A VERY SPECIAL HOLIDAY THANK YOU AND MESSAGE

At this time of year, it’s all too easy to get lost in the hustle and bustle of the holiday season while forgetting the true meaning of the season. As 2013 draws to a close and I look back on the past year, a couple of inescapable truths are apparent to me.

First, I realize how truly blessed I am in so many aspects of my life. Between beloved family, dear friends, wonderful colleagues and trusted clients, there is little I’m left longing for. The tangibles and ‘stuff’ of life come and go, but these precious relationships make it all worthwhile and help us through our day to day struggles. But for these relationships, I wouldn’t be the person who I am. They help me. They inspire me. They are a true and very real part of me.

With that in mind, allow me to take this opportunity to express my love to all of my family and friends for their support in recent years, especially my wonderful wife. I’m also obliged to express my heartfelt appreciation to all of my colleagues and clients without whom I wouldn’t have the luxury of operating my own practice. There are no words to express to you my gratitude for your ongoing trust, support and patronage; I look forward to growing our relationships even more in 2014! To all of those with whom I’ve yet to do business, know that I welcome the opportunity to be of service to your individual needs and that I humbly look forward to the privilege of getting to know you.

This all leads to a second truth – all, unfortunately, are not so lucky. In this season of faith and hope, I ask every reader to remember your brothers and sisters around you, especially those who are less fortunate. Whether it be individuals facing financial hardships, members of our elder citizenry who lack the human companionship that we all crave, or those who require some other basic necessity, so many around us find themselves in desperate need at a time of love, family and camaraderie. Please keep them in mind, and ease their burden if you can. While we’ll never be able to eliminate all human suffering or meet every need, we should always strive to do what you can for the less fortunate, especially during the season commemorating Christ’s birth.

In closing, I offer this prayer of hope and peace written by Frank Borman.

Give us, O God, the vision which can see Your love in the world in spite of human failure.
Give us the faith to trust Your goodness in spite of our ignorance and weakness.
Give us the knowledge that we may continue to pray with understanding hearts.
And show us what each one of us can do to set forward the coming of the day of universal peace.

Merry Christmas and a most blessed New Year to everyone!

May the Spirit of Thanksgiving Touch You and Yours Today!

In memory of our humble beginnings and the official start of Thanksgiving in America, I offer you the following Proclamation delivered by Abraham Lincoln in 1863 that gave rise to our annual celebration of family, friends and a counting of our respective blessings. May the Lord touch each of you today and remind you how blessed each of us is to live in the United State of America.

The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union.

Needful diversions of wealth and of strength from the fields of peaceful industry to the national defense, have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy. It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People.

I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens.

And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquility and Union.

JOIN US FOR A GOOD CAUSE!! (And for some really great food to boot!)

The Penfield-Webster Rotary Club would like to welcome you to join us for our Second Annual Brew and Dinner Pairing on November 14, 2013. The evening promises to be filled with good times, great food and tantalizing libations from one of Rochester’s very own breweries – the Roc Brewing Company.

Hosted at the Penfield Country Club, the Brew and Dinner Pairing features a five-course meal infused with the flavors of some of the finest brews around that will delight even the pickiest palates. We also have the honor of Roc Brewing Company’s very own brew master attending and talking about the various beers being served. As one of our club’s signature fundraising events, the Pairing helps our Club raise money to be distributed toward our various pillars of giving, including literacy and the Rotary Foundation. Your support is welcome and encouraged.

Details for the event are as follows:

Where: Penfield Country Club, 1784 Jackson Road, Penfield, New York 14526
When: November 14, 2013
Cocktails begin at 6:30 (cash bar) with Dinner at 7:30
Price: $40 per person

Please feel free to read more about the event at our website and pre-purchase your tickets online here. We look forward to seeing you there!

Questions? Call Mary at (585) 520-2447.

FREE ROCHESTER AREA FIRST-TIME HOME BUYERS SEMINAR

Most people don’t realize how easy it is to buy their first home. Many renters are able to purchase a home with mortgage payments lower than the amount they pay in rent. With the current low rates and available programs, whether your credit is good or bad, you owe it to yourself to join us at this exciting and informative event.

Join area real estate professionals for an exciting seminar geared toward first-time home buyers on Saturday, October 12, 2013, from 10:00 to 11:30 a.m., at the Courtyard Marriott, located at 33 Corporate Woods, Rochester, NY 14623. Seating is limited. For information and to register, please visit this link.

Presenters include representatives from the Law Office of Mark M. Campanella, RATEX Credit Solutions, LLC, VanScoter Insurance Agency, LLC, First Rochester Mortgage, and Nothnagle Realtors.

NEVER FORGET THEIR SACRIFICES

For those of you who are unaware, today is National POW/MIA Recognition Day in the United States. In commemoration of the sacrifices and service of the thousands of military personnel identified as either prisoners of war or missing in action since the Vietnam War, I would urge everyone to take a moment to remember them and their families. May God bless them and see clear their way home.

A POW’S PRAYER – By Henry R. Tavares


God, please grant me
The courage and endurance
To persevere at the hands
Of my enemies.

Please endow me with the presence
Of mind to always remember
Who and what I am.

Gift me with the needed fortitude
To resist all torture and deprivation
Be it mental or physical.

And most of all dear lord
Grant unto me the power and ability
To keep my soul and resolve,
American, to the core.

LEST WE EVER FORGET...

A flag of honor, a flag for reflection

It stands for us all uniting this nation.

It will keep in our minds this tragic day,

Memories of such heroic acts shall not go away.

As we look on this flag of cloth and thread,

A field of bright red for the blood that was shed.

Not just on this day of lasting memories,

But for lives that were given throught history.

Two towers of strength that rose up so high,

Reaching for dreams, they stretched to the sky.

They lay now in ruin at the hands of hate,

Great symbols of our nation have met this fate.

Out nation’s military housed in a fortress of steel;

We’re reminded this day that war is so real.

Hitting the heart of our power and might,

Rise up America, this terror we must fight!

Stars that shine on a field of bright blue,

Remind us of heroes with hearts so true.

An ordinary day, it had started out to be,

Soon their lives would be given for you and me.

A circle is drawn to stand for our nation’s unity,

A nation coming together through such tragedy.

A reminder is given for all of America to see,

That our freedom is never really free.

“God Bless America” is written in white,

Make this your prayer each and every night.

God is always with us, He knows our needs

Bring America back to God, should be our decree.

Much was given, many were lost on this day,

A man of terror tried to take our spirit away.

Do not let our new found spirit and unity fade,

As you look on this flag, remember this day…

By Lt. Tom Robinson, Wilmington, NC Firefighter

CONSIDERING FORMING A SMALL BUSINESS (Part II)? IS AN LLC OR S-CORPORATION RIGHT FOR YOU?

Even the most brilliant innovators and entrepreneurs require protection, but from what you might ask. The answer is actually suggested by the question itself, and is quite simple: you just don’t know. You never really know all of the things that might present themselves as potential liabilities, real or imagined, against you and your company. To the extent possible, one of your first goals as an entrepreneur is simple: shield your interests, corporate and especially personal. Exposure is everywhere, and everyone’s looking for certainly against that risk. While nothing is an absolute guarantee, there are nonetheless a myriad of ways to protect your individual interests, all the way from umbrella insurance policies to corporate formations. The latter serves as the fodder for today’s article.

While virtually everyone’s heard of a corporation and a limited liability company, practically speaking, not many understand the differences between them and which is the right choice for their particular business. Truth be told, even professionals sometimes differ on these opinions. Attorneys and CPAs have a notorious reputation, rightly or wrongly, for recommending a different entity selection to the same client. Is one suggestion necessarily right or wrong? I guess that depends on whether you’re speaking with the attorney or the accountant. Regardless, whenever considering the formation of a business, one should consult with a trusted advisor to ensure the right choice.

With all of that said, I’ll use the balance of this article as a primer on some of the primary similarities and differences between corporations and LLCs. In particular, given that we’re talking about start-ups, this article focuses on S-corporations rather than C-corporation. For a more detailed discussion of the difference between S and C-corps, feel free to review my prior article which addresses that issue. Now, on to the discussion at hand..

1. Formality and Liability Shield: Let’s start with one of the primary reasons that individuals form a legal entity to conduct business in the first place – the creation of a business shield. Both corporations and LLCs provide their shareholders/members with liability against corporate liabilities. There are really only a couple of caveats to that rule. Regardless of whether you’ve chosen a corporation or an LLC, each entity has certain formalities that must be strictly adhered. If you fail to abide by those formalities, you risk the entity being set aside, and the courts recognizing that you are personally liable for the corporate liability at issue. Aside from adhering to corporate formalities, unless the owners engage in egregiously fraudulent and intentional acts under while acting in the name of the business, the courts will honor the shareholders’/members’ liability shield.

2. Membership Size: If the potential number of members in the business is a concern to you, either in terms of your intentions to grow the business later on or who you may want to bring in as a member, here are a few other considerations. S-corporations are limited to no more than 100 shareholders, and all shareholders must be United States citizens or permanent residents. If your business is facing circumstances that might circumvent either of those restrictions, then your s-corporation could lose its status and revert to becoming a C-corporation. Such being the case, LLCs might be your best alternative if you expect to face either of those possibilities.

3. Pass-Through Versus Double Taxation: Both S-corporations and LLCs are considered pass-through entities for tax purposes. What does this mean in practical terms? Unlike C-corporations that face taxes on not only the corporation itself, but on the earnings paid out to the corporation’s owners, the company profits of S-corporations and LLCs are only reported on the personal income tax returns of the businesses’ respective shareholders or members. In this way, members of S-corporations and LLCs avoid that dreaded “double taxation” that so many fear when forming traditional C-corporations.

4. Income and Loss Allocation: On the related issue of taxes, another significant difference between S-corporations and LLCs comes in the form of income allocation. LLCs are often a favored entity because of the flexibility they allow their owners, especially when it comes to income allocation. Quite distinct from S-corporations, where shareholders incur income and losses subject strictly to their pro-rata shareholder interest in the business, income and loss between members of an LLC can be disproportionately allocated among its owners. Regardless of what each member puts in to the business, they can nonetheless enter into any sort of allocation agreement they might like vis-à-vis the operating agreement. The members will then be taxed accordingly by the Internal Revenue Service.

5. Membership Levels: Here’s just a quick note on the availability of differing membership classes in S-corporations and LLCs, but one nonetheless worth making. As far as S-corporations are concerned, shareholders own only one class of stock, which are either voting or non-voting shares. They cannot however have distinctions like common stock and preferred stock. Non such limitations exist relative to LLCs where you can have different membership classes with different priorities and preferences.

These are only some of the many important features that align and distinguish S-corporations and LLCs from one another. When you’re considering starting a new business, it’s critical to have a firm grasp on all aspects of the entity differences to ensure an appropriate choice, so always consult with a qualified professional to assist with your decision.

WILL YOUR INTERESTS BE PROTECTED IF YOU GET INTO A SERIOUS CAR ACCIDENT? The Mysteries of SUM/UM Explained.

Shhhhhhh!! I know it’s a dirty little secret, but you’ll be happy to learn that almost everyone is guilty of it. When was the last time you actually reviewed or paid attention to your motor vehicle insurance coverage? Do you really know or understand what your policy provides for in the event of an accident? If you’re like most people, I suspect the answers to those respective questions are rarely, if ever, and nope, not really. About the only thing that most drivers care about is making sure they have the necessary insurance coverage to ensure their right to operate their motor vehicle (at least as mandated by the State of New York).

If ever an accident were to occur in which you were seriously injured at the hands of a driver who either didn’t have any insurance coverage or minimal policy limits, your own interests could be seriously jeopardized. It’s for this reason that I’m urging every one of you to grab the declarations page from your insurance policy and give it a quick perusal… go on… right now, go grab it…. Don’t worry, I’ll wait…

Now, assuming you’ve done your homework and have in fact reviewed your policy limits, I’ll draw your attention to a couple lines on your policy that you’ve probably never paid attention to or that you may not have fully understood. I’m referring to the coverage line pertaining to SUM/UM coverage. Although it may have a funny and acronym ridden name, this coverage line is second only to your liability limits in terms of importance in your policy.

As for what are they and what do they mean, SUM stands for Supplemental Underinsured Motorist coverage, while UM stands for Uninsured Motorist coverage. In New York State, drivers are required to carry a minimum of $25,000 in liability coverage for a single person and $50,000 in liability coverage for multiple claims. This is different than SUM/UM coverage. Liability coverage protects other individuals against your negligence in the event you cause an accident with resulting injuries. All in all, the statutory minimum $25,000/$50,000 policy is by all measures small potatoes and won’t provide much coverage. That’s where SUM/UM coverage come into play.

Heaven forbid it ever happens, but consider this. What happens if you’re involved in a serious or catastrophic motor vehicle accident caused solely by the negligence of another. Chances are pretty good that you or your family may be entitled to damages against the driver of the other vehicle. Now imagine that the driver of the other vehicle either has no coverage or only the statutory state minimum? What happens then, when that $25,000/$50,000 policy isn’t enough to make you or your family whole? Do you call it a day, and walk away once her policy gets tendered? Or do you try to chase down the negligent party for the damages you’ve suffered which exceed her policy limits?

Both are certainly viable options, but the issue of practicality often comes into play. From the standpoint of professional experience, I’ve often found that those who maintain only minimal policy limits likely won’t have assets sufficient to satisfy even a potential judgment. Is that an absolute statement or even a bar to chasing tortfeasors for their negligence? Of course not, but it is a warning that you should never rely on another party’s ability to make you whole.

With that lesson in mind, I turn back to the concepts of SUM and UM coverage. These, in essence, are policy riders intended to protect you and your household relatives against the unexpected exposure resulting from the negligence of others. Where a negligent driver either has no coverage or insufficient coverage to make an injured party’s damages whole, UM and SUM riders kick in to fill in the gaps, respectively. The riders work just as their names imply. SUM coverage applies to situations where a driver has insufficient coverage, while UM coverage applies to situations where the other driver has no coverage.

What’s important to understand about both SUM and UM riders is that you are buying coverage up to a particular dollar value, but that may not be the amount you get. Any coverage offered by a SUM/UM rider will first be offset by any amounts you receive from the other party’s insurance policy. Take for example the following hypothetical. Assume you are involved in an accident with an individual that only carries a $25,000 liability policy which fully pays out to you. Assume also that you carry a $100,000 SUM rider. The most you could ever hope to recover against your SUM rider is $75,000 because the $25,000 will get deducted against the total amount available under the rider.

The down side to the system is that you don’t get the full $100,000 on top of the $25,000 you received from the negligent driver’s carrier. The up side, however, is that your little bit of planning has provided you with an extra $75,000 in potential coverage to which you wouldn’t otherwise have had access.

At the end of the day, the moral to this story should be simple: risk exposure is everywhere, so do what you can to minimize it, especially if you have a family. In the world of motor vehicle accidents, the statistics suggest that a collision occurs about every 8 seconds in the United States. While the majority of these accidents are certainly minor, a portion of them will nonetheless result in serious injuries and death. If you ever fall into one of these latter categories, do you really want to bank on the other driver having adequate coverage to protect your interests? I suspect not.

On a final note, I would remind everyone that even if you have high liability limits on your policy, that doesn’t necessarily mean you have any or adequate SUM/UM coverage. It’s for this reason that I encourage everyone to review their insurance policies. Not only should you understand what your coverage limits are, you need to make sure that you have adequate limits in place to protect against the unknown. If you’re unsure, speak with your attorney or insurance agent to determine what makes sense for you.

GOD BLESS AMERICA! HAPPY INDEPENDENCE DAY!

While the Fourth of July is quintessentially known as a time for eating hotdogs and watching fireworks, today I call to mind the true meaning of the holiday and remind everyone of its fundamental importance to our Nation. It was 237 years ago today that 56 intrepid souls signed their names to the Declaration of Independence. In doing so, these men not only risked everything that they held dear in their lives for what they believed to be true and right by committing treason against the British Crown, but they inexorably changed the world forever. Our Nation is the benchmark by which freedom is measured across the World because of what these brave men sacrificed and created over 200 years ago.

I encourage everyone to celebrate today, but never forget. Never forget where we came from, and never lose track of where we’re going because what we and those of us before us have built is too important to lose. I offer the following message, originally given by Charles Province, as a reminder to hold our freedoms sacrosanct no matter the cost. Ours is a truly unique and wonderful society that has never seen its equal, and I dare say never will.

It is the Soldier, not the minister, who has given us freedom of religion.
It is the Soldier, not the reporter, who has given us freedom of the press.
It is the Soldier, not the poet, who has given us freedom of speech.
It is the Soldier, not the campus organizer, who has given us freedom to protest.
It is the Soldier, not the lawyer, who has given us the right to a fair trial.
It is the Soldier, not the politician, who has given us the right to vote.
It is the Soldier who salutes the flag,
Who serves beneath the flag,
And whose coffin is draped by the flag,
Who allows the protester to burn the flag.

CAN YOUR ESTATE AVOID THE TRIALS AND TRIBULATIONS OF INFIGHTING AFTER YOU PASS?

The time after someone passes away is supposed to be a period of mourning, acceptance and hopefully regrowth. I think it’s fairly safe to say, however, that we’ve all seen at one point or another circumstances following the loss of a loved one (whether yours or someone else’s) degrade into nothing more than a money grab. I don’t care if you’re the Brady Bunch or that prototypically dysfunctional family, money seems to have a way of bringing out the worst in people. When that happens, greed, shortsightedness and/or one’s own sense of entitlement often lead an individual to the precipice of challenging the contents of their loved one’s Will. Are there times when a will contest is a valid alternative? Certainly. At other times, however, it’s nothing more than an effort to get more “stuff” out of the estate of your loved one.

What, if anything, can be done to avoid this possibility? As someone planning his or her estate, you’re often in a unique position to know your family well enough to sense the possible danger signs that a Will contest following your passing could be on the horizon. Whether you see trouble brewing from the get go or whether you simply wish to avoid infighting as a possibility down the road, you do have some options going forward to minimize the chances of it occurring.

What if you could dissuade someone from filing a Will contest with nothing more than a few written words? Sound appealing or even too good to be true? While not for everyone, the inclusion of what’s known as a “No Contest Clause” or “Terrorem Clause” in your Will might have just that effect. At its most basic level, no contest clauses state in no uncertain terms that if anyone files a lawsuit challenging the validity of your estate plan, that person will receive nothing from the estate. Yep, you heard me right. If someone challenges the Will in the midst of a terrorem clause, that person is entirely cut off from taking anything from the estate.

Pretty powerful stuff, huh? Is it an absolute deterrent? Of course not, but it will almost certainly give anyone contemplating a challenge pause to reconsider before filing. At the end of the day, you are always free to challenge a Will, but where a terrorem clause is present, the challenger must be cognizant of the fact that he or she will receive nothing if that challenge is lost. While New York recognizes the enforceability of no contest clauses, not all states do, so be sure to consult with local counsel to determine whether terrorem clauses are a valid and appropriate option for you.

If we take a step back and look more generally at the grounds on which Wills are typically overturned once challenged, we would see that the capacity (or rather incapacity) of the testator is often key to the challenge. While not directly a deterrent for challenging a Will, I would offer the following as guidance to at least ensure your wishes are carried out if your Will ever is challenged. The lesson is this: start soon and revisit often.

What does that mean exactly? Simple. In order to successfully challenge a will, the opponent must demonstrate that the Will is not valid for at least one of any number of reasons. Those reasons include facts like the Will was executed under duress or the testator didn’t have the mental capacity to execute the Will. With those facts in mind, I would suggest that it is wise to undertake your estate plan as early as possible – when there’s no question about your capacity – to ensure that your wishes won’t be set aside. To that end, I would also suggest that any good estate plan needs to be revisited often. Estate plans are organic and need to be updated occasionally to reflect major (and minor) changes in one’s life. It’s all about making these changes when you have the ability to make informed decisions. If you do so, short of your estate plan violating some established public policy, your wishes will become manifest and your intentions will be given full effect.

I would offer testators one final strategy for avoiding familial strife once you pass. Another major reason that Wills are challenged is the element of surprise. If the beneficiaries of a Will learn about a decedent’s wishes only after death and those stated wishes are a shock to one or more beneficiaries, you unfortunately have the home-grown makings for a challenge. Individuals who feel slighted by a decedent or who simply don’t understand why their loved one did what he or she did, are prone to lash out – often times in the form of a Will challenge. Such being the case, a certain level of transparency in one’s estate is often times a good idea. I’m not suggesting that testators go into gory detail about their assets with their loved ones, but there is something to be said for discussing your estate plan so they understand your wishes in advance of your passing, not to mention your rationale for distributing your estate in the manner you’ve chosen. No strategy will entirely eliminate the possibility of a challenge, but depending on your particular circumstances, a modicum of transparency could well remove any surprises that might otherwise result in a contest.

Any strategy aimed at minimizing the likelihood of a Will contest should be discussed with counsel. Depending not only on your particular family situation but also on the applicable laws and public policies of your jurisdiction, the choice of strategy(ies) is critical. Always consult with an attorney about your particular circumstances to ensure you understand not only your options, but the possible ramifications of those options.

THE IMPORTANCE OF COUNSEL IF YOU'RE NOT USING A REALTOR

Hey, I get it – in today’s economic climate, I’m as much in favor of trying to save a buck as the next guy… There’s a difference, however, between trying to save a buck and jeopardizing your interests. At least in the Western New York region, the real estate market is presently pretty gosh darn hot. In an effort to save that proverbial dime, I’ve noticed that many buyers and sellers are navigating the market without the assistance of a realtor, all in an effort to keep costs down. I’m not here today to debate the sageness of buying or selling a home without the benefit of a good realtor – regardless of whatever I might say, there will always be those who simply undertake to do it themselves. That being the case, I offer the following to those brave souls determined to purchase or conduct a For Sale By Owner (FSBO) on their own.

Is it impossible to conduct a real estate transaction without the benefit of a realtor? Hardly, but buyers and sellers need to understand that realtors bring many unique characteristics to the table that benefit their clients, not the least of which include their experience in negotiating and their familiarity with the necessary contractual documents. When you remove realtors from the equation, buyers and sellers alike are eliminating a font of professional experience from the process that likely needs to be filled in order to bring the deal to fruition. The question becomes one of who will fill that void to ensure your interests are truly protected?

For the sake of this discussion, I’m setting aside the issue of your negotiating prowess. If you’re doing it on your own, hopefully you’ve at least educated yourself on the market and your area comparables so you have some sense of the deal your making. My fingers are crossed for you that you aren’t getting robbed, regardless of which side of the table you’re sitting. My real concern today relates to the dangers of undertaking real estate contracts on your own.

Unless you’re an experienced real estate investor who routinely flip houses, it’s unlikely that you have the knowledge and requisite understanding of real estate law to prepare a purchase offer agreement, a counteroffer or the associated addendums that almost always accompany such offers. Here’s the danger, and I believe it’s very real. Unless a real estate contract has been prepared and executed properly, you could well be setting yourself up for disaster, either in terms of having drafted an unenforceable contract, having prepared an incomplete contract that doesn’t fully set forth your intentions, or exposing yourself to liability down the line if you failed to disclose something you should have. None are pleasant thoughts, and all will almost certainly cause you to have a very bad day if brought to light or used against you.

No one wants to go through the purchase and sale process only to later find that the deal you were so intent on can’t or won’t be closed for some reason that was entirely within your control from the very beginning. Rather than risk that potential, the solution is simple. In order to close, you’re going to need counsel in the first instance to review and approve whatever contract you execute. If you’ve chosen not to use a realtor, do the smart thing and engage your attorney to prepare the necessary purchase offer or counterproposal too! If your attorney routinely practices real estate law, he or she is intimately versed with these contracts and will be happy to assist you at usually nothing more than a nominal fee over and above their usual closing cost. Yes, it might be slightly more expensive than doing it yourself, but I can guarantee you that it will certainly be less expensive than using a realtor or the costs associated with the litigation that could ensue from a poorly, inarticulately or incorrectly drafted contract.

Are there guarantees in life that your deal won’t fall through even with a perfectly drafted contract? Certainly not, but using counsel at least ensures that you’ve done all you can to protect those interests to the best of your ability. As the old saying goes, don’t be penny wise and pound foolish. Save money where and if you can, but not at your own expense!

WHY SHOULD YOU REGISTER YOUR FOREIGN BUSINESS?

The statistics really haven’t changed over the past few years. New York not only remains one of the most expensive states in our fair Union to live and do business, but we also have one of the most oppressive tax structures to boot. All in all, this usually makes for an incredibly unfriendly environment for starting and/or maintaining a business in New York State.

Call it a trickle down effect if you will, but this hostile fiscal climate invariably impacts entrepreneurs’ decisions as far as where to incorporate or whether to even do business in New York. Such being the case, even when companies decide to do business in New York, before doing so, they will often make a strategic decision first – namely, forming their business in another state so that their business is subject to not only friendlier corporate governance laws, but also a less oppressive tax and regulatory structure. That’s all well and good in theory, at least until you start “doing business” in New York.

Quick side note. Just so there is no confusion, when I use the term “foreign” business, I’m not talking about a company that’s been set up in Bangladesh or some other far off land. Foreign in this sense that I’m using it refers to businesses that were formed outside of New York in another state (even if that business was formed by a New York resident with the intention of doing business exclusively in New York). If we were talking about companies formed in another country, those would be referred to as “alien” entities.

New York, like many other states, requires “foreign” businesses to register with the Department of State before conducting business in order to take full advantage of the State’s laws and corporate protections. Registering your foreign entity is a simple enough matter. I do, however, always recommend utilizing competent attorney to assist with the process because failure to do so properly could lead to disastrous consequences for your business later. In order to register, it’s merely a matter of filing some paperwork with the Department of State and thereafter obtaining a Certificate of Authority to transact business here. Simple enough, right?

At the end of the day, business owners need to understand that forming a business in another state is not a panacea to your New York corporate woes. While there may be times that doing so makes sense, owners need to recognize certain facts, not the least of which include that you could be opening your business up to potential litigation in more than one state by undertaking this strategy, and that you will face increased costs by maintaining your business in two separate states. Whether this approach makes sense for your business is fact dependent and one that should be considered with counsel.

Assuming for a moment that you do form a foreign business – then what? What happens if you fail to register it or if you do so improperly? What risks do you run? The long and short of it is that doing business in New York as an “unauthorized” company will subject your business to considerably greater liabilities. The downsides are very real. Depending on the nature of your industry, your company may be entirely banned from conducting business here unless you’ve registered and secured the permission of the necessary state agencies to conduct business (i.e., insurance companies and other industries subject to strict governmental regulation). Your business could likewise find itself subject to fines depending on the illegal practice(s) in which you’ve engaged.

Another reality of doing business in New York as an unauthorized foreign entity is that you will be precluded from affirmative access to the court system unless and until you have qualified to do business in the State. This prohibition is codified in New York’s Business Corporation Law, and is designed to “to protect domestic corporations from unfair competition and to place them on an equal footing with corporations who are using the facilities provided by the state of New York in the conduct of their business.” Others, however, will still be able to gain jurisdiction over you, even though you’re not registered here. One of the goals of any company, regardless of the locale in which it is conducting business, is to enjoy the protections offered by that jurisdiction’s laws, while similarly being able to access its legal system. Without the benefit of those advantages, an unauthorized company could well find itself behind the eight-ball as far as protecting its interests.

Whatever your rationalization for forming your business in another state, the lesson here is simple. If you’ve chosen to do business as a foreign entity, make sure to register with the Department of State! It’s fairly quick. There’s only a nominal expense for doing so. But it will likely save you a major headache down the road should some dispute involving your company arise. Heaven knows there are certainly enough challenges in business without creating additional and unnecessary burdens for yourself; this is an easy fix, so strongly consider it.

WHAT CAN I DO ABOUT MY NEIGHBOR'S #@&$ TREE!

Let’s face it – one of the first lessons you likely learned as a homeowner was that you can’t pick your neighbors, no matter how much you might like to at times. Consider yourself one of the lucky ones if you in fact have neighbors that you like, get along with and can openly speak with (I’m fortunate enough to count myself in this latter category). Regardless of whether you’ve got neighbors that drive you bonkers or ones that you get along with famously, another sad lesson in life is that it often doesn’t take much to sour even the best of relationships. While I wouldn’t deign to write about how to keep a harmonious neighborhood, I will offer some general advice on a topic that has unnecessarily spoiled many a friendly relationship.

It’s silly. It’s small. It’s seemingly innocuous and likely petty. It’s all of these things and more, at least until you’re the one faced with it. What dastardly thing could divide once loving neighbors like the Hatfields and McCoys?? The answer? Shrubbery! Well, any foliage really, but hopefully you get the point. I know, I know. That’s plain silly, right? To an extent I agree with that assessment, at least until you recognize that a family’s house is its castle. That said, most liege lords don’t like things that threaten their property rights, even if those threats are minor.

With all flourish aside, let’s settle into the questions de jour. What are your rights when faced with a neighbor’s tree or hedgerow infringing onto your property? What rights do you have to trim or remove a tree or hedge which belongs to your neighbor but which resides partly on your property? Does it make a difference whether an overhanging tree poses a threat to person or property?

Barring local ordinances to the contrary (yes, they exist, so be sure to check your local rules!!), New York law does allow neighbors to tend to trees and hedges that infringe on their property. This is a limited right though, and one that must be exercised carefully. Homeowners have a right to trim infringing branches only up to their property line, but they must take care not to damage or kill the remaining tree, hedge or bush. If you do harm your neighbor’s foliage, be heedful of that fact you could well find yourself liable to your neighbor for any damages that she suffers from your actions. The aesthetics of a poor pruning job aside, so long as you don’t kill your neighbor’s tree and you only trim up to the property line, you’re well within your rights to cut it back.

Let’s assume your neighbor has exercised her rights to trim your tree up to your property line. What should you do if your neighbor demands reimbursement for the costs she incurred to trim back the branches? Unless the tree is posing a hazard to your neighbor’s person or property (yes, that standard is somewhat open to interpretation), the law does not require you to personally trim the branches or reimburse your neighbor for any expenses she might have incurred from electing to trim back the tree herself.

Propriety aside, even if you are legally entitled to trim back that overhanding branch or creeping hedge row, before you do so, you may want to ask yourself how you would feel if roles were reversed and your neighbor started hacking away at your property without so much as consulting you. While’s there’s certainly no guarantee as to how your neighbor will react, an explanation of what you plan on doing beforehand, with particular emphasis on the fact that you will only be trimming up to the property line, will probably be better received than simply starting up the chainsaw without any notice to her.

Keep in mind that although you may not need to secure your neighbor’s permission to do the work, you’ll still likely be well-served by communicating with her first, if for no other reason than to try and maintain cordial relations with your neighbor. And you never know what might come of that conversation – not only might your neighbor have some useful suggestions for the trim job, but she might even offer to help with the work!

Happy Memorial Day!

Dear Heavenly Father, with a sober heart we come before You this Memorial Day. We pause for a moment and call to mind all the men and women who have died in the service of our nation since 1776.

Dear God, please look with mercy on our brave and selfless brothers and sisters, who did not shirk from their task but gave themselves completely to the cause of defending and protecting us all. Bless all who have given their lives for the sake of liberty, and grant them eternal rest with You.

We remember also our brave men and women now serving in our Armed Forces, both at home and abroad. Dear God, send out Your angels to protect them all. Help them discharge their duties honorably and well. Please bring them safely home to their families and loved ones. Please bring Your peace and mercy to our troubled world.

We ask this, Father, in the name of Jesus, Your Son, our Savior and Lord. Amen.

By Father Loren Gonzales

JANUARY 2014 TO BRING MORE CHANGES FOR MORTGAGE LENDING RULES - SELF-EMPLOYEED BEWARE?

Unless you’re into reading the minutia of federal legislation, you are probably like most consumers and are unaware of a new mortgage lending rule that is slated to go into effect in January 2014. Born of the Dodd-Frank Wall Street Reform and Consumer Protection Act, lenders and consumers should anticipate the implementation of the “Ability-to-Repay” rule early next year, including its provisos related to qualified mortgage criteria. The new rule, like all other mortgage legislation of late, aims to protect borrowers and the real estate market from abuses and another housing collapse.

The idea behind the new rule is simple enough. In order to avoid abusive practices that harm consumers by obfuscating the true costs of a mortgage, the rule prohibits lenders from offering low or no-documentation loans that mask a mortgage’s true costs. Lenders will instead be required to ensure that borrowers can repay any mortgage offered to them – i.e., the “Ability-to-Repay”. Intuitive enough, right?

The “Ability-to-Repay” rule also defines a new loan category known as the “qualified mortgage”. These are a somewhat new financial beast designed explicitly to comply with the new repayment rule. The legislation requires that qualified mortgages adhere to the following criteria:

1. Qualified mortgages cannot have interest-only periods;
2. Qualified mortgages cannot have negative amortization;
3. Qualified mortgages cannot exceed 30 years;
4. Qualified mortgages cannot have balloon payments at the end of the term, with a limited exception for those living in a rural or underserving areas (although who defines that I’m not sure);
5. Qualified mortgages cannot exceed forty-three percent (43%) of a borrower’s monthly pretax income; and
6. Borrowers must provide proof of income or assets.

While these new rules may be good for consumers by stabilizing the housing market and minimizing the chances of a further collapse, the “Ability-to-Repay” rule is likely to have a chilling effect on at least one segment of the population – self-employed individuals. For better or worse, those who are self-employed often have uncertain, seasonal and/or fluctuating income. Under the best of circumstances in the current system, lenders are often hesitant to lend to these individuals. While more of a challenge to secure financing, lending for these individuals has, at least for the most part, traditionally been available.

So, what impact will these new rules likely have? The rules of the game are already stacked against the self-employed because of their often uncertain income. The “Ability-to-Repay” rule takes that burden and significantly heightens it by applying stringent criteria to get a qualified mortgage. Unless the applicant can demonstrate stable or increasing income, his or her chances of obtaining a mortgage may be poor. Under the new rules, it’s unclear whether and how much leeway lenders might have to make business decisions about making loans. As a matter of practicality though, I wouldn’t bank on lenders going out of their way to accommodate applicants who have anything other than a pristine record. It light of the present economic and political culture, I would wager that few if any institutions are willing to assume the risk of running afoul of the administration or this new legislation.

DOES YOUR "SOFT TISSUE" INJURY SATISFY NEW YORK'S SERIOUS INJURY THRESHOLD?

For those readers familiar with my articles, you might recall a previous piece in which I discussed New York State’s serious injury threshold law. In part, the article discussed how New York, years ago, implemented legislation intended to make it more difficult for individuals to maintain legal actions against negligent drivers unless they were “seriously” hurt as a result of the accident. This was done for a number of reasons, not the least of which included efforts to reduce state court dockets and the legislature succumbing to pressure from the insurance lobby. Propriety of the legislation aside, New York’s law, often referred to as the serious injury threshold law, achieves its aims by instituting certain criteria that must be met in order to maintain a legal action.

The legislature provides for seven different categories of injury that satisfy the threshold law:

1. Personal injury which results in death
2. Dismemberment; significant disfigurement
3. Fracture
4. Loss of a fetus
5. Permanent loss of use of a body organ, member, function or system
6. Permanent consequential limitation of use of a body organ or member; significant limitation of use of a body function or system
7. A medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person’s usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment.

As even unfamiliar readers will note, there are some stark differences qualitatively speaking as far as how the law treats each category. Unlike the first four categories, which one either definitively suffers or doesn’t, the latter categories are more open to interpretation. In practice, categories 5 through 7 are the subject of ongoing legal debate and are continually changing.

While what qualifies as a serious injury under these categories is always fact dependent, they at other times appear subject to judicial whimsy. While the system isn’t always fair, leveling that accusation against the courts isn’t exactly fair either. The courts have undoubtedly left their mark on the law, but it and all of its intended or unintended ramifications are very much a creature of legislative design.

Let’s be frank, and I’ll offer an extreme example to demonstrate my point. There is a significant difference between a broken finger and a bulging disc in one’s back. Broken fingers, although perhaps uncomfortable while healing, rarely cause permanent problems once they’ve healed. That broken finger, however, will automatically qualify as a serious injury under the law, despite the fact that its impact is likely minimal. The same can’t be said for bulging discs and other soft tissue injuries, however. For anyone who’s ever suffered one, they can be utterly debilitating, cause regular pain and go unresolved for the balance of one’s lifetime. Despite that reality, unless certain factors are on your side, your soft tissue injuries may well not be compensable because they simply don’t rise to the level of a “serious injury” under the threshold law.

When I talk about soft-tissue injuries, I am basically talking about injuries that you suffer to your connective tissue, including muscles, tendons, ligaments and discs (the spongy, shock-absorbent tissue stuff between your vertebrae). These injuries can take the form of strains, sprains, tears and the like. Typical soft tissue injuries suffered in motor vehicle accidents are bulging discs and/or whiplash.

If you’ve suffered a soft-tissue injury in a MVA through the fault of another, you need to evaluate with an experienced attorney whether your situation rises to a level enabling you to maintain a legal action. There are numerous criteria that should be evaluated during this process, but here are a few of the more important ones to consider.

You first need to consider the nature of your injuries and how they’ve impacted your life. Many successful soft-tissue cases hinge on factors such as whether the injury required surgery or prevented you from working for an extended period of time. Hand in hand with those factors, one also needs to evaluate how the course of treatment progressed. Did the victim require an extensive and uninterrupted course of treatments since the accident, or were there gaps in treatment? The more of these factors you have on your side, the better your odds of surviving an inevitable motion by the defense to dismiss your case.

When it comes to soft-tissue injuries, another factor that plays into your likelihood of maintaining a successful case is your ability to produce objective medical evidence regarding the nature of your injuries and your accompanying limitations. It’s a rare occasion when I question a client’s reports of pain; who am I to say that they’re not feeling something other than what they claim. In the eyes of the court, however, that won’t be enough. Even the most horrific subjective reports of ongoing pain, when unaccompanied by objective medical evidence to substantiate those reports, are likely to get kicked by the court. For this reason, it’s imperative that you and your attorney learn all they can from your treating physicians about the true nature of your injuries and how they may or may not help you qualify under the threshold system.

There is no question that not all soft-tissue injuries meet the serious injury threshold, but under the right circumstances, one can meet those criteria. This has been one of the more chilling effects of the law. Is the threshold system fair? By no means would I even begin to suggest that, but it is the best we have and the one we are forced to work under. That said, if you’ve suffered an injury at the hands of a negligent driver, while your focus should be on healing, don’t forget to protect your legal interests. Soft tissue injuries can and often times do last a lifetime; while no-fault can often return you to your pre-accident baseline, sometimes it’s not enough. When that’s the case, don’t hesitate to explore your legal rights and options.

EMPLOYER/EMPLOYEE RELATIONSHIPS ARE LIKE DATING? THE DIRTY LITTLE SECRET OF RESTRICTIVE COVENANTS

When someone is starting out in a new job, one of the last things on his mind is what happens if and when things don’t work out with that employer. Things are all shiny and new, and most people have every hope that the relationship might be lasting. Sounds kind of like dating or marriage, doesn’t it? In a way, it is. The reality is that sometimes things can go horribly wrong in an employer/employee relationship, just like in a personal relationship. When that happens, the question often becomes one of can you just walk away with no further strings attached as you so desperately want to do, or are you somehow still bound to that person with obligations that you just can’t shake? Whether it’s because of a child that you’ve had together or some kind of restrictive agreement that you’ve entered into with your employer, sometimes relationships aren’t that easy to just cast aside.

Today I’ll leave the personal relationship advice to the experts (you go, Dr Phil!), and focus on something that many people face and don’t even realize. While hardly something that every employee needs to worry about it, I direct this article to professionals and/or uniquely talented individuals who were asked to sign a non-competition agreement as a condition of their employment in New York State.

What is a non-competition agreement you might ask? At its most basic level, a non-compete agreement is a contract which restricts an individual’s employment opportunities for a certain period of time and within a certain radius of his current employment following the termination of that relationship. Non-competes often have an additional restrictive condition included which prevents an employee from starting a competing business within a certain period of time following his departure from his employer.

There are no statutes or regulations controlling non-competes within the State, but case law clearly tells us that New York courts generally disfavor such agreements and hold them against public policy. They are viewed are unreasonable restraints on trade and employment. New York typically stand for the proposition that individuals have a right to work, and that right will not unreasonably be infringed upon. Even so, you nonetheless need to understand that your particular non-compete agreement may still be enforceable.

The enforceability of a non-compete agreement comes down to an analysis of one simple, or rather not so simple, word: reasonableness. Reasonableness is the standard by which non-competes live or die, and that reasonableness is evaluated on a case by case basis. It falls on the party seeking to enforce the agreement to demonstrate that measure. Without going into gory and gruesomely boring detail, individuals seeking to enforce a non-compete do have some practical guidance for understanding what amounts to reasonableness.

Courts look to a number of different factors in assessing whether an agreement should stand or be set aside. They include:

(1) An assessment of whether the agreement imposes a restriction that is no greater than necessary to protect an employer’s legitimate protectable interests;
(2) An assessment of whether the agreement imposes an undue hardship on the employee;
(3) An assessment of whether the agreement causes harm to the general public; and
(4) An assessment of whether the agreement is reasonable both in terms of duration and geographic scope.

There’s no bright line answer to assess these measures, as each has to be considered based on each cases unique circumstances. Typical interests, however, that the Court is inclined to protect on behalf of an employer include: potential damage to the business’ trade secrets or confidential information; damage to the business’ goodwill; or to prevent the employer from losing an employee to a competitor whose skills are special, unique or extraordinary that the business would be damaged. Even if some or all of these criteria are met, the court still needs to assess the reasonableness of the agreement in terms of the other restrictions it places upon an individual. This assessment may result in the agreement being wholly enforced or struck down, either in part or in whole. The court exercises a measure of control that enables it to re-write an agreement to make it reasonable if an employer’s interests are truly at risk.

In the event that an employer does seek to enforce a restrictive agreement, it will likely be seeking both an injunction to prevent the arguably prohibited behavior and monetary damages to compensate for the lost profits that it would presumably suffer because of the breach. In light of the fact that these agreements are generally disfavored by the courts, employers need to truly assess with counsel whether they have a legitimate grievance that would justify the time and expense that would be incurred to try and enforce the agreement. Sometimes the answer to that question is an unqualified yes; depending on the skill set and supposed uniqueness of your breaching employee though, I’d urge you to assess that decision well.

By way of bringing this article full circle, I think it goes without saying that employer/employee relationships, just like personal ones, sometimes go wrong. When they do, it’s my hope that you originally entered into the relationship with eyes wide open as to what you bargained for. If you are an employee subject to a non-compete, always know your rights and consult with counsel if you think an agreement might unreasonably infringe upon your livelihood. If you are an employer, I would urge you not to willy-nilly have all of your employees sign a non-compete, but understand when and how they should properly be used.

"OPERATION HANG UP" IN EFFECT!

By now I think it’s pretty safe to say that we should all know this fact, but texting and driving and/or talking and driving are becoming ever increasingly more significant factors in not only car accidents across New York State, but also motor vehicle related fatalities. For that reason, police across the region and State are undertaking another round of Operation Hang Up. This is an initiative targeted at drivers using mobile devices unsafely, and in particular, those not using hands-free devices. Starting today and running through Sunday, April 28, 2013, drivers can expect an increased police presence on roadways that will target such drivers. The State’s intention is to both increase public awareness of the hazards of distracted driving, and to reduce its actual occurrence (high ticket fines and surcharges often have that effect, even if only temporarily). Be safe. Drive smart. And keep your eyes on the road! Not just this week, but every day.

UPDATE! STAR PROPERTY TAX REBATE PROGRAM

If you follow my blog at all, you likely saw my recent article in which I discussed upcoming changes to New York’s STAR property tax rebate program that would directly or indirectly affect millions of property owners. When I wrote about this topic in March, details regarding the proposed changes were still up in the air. About the only thing for certain that was known was that eligible property owners who qualify for the STAR program would have to re-register. No time frame was provided for re-registration, nor was any mechanism for doing so communicated to the public when the initial press release was issued.

The legislature’s purported impetus behind requiring all property owners to re-register for the program was a down state investigation that revealed a seemingly systemic abuse of the program. The investigation suggested that ineligible properties, such as rentals, were being registered under the program, thereby costing New York State millions in property tax revenue annually. To stem this abuse, the legislature proposed as part of its recently passed budget that all property owners re-register for STAR status, regardless of when they last applied.

After posting that article, given how little publicity surrounded the legislature’s intentions regarding STAR, I received several communications from readers questioning whether I was mistaken and/or were these changes were really going forward. The reality is, they are! More importantly, we finally have some details provided by NYS that address the upcoming changes. My appreciation goes out to those readers who brought the updated information to my attention.

According to the New York State’s Department of Taxation and Finance (Department), all homeowners seeking to maintain a basic STAR exemption will need to register (or re-register if you already have) with the Department of Taxation and Finance to receive a STAR exemption in 2014 and thereafter. Homeowners, however, will not need to re-register to receive their 2013 STAR exemption. Although the Department indicates that it will mail all basic STAR recipients information on when and how to register for 2014 and on, I’d still recommend staying on top of matters and possibly even contacting your local tax assessor to ensure you understand the required process to avoid missing out.

On a positive note, the legislation indicates that these changes will not affect senior citizens who are eligible for the enhanced STAR program. Seniors, however, must continue to apply annually to maintain registration or participate in the Income Verification Program.

As a remedial measure to prevent against further abuses of the STAR program in the future, the legislature also implemented heightened penalties for those ineligible for the program that nonetheless apply for same. Under the new rules, penalties for intentionally providing misinformation to an assessor will increase from $100 to as much as $2,500, while the number of years for which a taxpayer must repay inappropriate STAR benefits will increase from three to as many as six years. Also, not only will taxpayers whose STAR exemption is revoked will be unable to receive the exemption for six years after the revocation, but an additional $500 processing fee will be imposed whenever an inappropriate exemption granted after April 1, 2013 is revoked. Perhaps these new rules will discourage ne’re-do-wells from abusing the system.

WHY DO PEOPLE AVOID WRITING A WILL?

I’d like to say that it’s a recent phenomenon, but I’m writing today about a trend that I’ve noticed throughout my career. Truth be told, I’d be naïve to think that this trend doesn’t predate my practice by decades, if not centuries. What am I talking about exactly? I’m talking about the propensity of much of society to hesitate (if not complete avoid) writing a will. Both in my practice and my everyday life, I regularly hear from people who recognize and wholeheartedly admit that they should put a will in place, but despite their best intentions, there’s simply a wall up that seemingly prevents them from taking that final step to do so. Why is that? What keeps us from doing what we should do to protect our family?

FALLACY ONE: I DON’T NEED ONE

One of the primary reasons that people avoid preparing a will is they don’t think they need one. If truth be told, there are some limited instances when a person truly doesn’t need one. That, however, is the exception to the rule. Individuals need to understand one very simple thing. If you pass away without a will, it falls on the court to decide not only how your belongings are distributed, but also who will be responsible for raising your minor children after you pass. If you’re okay with that, then you can skip to the next section. If, however, you want your last wishes to be known and honored, I highly recommend doing the right thing by your loved ones and prepare a will.

Even if you don’t think that you have assets enough to warrant the necessity of one, if you’ve got minor children, I would pose this question to you. How could you not want to ensure that you have provided for their future well-being by making known who you want to raise them? I can guarantee that the individuals you would choose are not necessarily those the court would choose in your stead. That issue aside, however, you should understand that having a will in place really does make it easier on those you’ve left behind to handle your estate. Your loved ones will have enough to deal with when you pass; shouldn’t you do what you can to ease their burden?

FALLACY TWO: IT’S EXPENSIVE AND COMPLICATED

While no two estates are alike, it’s typically not an expensive proposition to have at least a basic will prepared. Can it become expensive? Certainly, but the reality is that not everyone requires a complicated estate plan or a living trust. For the average person, it will be money well-spent to retain counsel to assist you with the preparation of a last will. Not only will it provide you with peace of mind knowing that everything has been set in place and done properly, the nominal investment that you make now to ensure your wishes are carried out could save your estate considerable money down the road after you pass if matters aren’t otherwise set in place.

FEAR OF DEATH AND OUR OWN MORTALITY

In my experience, the final driving factor which deters many individuals from preparing a will is that they don’t want to face their own mortality. It’s hardly a bad reason, and I can’t necessarily fault them. Many people feel that if and when they do memorialize their last wishes that they’ll be tempting fate or inviting something terrible to befall them. While this is intellectually an irrational and unfounded fear, it’s hard to minimize the psychological impact which results from being made to ponder your last wishes.

There is no easy answer to this quandary. Without diminishing the very real distress that many people face when forced to think about their last wishes let alone talk through with their attorney and/or spouse, I would offer this bit of advice: Get over it. I hate saying that, and I certainly don’t intend to be rude, but you have no choice. You need only consider what’s at stake after you pass to truly understand that reality. Do you really want the court to make critical decisions for you as far as who raises your children or where your assets go? I’d wager that the answer is probably no. I’m not saying it will necessarily be a comfortable conversation to have, and you might even disagree with your spouse about your final plans, but given the alternatives, is a little bit of discomfort really worth the potential chaos that you could leave your family in should you choose not to have that conversation and take action?

FINAL THOUGHTS

It will probably come as no surprise, but I’ll conclude this article simply by saying that I believe each of us has an obligation to those we love to do everything we can to ease the transition process once we pass away. Those obligations include writing a will and making our final wishes known. If you haven’t already done so, I would urge you to write one for not only your own sake, but, more importantly, for the sake of those you hold most dear. They are the ones after all who will be left to pick up the pieces.

CONSIDERING FORMING A SMALL BUSINESS? THE CHOICE BETWEEN AN S-CORP AND C-CORP IS CRITICAL

There’s no question that entrepreneurs and small businesses are the life blood of this great nation. For those just starting out or who are only now considering incorporating an existing business, your choice of entity is critical. While I’m personally partial to limited liability companies for most small businesses, many individuals, for a myriad of reasons, still want to conduct business as a traditional corporation. While other forms of corporations exist, the two most common for-profit types are S-corporations and C-corporations. If you’re undertaking to incorporate, you need to understand the difference between them and how they can affect you, especially your bottom line.

In order to create a corporation, one initiates the process by filing article of incorporation with the Department of State. Aside from indicating your intention to create a new entity, articles of incorporation do not state what type of corporation you are filing. By default, corporations are considered C-corporations under subchapter “C” of the tax code upon formation. S status is secured only when the entity files for same with the Internal Revenue Service (IRS).

On many levels, the choice between C or S status is irrelevant. Both forms provide owners with limited liability. This is generally the paramount reason individuals decide to incorporate in the first place; to avoid personally liability resulting from the ordinary, everyday operation of your company. The shield which results from incorporating results from the fact that corporations are considered entities separate and apart from their owners and directors. Corporations, nonetheless, are still owned by their shareholders and controlled by their boards of directors.

The real difference between C-corporations and those which choose an S election comes down to tax treatment under the Internal Revenue Code. Traditional C-corporations face two levels of taxations. Not only will the entity pays taxes on the net income it generates, but its shareholders will pay a secondary layer of taxes on the distributions they receive from the entity. S-corporations, however, are not subject to this double layer of taxation. Rather, they are instead subject only to a single level of taxation at the shareholder level, and ate referred to as “pass-through” entities. In this sense, corporations which choose an S election are treated instead much like LLCs or partnerships.

In order to be an S-corporation, your entity must be limited to no more than 100 shareholders, all of which must be U.S. citizens or resident aliens. Shareholder status is not limited to natural persons, but can also be enjoyed by other corporations (remember, corporations are separate entities in the eyes of the law).

In order to choose S status from the beginning, the corporation must file an S election with the IRS within 75 days of formation. If you elect S status from the beginning (or during the election period), your business will never be treated as a C-corporation. If you miss that window and are considered for taxation purposes as a C corporation, all hope is not necessarily lost. C-corporations can convert to S status, but it may not be that simple. Because of its complicated accounting rules, many C-corporations find it difficult to convert to S status, at least without the risk of nonetheless facing that double layer of corporate taxation because of a built-in gain tax that was instituted to take effect upon conversion from a C to S. Nonetheless, the law does provide a mechanism for converting from a C to an S corporation, just as it provides a mechanism for converting from an S to a C if desired.

When one weights all of the costs and benefits associated with a C-corp versus an S-corp, it ends up making very little sense for most small business owners to stick with C-corp status to run their business. Aside from the fact that small businesses fiscally can’t afford the hit of paying the two levels of taxation that accompany C-corp status, conducting business as an S-corp allows business owners to personally claim losses on their taxes – a feature simply not offered by C-corporations. At the end of the day, corporations have their time and place. If you’re considering one over an LLC, you need to at least make sure you elect wisely when forming one so as to get the most out of your chosen entity. Last but not least, rules and laws change regularly, so always consult with counsel when choosing an entity form. While this article gives one a sense of the differences between S-corps and C-corps, there are multiple other differences that I’ve not touched on which could affect your choice of entity.

CAN I REFUSE TO LEASE MY "NO-PET" APARTMENT TO SOMEONE WITH A "COMPANION ANIMAL"?

Imagine the dilemma. You’re a landlord with a house or apartment to rent. As a conscientious property owner, you’ve made what you believe to be well-reasoned decision to keep the property pet free because you recognize the potential damage they can cause to the premises. Despite your best intentions, a potential tenant comes a knocking with a lease application in hand. The applicant on paper looks like the perfect tenant, except for the fact that he has a “companion animal” in tow… Even though your well-reasoned policy to exclude tenants with pets remains in effect, can you legally refuse to rent to him? The answer might surprise you.

As a landlord and/or property owner, the law is often on your side as far as permitting you to set reasonable criteria for renting to people. Maintaining a rental as pet-free or cigarette (smoke) free is hardly atypical, so one wouldn’t think that adhering to such policies could result in potential legal problems, but they could. The overriding issue relates to the American with Disabilities Act (ADA) and the obligation that it places on landlords to reasonably accommodate disabled applicants and residents – in this case, those with service pets and/or companion animals.

This discussion might be facilitated by some definitions to enhance everyone’s understanding of exactly what we’re talking about. According to the ASPCA, companion animals are defined as either “domesticated or domestic-bred animals whose physical, emotional, behavioral and social needs can be readily met as companions in the home, or in close daily relationship with humans.”

With that definition in mind, we need to turn to the federal government for a moment to determine how it defines these animals and what special treatment it provides them. While you might think that the ADA codifies what is meant by the term “service animal”, that guidance and is actually found in a joint memoranda issued by the Department of Justice (DOJ) and the Department of Housing and Urban Development (HUD).

The memoranda states that “service animal” means: any guide dog, signal dog, or other animal individually trained to do work or perform tasks for the benefit of an individual with a disability, including, but not limited to, guiding individuals with impaired vision, alerting individuals with impaired hearing to intruders or sounds, providing minimal protection or rescue work, pulling a wheelchair, or fetching dropped items.

Service animals are specially trained not only to perform tasks or work for the benefit of a disabled person, but also to behave properly in places of public accommodation. Companion animals, however, receive no such training and their primary purpose is to provide companionship (i.e., they are little more than pets!). Given the training that service animals receive, all service animals can be considered companion animals, but hardly all companion animals are service animals.

Interestingly, while the aforementioned agencies recognize and use the term “service animal”, none of them use or recognize the term “companion animal”, “emotional support animal” or “therapy animal” in connection with a landlord’s duties. Despite that fact, disability rights groups refuse to draw a distinction between service animals and companion animals.

There is no question that the ADA mandates that a landlord must make reasonable accommodations relative to a disabled person with a “service animal”, which includes leasing to him despite a no-pet policy. What about applicants with something other than a service animal though? Given the seemingly bright line that exists as far as the ADA is concerned relative to what constitutes a service pet, you would think that you’d be on solid footing refusing to lease to an applicant with an emotional support pet based on your no-pet policy, but it’s not that simple.

Advocacy groups are vehemently promoting the notion that landlords are obligated to waive their no pet rules for applicants who use emotional support or companion animals. They further push landlords into leasing to disabled or mentally ill persons who are merely emotionally dependent on their pets. As improbable and counter-intuitive as it might seem, many courts are endorsing these advocates’ point of view, including some courts in good ol’ New York State.

In a case dating back to 1991, Crossroads Apartments Associates v. LeBoo, Rochester City Court reasoned that a landlord had a duty to reasonably accommodate a mentally ill tenant with a companion cat if the tenant could prove to a jury that he needed the cat to help him cope with his illness. What exactly needs to be demonstrated though?

In 2004, the Appellate Division took up that very issue in the matter of Landmark Properties v. Olivo. The court determined that a landlord had a right to refuse a tenant’s accommodation request because the applicant had provided nothing more than an ambiguous statement from his physician stating that those in a depressed state might benefit from a pet. The court impliedly installed a standard that requires a tenant to produce either by expert medical or psychological evidence that a companion animal is necessary for him to use and enjoy his apartment.

This issue, nonetheless, continues to be litigated; courts have yet to reach full consensus as to how companion pets should be treated, including those courts in New York where opinions remain divided. The tide, however, seems to be favoring advocates who support a tenant’s right to a companion animal.

At the end of the day, what’s a landlord to do when faced with so much conflicting information? Although I personally feel it’s an infringement of a landlord’s rights, it appears more likely than not that as time pushes forward, property owners will have no choice but to always “accommodate” the companion pet movement. That said, you do have the right to verify an applicant’s purported disability and the medicinal and/or emotional basis supposedly necessitating their need for a companion pet before you consent to lease to the lease. And then you should consult with counsel if you have any other questions about your rights and/or options going forward.