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Thursday
Sep152011

Buy Sell Agreements – Protecting Your Interests From the Four Ds

Trusts & Estate Planning

 

by Kira S. Masteller
818.907.3244

 

Buy sell agreements are common estate planning tools for people with business partners. They ensure the continuity of the business in the event of the death, disability, retirement or withdrawal of one or more of the principles.

If you run a successful company with a business partner, you should consider executing a buy sell agreement to protect your own interests, as well as those of your family. Here are some scenarios to consider:

1. Death

▪ When a principle dies, will that person’s stock be repurchased, or can he or she leave that stock to a person of his or her choice? To assure the continuity of the business, it is usually best to repurchase the stock.

▪ Will the repurchase, if any, be done by the corporation or the other shareholders? This involves business and tax issues which will need to be discussed one on one with your attorney, since individual situations vary.

▪ A proper repurchase arrangement requires the use of life insurance, which also needs to be discussed in person to address your unique needs. For example, in a corporate redemption situation, if there is a $500,000 purchase price, the corporation will likely not have sufficient assets to pay that purchase price. Generally, life insurance is used for these purposes. (Be sure to read my previous blog, “Your Life Insurance Review” to understand why it’s important to keep your policies up to date.)

2. Disability

▪ If a principle becomes disabled, will s/he continue to receive salary and benefits? If yes, for how long? That person cannot receive salary payments indefinitely, because at some point those payments will be deemed to be dividends, which is subject to double tax.

▪ Will a disabled shareholder’s stock be repurchased? If so, we will have to discuss how the payments will be made, since life insurance will not be available for this purpose.

▪ Some of these issues can be addressed in employment agreements.

3. Departure or Retirement

▪ Will a shareholder’s stock be repurchased in the event s/he retires or withdraws? Typically, this does not happen because it places an economic drain on the corporation.

4. Divorce

▪ If your partner separates or divorces, will that put your interests in the company at risk? A buy sell agreement can protect you or your partner from unforeseen events like this.

If you co-own a business, it might be time for you to consider the future of your company and maintaining financial interests for yourself and your family. Buy sell agreements are one of the best ways to protect those interests from unforeseen events.

Kira S. Masteller is a California Trust Attorney and Shareholder in our Tax and Estate Planning Practice Group. You can reach her at 818.990.2120.

 

 
Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

Tuesday
Sep132011

Perchloroethylene Cleanup Hangs Drycleaners Out to Dry

Litigation Los AngelesEnvironmental Litigation  

Stephen T. Holzer
818.907.3299

Drycleaners have been using perchloroethylene, a colorless liquid chemical also known as “PERC” or “PCE,” for decades. The chemical is also used in solvents, inks, shoe polish and other products, but it’s the dry-cleaning industry that accounts for 85 percent of its use.

PERC is a hazardous waste made with chlorine and other chemicals, and until modern-era environmental legislation regulating the disposal of PCE, the liquid leaked or spilled into the ground and seeped into water tables without much notice.

But federal and state-mandated clean ups are now hanging drycleaners out to dry financially, and insurance companies are also paying the price. In an attempt to find someone to pay for cleanup, some drycleaners are suing their machine manufacturers citing faulty designs and distributing use instructions that failed to warn drycleaners of potential perchloroethylene leaks and how to prevent them.

The drycleaner plaintiffs allege the machine manufacturers violated the federal Resource Conservation and Recovery Act, or RCRA, which governs all handling of hazardous waste from generation to disposal. RCRA provides for liability on the part of:

“Any person . . . including any past or present generator, past or present transporter, or past or present owner or operator of a treatment, storage, or disposal facility, who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to health or the environment . . . .”

The Plaintiffs in Hinds Investments v. Patricia McLaughlin relied on this language in RCRA. But last August, the Ninth Circuit Court of Appeals rejected plaintiffs’ claims, stating:

“From the language Congress chose, it seems plain that Congress was concerned with those who handle, store, treat, transport, or dispose of the waste, not with manufacturers who design machinery that might generate a waste byproduct that could be disposed of improperly at hazard to the public.”

Despite the Appellate Court’s ruling, perchloroethylene cleanup remains controversial, because plaintiffs may still try to hold dry-cleaning machine manufactures liable under other, State-law theories.

But manufacturer defendants in the dry-cleaning industry can now argue that holding such defendants liable for what their customers is too far of a judicial reach even at the State level, when it comes to perchloroethylene leaks.

Stephen T. Holzer is the Chair of our Environmental Law Practice Group.  You can reach him via e-mail: sholzer@lewitthackman.com, or by calling 818.990.2120.

 

 
Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

Wednesday
Sep072011

California Environmental Law – How Much Cleanup is Too Much?

Litigation Los AngelesEnvironmental Litigation  

 

Stephen T. Holzer
818.907.3299

 

Nearly 3,000 acres of land in Ventura County is destined for open space use. . .if it’s ever cleaned up.

That vision may be put on hold, if the current mood of all parties involved give any indication. U.S. District Judge John F. Walter overturned Senate Bill 990 at the end of April, which practically guarantees the Boeing Company and the California Department of Toxic Substances (DTSC) will be legally wrangling for quite a while.

Here’s some background:  

Santa Susana’s Historic Roots

The land in question is known as the Santa Susana Lab, home to North American Aviation’s rocket and nuclear research and development projects established in 1947. Due to a series of company splits and sales occurring over the decades, the land is currently owned by Boeing, NASA and the Department of Energy.

There was a partial nuclear meltdown in 1959. And aside from the radioactive materials, a lot of other toxic chemicals (such as dioxins, trichloroethylene, PCBs and perchlorate) infuse the soil and groundwater from years of rocket testing.

The Environmental Law Twist

We don’t even need to go into decades of federal and state environmental law history to illustrate the problems with Santa Susana.

Let’s just go back to 2007 when the now retired Senator Sheila Kuehl pushed SB 990 to reassure Ventura County residents that Santa Susana and the immediate vicinity would be scrubbed as clean as possible. The bill even outweighed federal standards on its goals for cleanliness and safety, and the DTSC was named chief overseer of the work.

So who got on board with the bill? The Department of Energy and NASA. But in 2009 Boeing filed suit, protesting DTSC’s supervisory role. Boeing claimed, among other things, that Kuehl’s S.B. 990 is preempted by the federal Atomic Energy Act, 42 U.S.C. §2011 et seq.

Judge Walters agreed, saying that a federal installation (or, as here, a private one under contract with the feds) is “shielded by the U.S. Constitution’s supremacy clause from direct state regulation unless Congress provides clear and unambiguous authorization for such regulation.”

The DTSC and the California Environmental Protection Agency are disappointed with this ruling, to put it mildly. And when Judge Walter delivered the ruling, he mentioned probable scrutiny by appellate courts, according to an April 27th article in the Los Angeles Daily News.

Which only means that Simi Valley residents may have to hold their breaths a long time before the Santa Susana Lab gets the cleanup it needs, whether it’s by federal or state standards.

Stephen T. Holzer is a Environmental Attorney, Shareholder and Chair of our Environmental Law Practice Group. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

Wednesday
Sep072011

No Fault Divorce in California: Over 40 Years of Benefits & Consequences

Encino Tarzana Divorce LawyerChild Custody and Support Attorney Los Angeles

 

by Vanessa Soto Nellis
818.907.3274

San Fernando Valley Custody Lawyer Los Angeles

 

Believe it or not, it was the coastal “blue” states who first and lastly signed no fault divorce bills into law. 

Former governor Ronald Reagan signed the Family Law Act of 1969 which changed California family laws and set precedents for no fault divorces with other states for the next 40 years – while New York’s former governor David Paterson brought the Empire State on board in October, 2010. 

But what is a no fault divorce, and what does it mean for Californians in particular? 

Critics of the law have argued that the law makes it too easy to obtain a divorce. That may be true, considering that 50 percent of marriages tend to end in divorce these days. However, there are definitely some benefits to a no fault divorce:

 

No Fault” means “No Lying”  

 

Before 1970 (when the law went into effect) one party in a divorce had to state specific reasons for applying for a divorce. Oftentimes, when spouses just didn’t get along, a husband or wife had to claim physical abuse, adultery or make some other critical complaint. 

Back then, clients often lied in an effort to obtain divorces.

Aside from the legal muddle of ethical questions and perjury involved, the lying caused other problems. It often created a hostile atmosphere which made it difficult for separating couples to agree on divisions of community property, child visitation, child support, and child custody. 

Additionally, if one side is at fault and the other looks innocent of all wrongdoing, settlements on the above issues generally proved to be unfair to the “at fault” spouse.  

But who suffered the most before 1970? Usually, it was the children, whose parents tended to be hostile and bitter towards each other, and who sometimes saw their relationships with a particular parent decline because of court-ordered restrictions on visitation or custody settlements.

 

Other Benefits of the Current California Divorce Laws

 

 

Because fault is irrelevant when filing for divorce, separating spouses no longer have a “day in court” to tell all that went wrong in a marriage. Some of my clients, specifically those who have been emotionally hurt and angered, are disappointed when I tell them this. 

But not having to testify benefits almost everyone else, particularly victims of domestic abuse. They no longer have to summon up the courage to face their abusive spouse in a courtroom – a California no fault divorce makes it much easier for them to leave a violent marriage.  

 

Marital Advice From a California Divorce Attorney

 

One last thing you should know: Attempting to by-pass the California no fault divorce law with separate, conditional agreements regarding your marriage probably won’t work. 

For example, writing an agreement that assigns one spouse certain property if another spouse has an extra-marital affair won’t be recognized as a valid agreement by the California family law courts – because the judges cannot consider fault when dissolving a marriage. 

There may be other remedies available, like a prenuptial agreement, if you don’t specifically address such marital issues in the agreement – but it would take some forethought and planning by your family law attorney. 

The long and short of it though, is that the no fault divorce laws across the country are mostly beneficial to parties seeking a dissolution of marriage.

 

Vanessa Soto Nellis is a California Divorce Attorney in Los Angeles County. She is a shareholder at Lewitt Hackman in Encino.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Tuesday
Sep062011

Your Life Insurance Review | Good Insurance Policies = Good Estate Planning

Trusts & Estate Planning Attorney

by Kira S. Masteller
818.907.3244

Tax, Trusts, Estate Planning Google+

First, let me just clarify that I do not sell insurance and I will not do an insurance policy review. But if you think you need a policy or need a review, I can recommend experienced professionals to help you.

However, I will advise that you review insurance policies on a regular basis, particularly your life insurance policies, as well as advise you what your potential life insurance needs are.

It just makes good estate planning sense, and, if you are acting as Trustee of another’s Trust, it is your fiduciary duty.

On the good sense side, many factors can affect the quality of your life insurance policy. Life, and financial environments are constantly evolving – your policy should reflect those changes.

When reviewing your policy, consider changes in:

▪ Interest or dividend rates, especially dividends to pay premiums
▪ Your life expectancy and health
▪ Overall mortality rates for your demographic
▪ Testamentary objectives of your estate
▪ Loans against the policy

As a Trustee of a trust in California, it’s your duty to oversee and manage the trust’s investments, handle the related accountings, and disburse information to the beneficiaries (and possibly the courts). That means you’ll have to Invest or manage Trust assets. If a life insurance policy is underperforming, this could be problem. A Trustee should be monitoring life insurance policies that make up an asset of the trust.

Review Life Insurance Often

How often? I recommend a policy review every two to three years. Most insurers will review life insurance policies without charge, and without obligation. And reviewing your policy will not necessarily mean that you will have to change your coverage.

Some topics you should discuss with your agent are:

1. Protection: Do you have sufficient death benefits?

2. Annual Premiums: Are you meeting your needs in the most economical way possible?

3. Ownership: Is your policy tax-efficient, or will it create financial liability for you or your beneficiaries?

4. Designations: Are you up to date? Did you have more children, or go through a divorce or another marriage? 

5. Supplements: What new benefit options are available?

6. Cash & Performance: Does your policy meet your expectations?

Again, you’ll need to contact your life insurance agent for a thorough life insurance review, but keep the above-listed questions in mind when you do it.

If you are uncertain as to what your life insurance needs are (income replacement, an investment, a tool to fund a buy-sell agreement, or to pay estate taxes or even just to provide your heirs with liquidity or additional wealth), please contact us to schedule an estate plan review at your earliest convenience.

Kira S. Masteller is a California Estate Attorney and Shareholder in the Tax and Estate Planning Practice Group at our Firm. She can be reached at kmasteller@lewitthackman.com, or by calling 818.990.2120.

 

 
Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120