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Legal Concerns When Doing Business Online

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We live in a digital world and if you are not doing business online you could be missing out on the profits and other benefits of this marketplace.  If you want to expand your business horizons using the internet, you should be aware of the legal implications that may come along with the benefits.  You should make your customers aware of your policies when doing business online and it is also imperative that you tend to intellectual property concerns at the same time.

  1. I.                   Terms and Conditions

An important but frequently overlooked legal aspect of doing business online is the Terms and Conditions of Use agreement.  This agreement should detail who owns the website, what its purpose is and outline the business policies.  In essence, this agreement will formalize what is appropriate and inappropriate behavior on behalf of the business and its customers.  You should also include a disclaimer of liability on the site that is relevant to your business. An experienced business law attorney can help you draft both the agreement and disclaimer to be sure they are valid.

  1. II.                Privacy

Privacy is always a main concern for customers and they want to be assured that their information will be kept safe.  It is important to have a privacy policy in place that explains how you handle customer information.  The policy should be comprehensive and accessible to the public somewhere on the website.  Once the policy is in place, it is imperative that you abide by it.  The Federal Trade Commission (FTC) and state law govern the collection and use of consumer data and it is in your best interests that an attorney reviews your privacy policy to make sure that it meets these specific regulations.

  1. III.             Intellectual Property

With regard to intellectual property, there are two preeminent concerns.  When setting up your website initially, it is important to check your URL to determine whether it is being used by someone else.  This will offer some protection against intellectual property claims in this area. In addition, it is a good idea to add a copyright notice to every page relating to the page and its content.  This will protect you in the event that someone attempts to use your original work as their own.  Actually applying for a copyright might be a good idea and an intellectual property attorney can assist you with that.

All of the standard laws that apply to regular business also apply to online business.  But, there are additional rules and regulations that you need to be cognizant of as you develop and maintain a web presence.  This is not an all encompassing list and therefore retaining a business law attorney knowledgeable in e-commerce is in the best interest of every business owner with a website

Should I Transfer My Home to My Children?

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Most people are aware that probate should be avoided if at all possible. It is an expensive, time-consuming process that exposes your family’s private matters to public scrutiny via the judicial system. It sounds simple enough to just gift your property to your children while you are still alive, so it is not subject to probate upon your death, or to preserve the asset in the event of significant end-of-life medical expenses.

This strategy may offer some potential benefits, but those benefits are far outweighed by the risks. And with other probate-avoidance tools available, such as living trusts, it makes sense to view the risks and benefits of transferring title to your property through a very critical lens.

Potential Advantages:

  • Property titled in the names of your heirs, or with your heirs as joint tenants, is not subject to probate upon your death.
  • If you do not need nursing home care for the first 60 months after the transfer, but later do need such care, the property in question will not be considered for Medicaid eligibility purposes.
  • If you are not named on the property’s title at the time of your death, creditors cannot make a claim against the property to satisfy the debt.
  • Your heirs may agree to pay a portion, or all, of the property’s expenses, including taxes, insurance and maintenance.

Potential Disadvantages:

  • It may jeopardize your ability to obtain nursing home care. If you need such care within 60 months of transferring the property, you can be penalized for the gift and may not be eligible for Medicaid for a period of months or years, or will have to find another source to cover the expenses.
  • You lose sole control over your property. Once you are no longer the legal owner, you must get approval from your children in order to sell or refinance the property.
  • If your child files for bankruptcy, or gets divorced, your child’s creditors or former spouse can obtain a legal ownership interest in the property.
  • If you outlive your child, the property may be transferred to your child’s heirs.
  • Potential negative tax consequences: If property is transferred to your child and is later sold, capital gains tax may be due, as your child will not be able to take advantage of the IRS’s primary residence exclusion. You may also lose property tax exemptions. Finally, when the child ultimately sells the property, he or she may pay a higher capital gains tax than if the property was inherited, since inherited property enjoys a stepped-up tax basis as of the date of death.

There is no one-size-fits-all approach to estate planning. Transferring ownership of your property to your children while you are still alive may be appropriate for your situation. However, for most this strategy is not recommended due to the significant risks. If your goal is to avoid probate, maximize tax benefits and provide for the seamless transfer of your property upon your death, a living trust is likely a far better option.

Legal Concerns for Businesses Engaged in Social Networking

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Social media is a phenomenon and in this day and age, it is rare that an individual, organization or business does not utilize it.  The use of websites like Facebook, Twitter and Linkedin can be of great benefit to your business and can assist in advertising, marketing and branding.  But, it is important to remember that their use is not without legal pitfalls.

While there are many issues to address when your business is considering entering the social media realm, some are more poignant than others.  Because the purpose of social media is to share information and to do so rapidly, privacy is a major concern.  You want to ensure that the privacy of your business and of your customers is protected.  While exposing private business information can have a dramatic effect on your venture in a variety of ways, you should also note that sharing customer information without permission can expose you to legal liability.  Privacy laws are enforced by the Federal Trade Commission and you would be best served by becoming familiar with them.  The regulations vary depending upon the industry and situation and you should therefore consult with a business law attorney to determine which are applicable to your business.

Intellectual property can be the subject of legal concerns when using social media in a business context.  If work is trademarked or copyrighted, you likely do not have the right to use it.  Even things that seem like they are open for public use can create liability.  Therefore, you should think about the implications of the content you are attempting to share before you do so and when in doubt, consult with your lawyer.

In addition, employment-related matters can cause legal liability.  Some employers use social media to make decisions before a prospective worker is hired and even while the worker is employed.  While this is acceptable in some situations, employers should be sure not to make decisions on a discriminatory basis.  Also, in most states, employers cannot make the decision to reprimand or fire a worker for their after-hours conduct, especially if they are breaking no laws.  Therefore, employers should be careful when reviewing their workers’ pages for this purpose.

Please note that this is not an all encompassing list and there are many other legal concerns that can and will arise with the use of social networking in a business context.  If your business has made the decision to use social media, you should put a social media policy in place.  This policy should outline what you are seeking to achieve by using social media, guidelines for its use in this context, the responsibilities of all those involved in the use and how those involved can be sure to comply with the applicable rules and regulations.

If you have questions about the use of social media in your business or need assistance putting a social media policy in place, contact an experienced business law attorney today.

Role of the Successor Trustee

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When creating a trust, it is common practice that the person doing the estate planning will name themselves as trustee and will appoint a successor trustee to handle matters once they pass on.  If you have been named successor trustee for a person that has died, it is important that you hire a wills, trusts and estates attorney to assist you in carrying out your duties. Although the attorney that originally created the estate plan would most likely be more familiar with the situation, you are not legally required to hire that same attorney. You can hire any attorney that you please in order to determine what your obligations are.

 If the decedent had a will it is common that the successor trustee is also named as the executor.  Although the role of executor is similar to that of trustee, there are technical differences. If there was a will, you should consult with an attorney to determine if a court probate process will be required to administer the estate. If all assets were titled in the trust prior to the person’s death, or passed by beneficiary designation, such as in the case of life insurance and retirement plan assets (such as 401ks, IRAs, etc.), then a court probate may not be needed. However, if there were accounts or real estate in the person’s name alone that were not covered by the trust, a court probate may be necessary.

During the probate process, all of the deceased person’s assets must be collected and accounted for. This includes all bank accounts, stocks, bonds, mutual funds, investment accounts, retirement assets, life insurance, cars, personal belongings and real estate. All of these assets should be valued and listed on one or more inventories. Depending upon the value of the assets, an estate tax return may be needed. You should be aware of any final expenses, the person’s final income tax returns, and any creditors. Although this process is lengthy, once all of the appropriate steps are taken, the assets will be distributed and the estate will come to a close. 

If you have been named a successor trustee, an experienced estate planning attorney can help you through this process and make sure you carry out your legal duties as required.  Contact us for a consultation today.

What is a mechanic’s lien?

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A mechanic’s lien is not just for mechanics.  It is a legal tool used to protect workers and suppliers who contribute the labor and materials used to improve a property, real or personal.  Workers and suppliers can file a mechanic’s lien if they do not get paid and may be able to force the sale of the property to receive payment.

How Does One Place a Mechanic’s Lien on a Property?

To place a mechanic’s lien on a property, a “contributor”—someone who supplies labor or materials—must provide the property owner with notice describing the material or service contributed.  Depending on state law, the owner usually must receive this within a certain number of days of when the work began.

If the contributor isn’t paid after completing a job, it can file a “claim of mechanic’s lien” in the county where the property is located.  The contributor then has a few months to bring a lawsuit to enforce the mechanic’s lien.  If the enforcement action doesn’t take place by the deadline, the lien is no longer valid.  If the lienholder wins the lawsuit, the property can be sold at auction, with the proceeds used to pay the lienholder.

Mechanic’s liens often have priority over other security interests in a property, such as a mortgage, though it may depend on when the lien was filed.  Construction loans may sometimes take precedence over mechanic’s liens in certain states.

Who Can File a Mechanic’s Lien?

Laborers and professionals who can take advantage of a mechanic’s lien include carpenters, electricians, HVAC providers, plumbers, architects, and civil engineers.  Suppliers may include lumberyards, plumbing and electrical supply houses, and offsite fabricators of items that become part of a project.

How Can Property Owners Protect Themselves?

Property owners who are concerned that a mechanic’s lien may be filed can obtain a “Release of Lien” from everyone connected to a project, relieving the owner from the threat of a lien.  Before making final payment, owners can also insist on an affidavit from their contractors listing anyone not yet paid.  The owner can then insist that those parties sign releases.

An owner can also file a “Notice of Commencement” before beginning a project listing all the contractors and subcontractors working on it, and a “Notice of Termination of Notice of Commencement” when the project is concluded and everyone has been paid and/or has signed a release.

If a lien has been filed, in many states there is a procedure by which an owner can challenge it on technical grounds, such as improper notice or identification of the property.  Owners may also file a “surety bond”—a promise to pay backed by an insurer—with the court to protect themselves against enforcement of the lien.

For legal assistance regarding a mechanics lien, contact a qualified business law attorney today.

What happens if you are bequeathed a car that no longer exists? The ABCs of Ademption

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If you’re involved in settling a loved one’s estate, you may come across the curious word “ademption”. Ademption describes what happens when something designated in a will no longer exists. Say, for example, your uncle dies and leaves for you in his will an old-school Harley Davidson motorcycle. However, if your uncle crashed the motorcycle two years before the will was probated and there’s nothing to leave, then that gift would be considered adeemed and you would receive nothing. This is why certain wills include language that says, “if owned by me at my death.”

However, it is important to realize that certain items cannot be adeemed. For instance, money. If your uncle died and left $7,000 for you in his will, but left a zero dollar balance in his accounts, your gift of cash would not be adeemed. Instead, the estate would be responsible for satisfying that gift, say for example, through the sale of the house or other such property.

There are exceptions to ademption, however. If the property leaves the estate after the person who wrote the will has been declared incompetent, ademption is waived.  Other states make exceptions for cases where interest in a corporation that no longer exists because the shares were exchanged with that of an acquiring company.  Your state may tackle ademption differently based on its laws, so please consult a qualified real estate or probate lawyer if you want to learn more about ademption and its exceptions.

How’s your Lawyer’s Math?

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Perhaps math isn’t every lawyer’s strong suit; although some lawyers prefer to stay away from fractions and decimals, it doesn’t mean they aren’t able to do math when needed to help their clients.

When it comes to businesses, math is intertwined in so many issues from basic day-to-day operations to complex corporate mergers and acquisitions.  For example, legal issues and litigation related to buying and selling a business, bookkeeping for an existing business and profit and loss statements, among other things, need to be handled by an attorney who is comfortable with arithmetic.

Business related classes like tax and finance are some of the only law school classes that require the students do math. So, in order to do well in these classes and become competent to handle a business or tax matter, a student must at least be able to do basic math.  A widely reported study by Harvard law professors found that business classes were the most highly recommend by alumni for current students take to better prepare themselves for practice.

The gap between what most lawyers know about business law and what their clients need them to know is a wide one.  This is why you need to look for an attorney who has demonstrated excellence this field.  Part of that excellence must be a comfort with arithmetic.  You want an attorney who is already excelling in the field and not one that has to educate him or herself about basic finance and bookkeeping in order to handle your particular matter.

Glossary of Estate Planning Terms

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Will – a written document specifying a person’s wishes concerning his or her property distribution upon his or her death.

In order to be enforced by a court of law, a will must be signed in accordance with the applicable wills act.

Testator/Testatrix – the person who signs the will.

Heirs – beneficiaries of an estate.

Executor/Executrix – the individual given authority by the testator to make decisions to put the testator’s written directions into effect.

Once the will is entered into probate, the executor’s signature is equivalent to the testator’s. The executor has a legal duty to the heirs of the estate to act in the best interest of the estate, and may collect a fee for performing such service.

Administrator/Administratrix – the person who assumes the role of the executor when a person dies without a will (intestate).

The Administrator must apply with the local probate office and may be required to provide a bond to be held in escrow as collateral for control over the assets of the estate.

Codicil – an amendment to a will.

In order to be valid, a codicil must comply with all the requirements of the applicable wills act.

Holographic Will– a handwritten will. 

Holographic wills are often exempt from requirements of the applicable wills act.

Bequest – a gift given by the testator to his or her heirs through a will.

Residual Estate – the balance of a testator’s belongings after debts have been paid and specific bequests have been distributed. 

Intestate – not having signed a will before one dies; a person who dies without having signed a will.

Life Estate – a bequest that gives an heir the right to have exclusive use of a property for the remainder of his or her life, but without the power to transfer such property upon the death of that heir.

The property will transfer to the heirs of the residual estate after the death of the beneficiary of the life estate.

Per stirpes – a Latin phrase precisely translated as “by the branch” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided equally among that beneficiary’s own heirs.

An alternative to per capita, described below.

Per capita – a Latin phrase precisely translated as “by the head” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided among the testator’s remaining heirs.

An alternative to per stirpes, described above.

While it is a good idea to have a basic understanding of fundamental estate planning vocabulary, this cannot serve as a substitute for the services of an experienced attorney.

How Title Insurance Protects Homebuyers

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Buying a home is the single largest investment that many individuals will make which makes it essential for potential homeowners to protect their interests. In particular, it is crucial to ensure that the seller can transfer free and clear ownership of the property by obtaining title insurance.

In short, title insurance protects both lenders and owners against claims for unknown defects in title to the property such as another individual claiming ownership of the property, unpaid taxes, judgments and liens, improperly recorded documents, encroachments and easements, as well as fraud and forgery.

In a residential real estate transaction, there are two types of policies, a lender’s policy and a buyer’s policy, and the homebuyer is required to pay for both. The lender’s policy, or mortgagee’s policy, specifically protects the lender’s interest, including the loan amount and legal costs. The buyer’s policy protects the owner up to the original sales price of the property, or its full market value, depending on the type of policy the buyer purchases.

In order to obtain title insurance, it is necessary to engage the services of an escrow agent, or an attorney, who will order a title search. This is a comprehensive examination of public records associated with the property such as deeds, taxes, court records – judgments, bankruptcies, wills, trusts, divorce decrees and other documents.

The title company will rely on the results of this search to issue a preliminary report, or a title commitment, which details the potential defects and outlines the conditions that must be met before a policy can be issued. This report gives the seller the opportunity to remedy any liens or other encumbrances before the loan closing, or in the alternative, from the proceeds of the sale.

In sum, title insurance protects lenders and buyers from a wide range of problems such as a fraudulent sale, unpaid taxes or other liens and defects. While the cost of a title insurance premium is typically based on the purchase price of the home, it also depends on the services the title company is offering. Lastly, the rules governing title insurance vary from state to state, so it is important to consult with an experienced real estate attorney.

Entrepreneurial Immigrants: Building the American Dream

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The American Dream of starting your own business and pulling yourself up by your bootstraps is alive and well. In fact, it is the creation and growth of small businesses that is instrumental in helping America recover from the Great Recession. What many do not realize is that a significant percentage of new business ventures in this country are started by immigrants.  Despite their business startup prowess, Immigrants face a multitude of legal issues as they start new ventures in the United States.

If you are an immigrant and are considering starting a business in your new homeland, there may be a number obstacles ahead of you. At the top of that list is obviously obtaining legal status for yourself, your family, and your employees. America welcomes innovators and business creators, but obtaining legal status is never easy. Thankfully, there are several paths to legal status available to entrepreneurs. Working with an experienced immigration attorney is the best way to figure out which options will work for you.

Providing employment for family members and friends is one of the rewarding aspects of being a small business owner, but immigrants must strictly adhere to all laws governing the employment of non-citizens. If you are caught violating this law you could lose your business and put your legal status in jeopardy.

Immigrant entrepreneurs may also face discrimination. If you think that a lender, supplier, or other business-related contact has treated you unfairly because of your nationality, and your business suffered, you should contact an attorney. An attorney can help you seek compensation if appropriate, and can help you negotiate and enforce future contracts.

There are also unique opportunities in the business creation world for immigrants.  As newcomers to an area, immigrants have the ability to see gaps in the market that others may not notice. A business attorney can help you take your vision and make it a reality by helping you through the formation and permitting processes.  The government also has several special programs that are designed to help minority and woman-owned businesses flourish. Many immigrant business owners are able to take advantage of these programs.

Starting a business is challenging regardless of whether you’re an immigrant.  The pride of owning your own business, seeing it succeed and living the American Dream more than makes up for the trials and tribulations that founders encounter.