices in your home and make sure you’re able to access and control each one. Change the passwords for every device as soon as a partner or spouse moves out and periodically thereafter. If you suspect that someone is spying on you, harassing you, or tampering with your home, speak to your lawyer immediately. The attorneys of Offit Kurman’s Family Law Practice Group can help you protect your home and family and obtain logging information for later use in court.
May 12, 2023
Family Law
How to Prepare for Divorce
Whatever brought you to the decision to consider divorce, as with most situations, knowledge is power. If you have determined that your spouse is considering separation or divorce, or if you have decided that you have tried to resolve matters and are ready to part ways, consulting with an experienced family lawyer will provide you with information so that you can make informed decisions. One of the first steps you should take is to prepare a chronology of events from the date of your relationship, noting important dates. The chronology need not be in great detail, but organizing your thoughts and recollection will be very helpful when it’s time for you to explain your situation to your attorney, counselors, mediators, etc. “Once and done” will relieve you of the need to review your history over and over again. Your attorney will request a summary of your and your spouse’s income, expenses, assets and liabilities. You will need to provide information as to what accounts, property, etc., is jointly or solely owned by one or both of you or if the assets are owned by a corporation or partnership. Generally speaking, you will be asked to provide the following documents: Income tax returns for the past five years Recent pay stubs for you and your spouse Bank statements for all joint and separate accounts Estate plans, including trust information Shareholder or partnership agreements Titles to cars, boats, airplanes, etc. Information regarding cryptocurrency Retirement plan statements Investment account statements Information regarding all debt - including mortgages, HELOC Accounts, personal loans, etc. Investment account statements Information regarding inheritance that you or your spouse received Information regarding pre-marital assets or gifts received from someone other than your spouse (or that your spouse has received from someone other than you) Be aware that your attorney will ask you to complete a financial statement, so becoming knowledgeable of your regular expenses will be very helpful. Consider counseling, which will be very helpful during this stressful and emotional time. Choose a divorce attorney who is recognized as an expert in this field. Sandy and Cheryl are both Fellows in the American Academy of Matrimonial Lawyers as well as the International Academy of Family Lawyers, having been recognized by their peers and the Court as experts in the field of Family Law. In addition, both Sandy and Cheryl have been included in Best Lawyers, Super Lawyers and other publications.
May 11, 2023
Family Law
How to Protect Your Privacy
While you will be sharing a great deal of information during the divorce process, it is important for you to take steps to protect your privacy. You will be required to produce financial documents, and you may also be required to provide copies of emails and text messages. Emails and texts between yourself and your attorney are protected due to privilege. However, the same is not true as to communication with others. If you believe that your spouse has access to your computer, iPad or phone, you should take steps to protect your privacy. You may want to purchase a new iPad or computer that you use only when communicating with your counsel or your therapist. If you do that, ensure that you are using a password that is difficult to break, such as a phrase. It is natural to want to discuss the divorce process with friends and family, but that may be to your detriment if too much detail or strategy is shared. This is a good reason to confide in a counselor or therapist to discuss the process and your feelings.
May 11, 2023
Family Law
College Decision Day – Now, Who Pays?
May 1 is an important and exciting day for high school seniors around the country, as this day is known as National College Decision Day. On May 1 each year, high school seniors are required to have made their formal commitment to the university they intend to attend by accepting their offers of admission and placing their college deposits. While some states have laws that grant courts the authority to order a non-custodial parent to contribute to a child’s college expenses, New Jersey does not have this requirement. Instead, New Jersey law grants the court the discretion to require that divorced or separated parents both contribute to a child’s college education and related expenses. In Newburgh v. Arrigo, 88 N.J. 529 (1982), the Supreme Court of New Jersey set forth several factors to consider in determining parents’ college contributions. These factors include: whether the parent, if still living with the child, would have contributed toward the costs of the requested higher education; the effect of the background, values, and goals of the parent on the reasonableness of the expectation of the child for higher education; the amount of the contribution sought by the child for the cost of higher education; the ability of the parent to pay that cost; the relationship of the requested contribution to the kind of school or course of study sought by the child; the financial resources of both parents; the commitment to and aptitude of the child for the requested education; the financial resources of the child, including assets owned individually or held in custodianship or trust; the ability of the child to earn income during the school year or on vacation; the availability of financial aid in the form of college grants and loans; the child’s relationship to the paying parent, including mutual affection and shared goals as well as responsiveness to parental advice and guidance; and the relationship of the education requested to any prior training and to the overall long-range goals of the child. Id. at 545. Subsequent case law in New Jersey has narrowed the obligation for contribution to a period in which there is an affirmative request and subsequent agreement or Order directing each party’s contribution. See Gac v. Gac, 186 N.J. 535 (2006). If you are looking to require your ex-spouse/partner to contribute to your child’s college contribution, here are some tips to consider to help achieve a favorable outcome: Assist your child in first obtaining all available loans, scholarships, grants, and aid. Keep the other parent informed of what schools the child is considering, the tuition costs, etc. If the two of you do not reach an agreement as to how the costs will be paid by May or June immediately preceding the child’s metrication to university, you should make the appropriate application to the court to avoid application of Gac. We strongly recommend that you consult with a knowledgeable family law attorney licensed in New Jersey regarding the facts and nuances of your matter, as all cases are fact sensitive and specific to the family involved. If you would like to discuss this issue or any other with us, please contact us by email at Emily.Ingall@offitkurman.com and msmith@offitkurman.com or by phone at 929-476-0046 or 267-338-1378.
May 10, 2023
Family Law
New York’s Laws Fail to Recognize Gender Neutrality
"How are you supposed to be believed about the harm that you experience when people don't even believe that you exist?[1] The legal system has long been criticized for its lack of inclusivity and support for marginalized communities. One such community is the gender non-binary or genderqueer community. People who identify as they/them often encounter challenges in accessing justice, as the legal system is structured around a gender binary. New York's laws assume that individuals identify as either male or female, and they often fail to recognize, let alone support, those who do not conform to these traditional gender roles. In New York State, there is currently no legal recognition of non-binary gender markers like "they/them" on government issued identification documents. As a result, people who identify as they/them are often stripped of their rights and may face discrimination and exclusion in various aspects of their lives, including access to healthcare, education, employment, and housing. In addition, legal documents, such as identification cards, passports, and birth certificates, also present challenges for those who identify as they/ them, as these documents require gender marker designations. This results in many people being misgendered or having to conform to a gender identity that does not accurately represent who they are. Moreover, the legal system's lack of support for those who identify as they/them is particularly concerning when it comes to cases involving domestic violence and sexual assault. These individuals often face additional barriers to accessing justice and may be further marginalized by the legal system. Opposition From Conservative Groups There has been some opposition from conservative groups who argue that recognizing non-binary gender markers on identification documents goes against traditional gender norms and could lead to confusion or fraud. However, advocates for non-binary recognition argue that it is a necessary step towards greater inclusivity and recognition of all individuals, regardless of their gender identity. Ultimately, the decision to recognize non-binary gender markers on identification documents will be up to lawmakers and policymakers. There are solutions, however, to address the concerns raised by conservative groups regarding non-binary recognition on identification documents. One potential solution could be to provide educational resources and training for government officials and individuals on the importance of recognizing non-binary gender markers. Another solution could be to implement safeguards to prevent fraud, such as requiring additional documentation or verification. Some other types of safeguards that could be implemented include biometric identification technologies, such as facial recognition, fingerprinting, or iris scanning. These technologies can be used to verify an individual's identity and prevent fraud. However, it is important to balance the need for security with the need for inclusivity. This requires a careful consideration of the potential impact on non-binary individuals and ensuring that any safeguards do not place an undue burden on them. It also requires ongoing dialogue and collaboration between stakeholders to ensure that the needs of all individuals are being met. In Conclusion The inclusion of non-binary gender markers in government-issued documents would have a significant impact on the lives and experiences of non-binary individuals in New York State. It would provide them with greater recognition and visibility and help reduce discrimination and exclusion based on gender identity. This could also lead to improvements in healthcare, housing, employment, and other services that are often difficult for non-binary individuals to access. Ultimately, it will require a collaborative effort between lawmakers, advocates, and community members to find a solution that addresses concerns while also promoting inclusivity and recognition of non binary individuals. There are ongoing efforts to push for legislative changes and updates to the current system to be more inclusive of non-binary individuals. Organizations like the National Center for Transgender Equality and the New York Civil Liberties Union are actively advocating for these changes. It is important for non-binary New Yorkers to consult with a lawyer who has experience navigating the legal issues related to gender identity. This can include issues related to changing legal documents, accessing healthcare services and other services, and experiencing discrimination or harassment. _________________________________________________ [1] -- Alok Vaid-Menon, Beyond the Gender Binary
May 10, 2023
Business
UPDATE: Did Your Business Need a PPP Loan? Borrowers May Return Funds by May 14 Without Fear of Civil or Criminal Enforcement
This blog post may contain information that was accurate at the time of publication but could become outdated over time. We strive to provide relevant and timely content, but circumstances, facts, and data can change. Users are encouraged to verify the current status of any information presented and seek updated guidance where necessary. Originally posted on 5/6/2020, no content changes. UPDATE: On May 6 the SBA extended the safe harbor deadline to return PPP funds from May 7 to May 14 in FAQ #43. FAQ #43 also noted this is an automatic extension of the safe harbor and that borrowers do not need to apply for the extension. The safe harbor applies to any borrower who applied for a PPP loan prior to April 24, 2020 and repays it in full by May 14, 2020. As the SBA has provided little guidance on what it means to “need” a PPP loan, the SBA has promised to provide additional guidance on this issue prior to May 14, 2020. *All May 7th deadlines have been extended to May 14th In response to adverse publicity, a number of high-profile entities, including listed companies, that had received loans in recent weeks under the Paycheck Protection Program (PPP), announced that they were returning the money. The decision by these entities was prompted in part by the SBA’s publication on April 23, 2020 of FAQ 31, emphasizing that loan applicants should think carefully before certifying, as required, that the loan was really necessary to support ongoing operations considering the uncertainty of economic conditions. The stakes were raised even further on April 28, 2020, when Treasury Secretary Steven Mnuchin announced that all companies receiving more than $2 million of PPP money, and other loans as appropriate, would be audited and could face criminal prosecution if their certification of “need” was false and they did not return the money by May 14th*. Predictably this sudden scrutiny of “need” by businesses that received loans has created uncertainty and anxiety among business owners who had applied in good faith, had been able to check all the qualification boxes on the application, and felt fortunate to have received the quick infusion of capital. However, the same business owners who a few weeks ago asked their attorneys and accountants for help in applying, are now asking these same advisors, with trepidation, should they keep the money? The problem of course is that the CARES Act legislation, and supporting regulations, were hastily drafted and did not provide clarity, especially with respect to “need”. Facing a hard May 14th* deadline, what should a business owner do now if he has any concerns regarding entitlement to the loan? Certainly, this requires a case-by-case analysis, beginning with making certain that the proceeds of the loan will be put to use as Congress intended: putting workers back on the payroll promptly, i.e., within the first eight weeks of receiving the loan. If a business is in an industry that cannot function during the lockdown, e.g., hospitality, the need for PPP money is difficult to justify. Second, businesses that have access to other sources of capital through, the public securities markets, private equity or hedge funds, should take a closer look at their “need”. On a more subjective basis, any company that would consider the scrutiny of a federal audit to be bad optics, e.g., a defense contractor, should carefully consider the consequences of not being able to support the need for the money. These special circumstances aside, what should the owners of a business that received a significant PPP loan be thinking about, and doing, in the next few days before the May 14th* deadline? If a borrower decides to retain the PPP Funds, affirmative steps must be taken now, if they have not been taken already, to document in writing the need for the loan. Put differently, in the event of audit by the SBA, the borrower must demonstrate that it had a good faith belief that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” While the Treasury and SBA have provided very little guidance on the interpretation of this borrower certification, documentation to establish a good faith belief should examine all issues the borrower faces as to economic uncertainty and necessity of the funds. Projections of revenue and cash flow under various scenarios should be made, with the margin of solvency resulting from each scenario closely analyzed. Further, the borrower should focus on issues specific to its business and also in the industry/region in which the borrower operates. Specifically, the borrower should review and document, among other items: Financial stability - budgets and projections, including payroll shortfall projections; Liquidity - cash on hand and alternative sources of funds; Geographic Location – will the area and region in which the borrower operates open first or last; Risks – is the borrower a favored “mom and pop” business; Employee Availability – cost to train, find and replace staff; Materiality of the Loan Amount – will the business be able to operate without the loan and for how long; Sensitivity to Public Scrutiny – what is the impact of an audit on prospective business opportunities; and Projected Uses of the Funds – when and how. Although the absence of clarity in the PPP legislation and rules makes good faith compliance challenging and uncertain for all, business owners should address these issues with a team of advisors including their attorneys and accountants.
May 8, 2023
Page 26 of 35
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