WHEN AND WHY SHOULD YOU REVIEW YOUR ESTATE PLANNING DOCUMENTS?

wfb_legal_consulting_inc_large

It is very important to periodically get out your estate planning documents and review them. You can pick a date that will be easy to remember such as your birthday, the beginning of the year, or a particular holiday, and do it every year. Everyone has changing circumstances in their lives, so for your planning to most benefit you and your loved ones when the time comes, keeping your estate planning documents up-to-date is important.

Very common issues that lead to the need to review estate planning documents are the birth or passing of family members, a need to change your fiduciaries (Executor, Attorney-In-Fact, Medical Agent, Trustee) due to the named agent’s passing, incapacity, or personal situation that prevents them from serving such as an illness in their own family or a relocation to another state, change in marital status, etc.

When drafting documents, it is important to name successor agents, so that during your incapacity such changes will already be addressed, but if you have capacity and are aware of the unavailability of your first named agent it will serve you and your family best to update your documents to have a valid first and second, and possibly even third choice, particularly in the case of an expected long term incapacity or a long term trust.

Likewise, if you have minor children and you have named a guardian for them in your Will, it is very important to review often to make sure the family you have named is still the best situation for your children, considering the demands on that family, any special needs of you children, relationships and school districts, etc.

Also, when initially doing your estate planning, hopefully, you coordinated all beneficiary designations with your Will or Trust terms. Oftentimes people change jobs, or their bank merges with another, etc. and life insurance and retirement plan beneficiary designations need to be made. It is important to review your documents and maintain consistency. For example, if your Will directs your assets to a revocable trust you don’t want to negate that credit shelter planning by having the new beneficiary designation go directly to your spouse.

There are a multitude of situations that could create the need for review, including anytime real property is purchased. This is particularly true of property purchased in another jurisdiction or investment property. In those cases, you may wish to review your ability to avoid probate. Each and every property you own outright is subject to probate in its local jurisdiction at the time of your death, but there are methods of avoiding probate in multiple jurisdictions such as having an entity (i.e. trust or LLC) own the property, or if a joint owner with rights of survivorship (i.e. your spouse) survives you.

Another issue to consider is whether your spouse or child (or other beneficiary) has developed a special need, which could be medical, emotional or financial concerns who would benefit from leaving them assets in trust rather than outright. Trusts can be included in the terms of your Will or be written within a separate trust document that will remain private at your death, and with the help of your attorney can be drafted to meet whatever needs your particular situation requires.

Finally, the law often changes, and this can drastically affect estate planning. Our firm holds an annual estate planning seminar, which is complimentary, in order to alert our clients to any changes in the law that may affect them. If it has been many years since you reviewed your documents, it is wise to make an appointment with your attorney to discuss any changes that might need attention. We recommend never going more than five years without reviewing your documents with your attorney, preferably review would take place every three years.

HOW TO CHOOSE A BUSINESS LOCATION

wfb_legal_consulting_inc_large

 

When you start a business, how do you choose the location? The answer depends on your type of business, your customer base and how you sell. For some types of businesses, such as retail stores or restaurants, you need a physical location located where most of your customers are. For others, such as service businesses or ecommerce companies, your physical location is less important, and you have more flexibility in your choice. Here are some factors to consider when choosing your location.

What does your business do? Do you need space to manufacture, store, package and ship products? Then you may need an industrial space. Is most of your work “knowledge work,” such as consulting, which takes place on a computer? Then you can work from just about anywhere.

Where are your customers located? If you plan to sell your products or services online, it doesn’t matter where your customers live since they can buy from you wherever they are. On the other hand, if customers must physically visit your location, this can rule out options such as working from home, since many zoning ordinances prohibit home-based businesses that attract too much traffic.

What materials, vendors or suppliers will you require? Do you need to be physically close to sources of product, or to key vendors? For example, if you need materials to produce a product, the cost of shipping them to your location can be prohibitive if you’re located too far away from your sources.

What’s your budget? If you’re on a shoestring budget, lower-cost options such as working from home, sharing office space or subleasing space from another business. or renting a spot in a co-working space could help you save money.

Will you have employees? If you plan to hire employees, you’ll need space to put them, which will require some type of commercial location. You’ll want a space that is configured appropriately for the layout you need, is handicapped-accessible so you don’t get into trouble with local zoning authorities, and requires minimal if any modifications before you move in.

What type of infrastructure do you need? When choosing your location, keep in mind factors such as Internet access, electrical and telecommunications services. For example, some older buildings aren’t adequately wired to handle the needs of a high-tech company. Along the same lines, your home may not have the Internet access speeds you need to run a home-based business effectively.

What’s on the outside? Don’t forget to assess the exterior of any location you are considering. Who are the neighboring tenants, and are they complementary to or competitive with your business? Is there enough parking for employees and/or customers? Is the location near major highways and/or public transportation so employees and customers can get there easily, and if you need foot traffic, is there plenty of it? Are the common areas well maintained and up-to-date?

 

WFB LEGAL CONSULTING, Inc.–LAWYER for BUSINESS

A BEST ASSET PROTECTION SERVICES GROUP

THE REALITIES OF SOLE-PROPRIETORSHIPS

wfb_legal_consulting_inc_large

Contribution by Mark Kohler

What is a Sole-Proprietorship? A Sole-Prop is the simplest form of doing business.  All you need to do is just start selling your product or service. No Tax ID# (“EIN”) is required. No Doing-Business-As Registration (“DBA”) is required (although recommended for marketing purposes).  No bank account is required (although recommended for bookkeeping and audit protection). No extra tax return required. All of your income and expenses are reported on your 1040 Tax Return- Schedule C.

 The BIG Problems with Sole-Proprietorships:

  • Tax planning to avoid self-employment tax. One of the primary disadvantages of a Sole-Prop is the Self-Employment tax of 15.3% on your net-income generated by the business.  This blindsides a lot of new small business owners with a big tax bill in the Spring of the following year. Again, the tax benefits of owning a small business are fantastic!  But after you write-off all of your ‘personal conversion expenses’, and the business still has profit, the SE Tax will kick in on everything else.  However, if you don’t have a lot of net-income, don’t worry about the Sole-Prop and consider your next issue with your professional.

 

  • Liability exposure from your product, services or location. Another primary disadvantage of the Sole-Prop that most people are already aware of is the owner’s personal exposure for the liabilities of the business. Thus, carefully analyze where the risks exist and if you indeed have exposure.  If you do, you may want to consider setting up an entity even if it is unnecessary for tax purposes or any other reason.  A strategic option is setting up an LLC, but taxing it as a Sole-Proprietorship.  This way you get asset protection with an LLC, but don’t have the cumbersome tax reporting of a S or C-corporation. However, if you are running a zero to low exposure business, forget about setting up an entity and move onto the next level of analysis.

 Anything GOOD about a Sole-Proprietorship?

  • Simple and easy (nothing to sign. Just say it- “I’m in business!!!”)
  • In business NOW (test out your product and service)
  • No State or Federal Filing (a DBA may not even be necessary)
  • No Bank Account (however I would like you to set one up separate for the business)

 What if I have a partner or investor in the business? If you have a partner or investor in your business, it’s almost a given you will form an entity rather than operate as a Sole-Prop.  Simply by definition, if you have a ‘partner’ than you will be taxed as a partnership, need to file a partnership tax return, and have the personal vicarious liability exposure for your partner’s actions.  Not to mention you will want to document your relationship with those individuals you are doing business with and be careful not to open yourself up to a lawsuit with a ‘hand-shake deal’.

 Where you live and do business does matter. It’s important to realize that if and when you set up an entity, it’s absolutely critical you establish the entity in the state where you are doing business.  If you don’t, more than likely you won’t receive any benefit from the structure.  As such, when you do your cost benefit analysis, look specifically at your state and it may be more advantageous to operate as a Sole-Prop.  For example the filing fees for an entity can be extremely high in states like Texas, or Illinois, and the on-going minimum tax for an entity can be too expensive in states like California.

 Business goals and marketing plans. If you are investing in a robust marketing plan and working hard to ‘brand’ your company name or product. Setting up an entity initially may be a wise move to protect your name (at least in the State where you are doing business).  Starting out as a Sole-Prop may be cheap and easy, but could cause you some money and headaches to re-brand and start over later. Moreover, you may want the legitimacy and image of having something more established like an LLC or Corporation and forming an entity would be more strategic than looking like a start-up in the garage doing business under your personal name as a Sole-Prop.

Administrative costs and demands of setting up an entity.  If the costs of setting up and maintaining an entity far outweigh any benefits they offer, than a Sole-Prop makes could be the perfect fit. If you don’t have a tax, liability or partner issue, this is when using a Sole-Prop tends to make the most sense.

I often tell clients that unless there is a major liability issue, starting out as a Sole-Prop is a great fit. Don’t get too complex too quickly.  Make sure the business concept is viable and making money before investing in a more advance structure.

 Bottom line action items:

  • If you anticipate making more than 30k in net-income before year-end, consider the S-Corporation.
  • If you have liability exposure, consider a single member LLC to create protection, but the simplicity of tax reporting as a sole-proprietor.
  • If you have partners or investors, consider an LLC so you can avoid the vicarious liability for your partner’s actions, and have the Operating Agreement for the LLC to document the ‘agreement’ between each of you.
  • If you need the credibility and image of a formal ‘Inc’ or ‘LLC’ behind your name and plan to invest in your brand and image, staying away from the Sole-Prop could save you a lot of headaches down the road trying to re-brand your company name, etc.

BEST ASSET PROTECTION SERVICES GROUP

WFB Legal Consulting, Inc.

Lawyer for Business

 

 

UNDERSTANDING THE IMPLICATIONS OF DEFINED VALUE CLAUSES IN ESTATE PLANNING

wfb_legal_consulting_inc_large

Taxpayers sometimes employ a so-called “defined value clause” (“DVC”) in connection with a gift of property that is difficult to value, such as an equity interest in a closely-held business.  In the case of such a gift, the value of the business interest – the amount of the gift – is never really “established” for tax purposes unless the IRS audits the gift tax return.  DVCs are aimed at such audits.

What is it?

A DVC may be used where the donor seeks to keep the value of the gift at or below his remaining gift tax exemption amount.  In the event the IRS successfully determines that the value of the shares of stock (or partnership units) gifted by the taxpayer exceeds the taxpayer’s available exemption amount, a DVC provides that some of these shares or units would be “returned” to the taxpayer, as if they had never been transferred.

The IRS has challenged DVCs as being against public policy, on the grounds that they enable the donor-taxpayer to retroactively adjust the number of shares transferred, depending upon an IRS challenge years after the transfer. However, a number of courts have found that DVCs are acceptable where the “excess” amount was not returned to the donor but, rather, was redirected to a charity.  (Alternatively, some taxpayers have directed that the excess be used to fund a zeroed-out GRAT.)

The IRS very recently announced its intent to issue regulations on the use of defined value clauses by estate planners. The use of defined value clauses to mitigate gift tax impact on the transfer of hard to value assets has long been an item of IRS scrutiny. While the Service has lost a number of tax court challenges to defined value clauses, the Service’s decision to include these clauses on the 2015-2016 Treasury Priority Guidance Plan Project nevertheless demonstrates its intent to continue to pursue limits on their use.

Several different types of defined value clauses commonly used have nevertheless withstood IRS scrutiny, utilizing both formula allocations and price adjustment clauses. Critical to structuring a defined value clause is ensuring that the transfer was implemented properly and that no pre-arrangement exists between the transferor and the transferee.

More recently, however, the Tax Court in Wandry, T.C. Memo. 2012-88, approved a DVC where the “excess” was returned to the donor, and not to a charity.  In that case, the taxpayers gifted LLC interests to their issue, but instead of stating the number of LLC units being transferred, they phrased the gift in terms of “that number of units which had a value equal to the taxpayers’ remaining exemption amount” (in other words, a fixed dollar amount).  If the appraised value of the LLC interests was successfully challenged by the IRS as too low, then the number of units originally calculated as having been gifted (on the basis of the taxpayer’s appraisal) would be adjusted downward, to reflect the greater value per unit determined by the IRS, and the donor’s relative interest in the LLC (post-gift) would increase.  The Tax Court ruled that what the taxpayers had gifted was LLC units having a specific dollar value – the exemption amount – and not a specific number of LLC units.

The Wandry decision may encourage more taxpayer-donors to employ DVCs, notwithstanding that the IRS did not acquiesce in the decision.  Before doing so, however, it is important that taxpayers look beyond the immediate transfer tax consequences of such an arrangement.  They also need to consider various income and other gift tax consequences that may result from an adjustment triggered by a DVC.

Closely-held businesses, the transfers of interests in which are the usual target of DVCs, are often formed as pass-throughs such as partnerships, LLCs or S corporations.  A gift transfer of an interest in such an entity carries with it certain “tax attributes.” For example, every member, including the recipient of the gift, must include his allocable share of the partnership’s income on his income tax return, whether or not the entity distributes such income.  If the donor-member had contributed built-in gain property to the partnership, a portion of the donor’s income tax liability as to such built-in gain shifts over to the donee-member as a result of the gift; on a subsequent sale of the property, a portion of the built-in gain would be taxed to the donee.  In addition, if the pass-through entity makes cash distributions to its owners, the donor and the donee would each receive an amount in accordance with their respective pro rata shares (before any Wandry-adjustment).  What if the original transfer was treated as a part-sale/part-gift because it resulted in a reallocation of partnership debt among the members?

Because the Service will likely move forward in scrutinizing the construction and implementation of defined value clauses, estate planners must ensure such clauses are properly constructed and strictly implemented according to the terms. Accordingly, some of the questions to ask your estate planning professional when structuring defined value formula clauses in order to avoid gift tax consequences on asset transfers, are set forth below. Simply, you want to avoid transfers that will trigger gift tax imposition.

  • What are the grounds for IRS challenges of defined value clauses?
  • What types of defined value clauses have failed to withstand IRS challenges?
  • How to best structure defined value clauses
  • How to structure defined value clauses involving non-taxable entities other than public charities

The foregoing highlights some of the issues that need to be considered before embarking on a gifting program which depends upon the use of DVCs. While a DVC is a useful estate planning tool, it does not lessen the need for a solid appraisal.  Moreover, as with all estate planning in the context of a closely-held business for example, the donor and his beneficiaries have to consider the possible ancillary consequences of their gifting decisions.

 

 

 

SIMPLE “FEHA” DISTINCTION BETWEEN RACE HARASSMENT v. DISCRIMINATION

wfb_legal_consulting_inc_large

To prove a violation of FEHA (Fair Employment and Housing Administration Act) for race discrimination (Ca. Gov’t. Code §12940(a)), you have to prove that you suffered an adverse employment action because of your race and that you suffered damages therefrom.

Alternatively, to prove a violation of FEHA for race harassment, (Ca. Gov’t. Code §12940(j)(1)), you have to prove that you experienced severe or pervasive conduct or comments based on your race that changed the fundamental nature of the workplace environment, rendering it hostile to you based on your race.

Conceivably you could have damages for harassment while working and other damages arising out of the adverse employment action, such as a termination for example.

INTERACTION BETWEEN SPENDTHRIFT & DISCRETIONARY TRUSTS TO OBTAIN BEST ASSET PROTECTION GOALS

wfb_legal_consulting_inc_large

A spendthrift trust is a kind of trust that limits or altogether prevents a beneficiary from being able to transfer or assign his interest in the income or the principal of the trust.  Spendthrift trusts are sometimes used to provide for beneficiaries who are incompetent or unable to take care of their financial affairs.

If a trust incorporates a spendthrift clause, the beneficiary is precluded from transferring his interest in either income or principal. Accordingly, the beneficiary’s creditors will not be able to reach the beneficiary’s interest in the trust.

The protection of the spendthrift trust extends solely to the property that is in the trust. Once the property has been distributed to the beneficiary that property can be reached by a creditor, except to the extent the distributed property is used to support a beneficiary. If a trust calls for a distribution to the beneficiary, but the beneficiary refuses such distribution and elects to retain property in the trust, the spendthrift protection of the trust ceases with respect to that distribution and therefore the beneficiary’s creditors can now reach trust assets.

A trust is called “discretionary” on the other hand, when the trustee has discretion (as to the time, amount and the identity of the beneficiary) in making distributions. Because the trustee is not required to make any distribution to any specific beneficiary, or may choose when and how much to distribute, a beneficiary of a discretionary trust may have such a tenuous interest in the trust so as not to constitute a property right at all. If the beneficiary indeed has no property right, there is nothing for a creditor to pursue. The statutes that follow this line of reasoning essentially provide that a trustee cannot be compelled to pay a beneficiary’s creditor if the trustee has discretion in making distributions of income and principal to begin with.

If the trustee of a self-settled trust (where the creator of the trust is also a beneficiary of the trust), has any discretion in making distributions, then the creditors of the settlor (creator) may reach the maximum amount that the trustee may distribute in his discretion to that particular settlor-beneficiary.

Consequently, when a trust is self-settled, to obtain any asset protection for the settlor, discretionary powers should be avoided in favor of a more desirable standard, emphasizing the fact that the trustee “may” exercise his discretion in designated allowable types of distributions, but only if he/she so chooses.

 WFB LEGAL CONSULTING, Inc.

A BEST ASSET PROTECTION SERVICES GROUP

7 LEGAL STEPS YOU MUST TAKE BEFORE OUTSOURCING CONTENT CREATION

wfb_legal_consulting_inc_large

  1. Identify your content needs.

In order to hire great content creators not to mention put together the kind of contract we’ll discuss shortly, you have to first define what types of content you need.

For example, you could include:

  • Weekly blog posts
  • Social media updates
  • Guest blogging
  • Email marketing
  • Pay-per-click ad copyrighting

Identifying the specific types of content needed may not appear to be a legal step. However, at the outset, these are incredibly important things to consider, all of which will enable you to outline both your job advertisement and various aspects of your contractual agreement.

  1. Assign copyright.

The act of simply paying someone does not automatically turn over copyright of that content to the end user. Unless you specifically list the terms of use in your contract, the content creator maintains ownership of that content. In this case, you only have an implied license, therefore, you’ll need express permission to re-purpose any of that content for other things, such as turning a blog post into an eBook or social-media posts.

It’s also important that you consider protection against indemnification for images or content that may be the property of others. At the end of the day, you will be responsible if the content published on your site or in your materials is found to breach copyright law.

For text-based copy, using a service is standard practice. But with image attribution, this is particularly difficult, since there’s no good way to test the copyright short of either buying the rights or waiting for an angry digital millennium copyright act notice from the infringed-upon owner.

             3. Clearly outline outsourcing requirements.

Be as specific as possible when outlining requirements so that freelancers know your expectations, including bench-marking and measuring success or failure. You may also want to include a Service Level Agreement that clearly outlines performance details and standards.

  1. Consider legal liabilities in your content.

You may need to take further precautions if the content you’ll be outsourcing is subject to any regulatory requirements. For instance, if you’re publishing medical content or financial advice, you may need to include relevant disclaimers or ensure materials produced meet certain standards to protect yourself legally.

If the content you publish on your website is something you could be held legally liable for, be sure your outsourced creators are able to meet any necessary requirements.

  1. Preparing in advance for termination.

Ideally, you’ll find in a freelancer a long-term partnership for your content creation needs. But since turnover is inevitable, it’s far better to protect yourself up front. Your termination clause is hugely important, as it sets forth the conditions under which the customer may exit the outsourcing relationship.

The termination clause needs to outline the common reasons that give rights to you and your company to exit the clause along with the rights of the contractor. It’s also wise to include both party’s respective rights upon termination with regards to ongoing privacy and protection as well.

  1. Put it all in a contract.

Once you’ve covered all your legal bases, document them in a formal written contract that both you and your freelancers will sign. In most cases, it’s a good idea to consult with an actual lawyer to do this.

  1. Take out an insurance policy.

Last, it’s definitely worth investing in an insurance policy when it comes to protecting your legal rights as a content creator and purchaser. At the end of the day, you need to be prepared for any legal ramifications that could occur from the content you publish, or, at the very least, be fully aware of who’s liable for anything that may occur.

Though the Internet has blurred the rules and lines concerning outsourcing, it’s best to stick to guidelines and follow the rules to protect yourself. If you have any doubts, always consult a lawyer.

FIVE WAYS TO SABOTAGE YOUR LIABILITY PROTECTION AFTER INCORPORATION

wfb_legal_consulting_inc_large

Many new business owners understand that incorporating or forming a Limited Liability Company (LLC) helps shield a business owner against being held personally responsible for their company’s liabilities and debts. This is known as the corporate shield or corporate veil as it separates your personal assets from those of the business.

Liability protection is not absolute and there are several instances where a business owner can be personally liable in business despite the fact he or she created a business entity.
Here are five of the most common ways this can happen:
1. Negligence and Personal Liability
In many situations, the limited liability protection from an LLC or corporation will not shield you from being liable for your own personal negligence. A person is typically liable for his or her own personal conduct when that conduct injures someone else. For example, if an electrician installs some wiring in a customer’s home and forgets to cap a live wire, the electrician can be personally liable if someone gets electrocuted. Likewise, if you’re driving to a client meeting in a company car and are negligent and hit someone, you can be personally liable for any injuries and damages.
2. Fraud
If you make untrue claims about a product or service, this is considered fraud. For example, if you’re marketing a milkshake supplement and guarantee that customers will shed 20 pounds per month just by drinking it, this could be a clear case of misrepresentation or fraud. If you claim that your glass container is BPA-free (when actually it does contain BPA), this also is fraud. In such cases, both the manufacturer as well as the company selling the product may be liable.
3. Personal Guarantee on Business Loans
When you first start your business, many third parties and creditors won’t be willing to do business with your LLC or Corp, as the entity is brand new and probably does not have a lot of assets or hasn’t built its own credit history yet. As a result, a bank or landlord may require the business owner or LLC member to “personally guarantee” a loan or lease. If you sign such an agreement, then you will be personally liable for those specific obligations.
4. “Piercing the Corporate Veil”
Many new business owners form an LLC or Corporation and then continue to operate their business as if that business entity didn’t exist. It’s very important that you follow through with all corporate formalities required for your LLC or corporation. For example:
• Pay your business’ state and federal taxes
• Don’t commingle your personal and business finances
• File your annual report (if required by the state)
• Keep up to date with your corporate minutes and resolutions (if necessary)
• Record any changes with ‘Articles of Amendment’ (if necessary)
• Have a board of directors and hold annual meetings of shareholders (if necessary)
You’ve got to make sure that your corporation or LLC remains in good standing. Why? Because if your business happens to be sued and the plaintiff shows you haven’t maintained your LLC/Inc to the letter of the law, your corporate veil is pierced and you can be personally liable again.
5. Conducting Business Out of State
If you’ll be conducting business in a state other than the state where you formed your corporation or LLC, you will need to obtain authority to do so. In most cases, this entails qualifying as a Foreign Corporation or LLC within the state that you will be doing business. Specific licenses and permits may also be required for certain types of businesses as well.
For example, let’s say you run a small software development company based in Nevada and your company serves clients located outside Nevada. At this point your company is most likely not considered to be operating out of state. However, once you open a small development office with a few employees in California, your business will probably be considered to be doing business in California and you will have to file a Statement and Designation by Foreign Corporation form with California.

BUYING OR SELLING A BUSINESS? WHAT YOU NEED TO KNOW.

wfb_legal_consulting_inc_largeThere are numerous issues important to Business Buyers or Business Sellers or both. Generally, Sellers are interested in:

● Sellers want to be that they will be paid, especially if payment of the purchase price is deferred.
● Sellers want to avoid the possibility that a Buyer will later make a claim because the business fails to meet a Buyer’s expectation.
● Sellers are often concerned about continuing liability to former customers, employees and vendors, and in the case of the sub-leasing the business location they often remain liable to the landlord until the expiration of the lease term.
● Sellers are often required to respond to Buyers’ due diligence requests that can be very burdensome with serious legal significance.

Generally, Buyers are interested in:

● Buyer’s usually want to avoid the Seller’s prior vendor, customer, employee and tax liabilities.
● Buyer’s want to be sure that they get what they are paying for.
● Buyers want to be sure that the Seller does not start competing for the same customers or use technologies and information that were part of the transaction
● When the location is important Buyers want to be sure that the commercial lease provides them the duration they require.
● Buyers want to be sure that key employees intend to stay with the business and/or if they leave, it is not a situation where they are capable of taking important customers with them. (Note that key employees who are not owners may in California compete against their former employer.
● Buyers may require assistance with respect to financing.

Other Considerations:

● if you are buying into an existing business or merging your business with another you will want to have investigated what the other party understands your role to be and how someone will share control over a business that they formerly ran themselves.
● If you are buying a Franchise you will likely be required to be approved by the Franchiser and sign an agreement with the Franchisor.· A Bulk Sale escrow is the purchase of the business assets but not the business.
● Sometimes when you sell your business an equally if not more important part of the transaction is your continuing relationship with the new owner as an employee or consultant.
● When there is a business broker involved in the transaction, especially when the broker is giving advice to both the Buyer and the Seller you may find yourself under pressure to finalize the transaction too quickly

When you are buying a Business there are usually related legal needs as well:

● Forming an Entity
● Commercial Lease
● Employees and Independent Contractors
● Standard Terms and Conditions
● Contracts and Agreement
● Trademarks and other intellectual property

Once you’ve agreed to purchase a business, you’ll need to formalize that agreement. This is typically done using a purchase agreement, which is a legal contract that outlines the details of the sale. (This may also be known as a business purchase agreement, asset purchase agreement, stock purchase agreement or something similar depending on the exact nature of the sale.) Attorneys for both the buyer and seller should work together to draw up the purchase agreement to ensure that it is fair to both parties.
The purchase agreement typically includes:

• Purchase price and method of payment
• Terms and conditions of the sale
• Representations and warranties of the seller
• Representations and warranties of the buyer
• Actions the seller has agreed to take prior to the sale (such as paying off existing loans or securing the resignation of employees who will not be employed by the new owner)
• Details of the business to be purchased, including a list of all assets, inventory, contracts and equipment
• A list of all existing creditors who are to be paid off with the proceeds of the purchase
• How much commission is owed to a business broker (if one was used) and who is responsible for paying that broker’s commission
• An agreement to resolve any disputes arising from the sale in a specific court of law or with a specific arbitration company
• Additional relevant documents known as exhibits and amendments

The exhibits may include items such as:

• Bill of sale
• A set of corporate documents including leases, financial statements, tax returns, accounts receivable and payable, articles of incorporation, bylaws and minutes
• An agreement that the seller will act as a consultant to the business, remain as an employee or agree not to compete with the business or operate in a particular territory for a certain period of time
• An escrow agreement, detailing the responsibilities of the escrow agent, if the purchase money is being held in escrow for a certain period of time
• Property deeds if the business owns real estate
• A promissory note if the buyer is paying the purchase price in more than one installment or paying the entire purchase price at a later date
• Assignment of leases and the landlord’s consent to the lease assignment

Questions for Your Attorney

An attorney who has experience working with business sellers and purchasers can help guide the process of creating a purchase agreement, and should give you peace of mind in knowing that no detail has been overlooked.
Among the questions to consider asking your attorney:

• Have you previously written purchase agreements?
• What red flags should I be aware of?
• How much do you charge for your services?

CAN I BE FIRED BECAUSE I USE MEDICAL MARIJUANA FOR A DISABILITY?

wfb_legal_consulting_inc_large

So far, courts that have considered this question have ruled against employees. Your legal right to use medical marijuana protects you from criminal prosecution, but not from employer drug testing programs. If you were taking a different legally prescribed drug for your condition, you would most likely be protected by the Americans with Disabilities Act (ADA). However, this protection hasn’t been extended to medical marijuana.

The ADA prohibits discrimination against employees with disabilities. A disability is a physical or mental impairment that substantially limits a person’s major life activities, including major bodily functions. There may be people with glaucoma who do not have a disability under the ADA, based on this definition. However, if your glaucoma substantially limits your ability to see (a major life activity), you are protected.

Employees with disabilities have a right to reasonable accommodation to allow them to do their jobs. This extends to the measures an employee uses to control and function with a disability. For example, an employer might have to lower a desktop to accommodate an employee’s wheelchair. The same rule applies to drugs that are legally prescribed for a disability. The employer may have a legal duty to accommodate the employee’s drug use, including the side effects that the drugs have on the employee, under the ADA. If, for example, an employee takes medication for depression that makes him or her drowsy in the morning, the employer may have to alter the employee’s start time to accommodate that side effect.

But medical marijuana hasn’t been treated this way, at least so far. Courts have held that a person’s right to use marijuana for certain medical conditions doesn’t extend to a right to have that use accommodated by an employer. Marijuana use remains illegal under federal law, and the ADA explicitly does not protect employees who use illegal drugs. This lack of consistency between federal and state laws has led to the unfortunate result that an employee can be fired just for following doctor’s orders.