Tortious Interference with Inheritance:  Not a Valid Claim in Texas

The Supreme Court of Texas states in its Archer v. Anderson opinion (published in June 2018) that “there is no cause of action in Texas for tortious interference with inheritance.” This ruling was based on the court’s holding that there are other adequate, valid remedies for pursuing inheritance-related claims without doing so under this specific tort that conflicts with Texas probate law.

The basic facts set forth in the Archer case.

Stated succinctly, Archer v. Anderson involved a man named John R. “Jack” Archer who had married and divorced four times and never had any children of his own. In a 1991 Will, Archer left the bulk of his estate to his brother and his six children (a generous sum was also left to charities). Seven years later, Jack Archer suffered a stroke that left him very confused, disoriented and delusional.

Multiple parties soon stepped in at different times, trying to coerce Mr. Archer into changing his estate plans. Guardianship proceedings were also pursued. Eventually, the Archer family sued Jack Archer’s attorney, Ted Anderson, for breach of fiduciary duty, legal malpractice, and intentional infliction of emotional distress. (They also sued others on Mr. Archer’s behalf).

Anderson passed away in March 2006 and Jack Archer died one month later. After Jack’s 1991 Will was probated, the Archers received their bequests under it. (Many other complex events also transpired, eventually leading both sides to file appeals that were addressed in this Supreme Court of Texas opinion).

Tortious interference with an inheritance has never been formally recognized in Texas.

The Supreme Court of Texas clearly notes that neither its predecessors on the bench – nor the State’s legislature – have ever formally recognized the claim of tortious interference with inheritance. However, over the years, various parties have repeatedly argued that such a claim was basically implied in other cases.

How should Texans respond and protect themselves based on this ruling?

Parties who believe that their contractual right to inherit from someone has been thwarted by a third party due to fraud, undue influence, issues involving testamentary capacity, or drafting irregularities — can still petition a court for help. A probate court could set aside certain gifts based on the offering of proper evidence – and might also correct a wrongful act by imposing a constructive trust so that no one will be unjustly enriched.

Of course, however parties proceed, they must be ready to cover court costs and attorney fees on their own.

To further combat fraud, it’s crucial for all family members to stay very actively involved with their elderly or disabled loved ones.

When few people keep in touch, numerous parties claiming to be friends or caregivers can find both cruel and hidden ways to steal from elderly or disabled people’s estates. (If you haven’t already done so, be sure to read The New Yorker article entitled, “How the Elderly Lose Their Rightsand AARP’sFraud in the Family.”

Please feel free to contact Murray Lobb so we can help you with all your estate planning needs. We can also provide you with legal advice on how you should proceed if you believe anyone is currently trying to defraud you (or a loved one) of any estate funds.

Starting a New Business: Avoid These common Mistakes

Starting a New Business: Avoid These Common Mistakes

Few activities in life are more challenging and exciting than starting a new business. So, if you’re determined to succeed, always accept advice from those who’ve been where you are now and know what often works best. Careful early planning can pay you back many times over later when your properly marketed goods and services motivate satisfied customers to tell others about your unique offerings.

By making the hard choices described below during your start-up phase, you can avoid many errors that often prevent hard-working people with great ideas from carving out a highly profitable niche in today’s marketplace.

The Key Early Decisions New Business Owners Must Make

  • Choose your co-owners wisely. Always look beyond each person’s academic degrees and decide if their experience is strong enough to withstand the challenges of running a business. Clearly define each owner’s responsibilities and how you’ll regularly monitor each other’s performance. Consider requiring every major stakeholder to undergo professional personality testing so you’ll know if you can each offset the specific strengths and weaknesses of one another that high-stress situations often reveal.
  • Fully track all money being spent and coming in. Be sure to hire a competent, in-house accountant. Agree in writing how all funding will be spent.
  • Have your lawyers draft one or more standard form contracts that fully protect your company’s rights. They should be thorough, but not so burdensome or one-sided that customers will refuse to sign them.
  • Meet early on with your trustworthy Houston business law attorneys. Carefully listen as they describe the various business structures that might best suit your company and the different tax consequences that accompany each one. Learn all you can about the state and federal employment laws and regulations you must follow. Ask for help drawing up your first employee handbook (spelling out all employee benefits) and decide if your employees should all sign “at-will” employment offer letters. Obtain advice on choosing the best available name for your company. Inquire about having everyone sign NDAs (non-disclosure agreements) protecting company secrets. And learn all you can about properly handling sexual harassment issues and claims of discrimination;
  • Create a flexible business plan with reasonable goals. This should normally be drawn up after you’ve decided on your business structure (such as a “C” corporation or “LLC”) and created a written operating agreement that clearly defines all key partners’ general duties and responsibilities, financial contributions, and liabilities. Be sure everyone knows that added responsibilities may be added to each person’s assigned tasks as unexpected needs arise. You should also agree in writing whether you must obtain help through arbitration or mediation services when internal problems cannot be readily resolved;
  • Hire the best employees you can afford. Just as you need to choose co-founders with proven records of making ethical business decisions, you also need highly flexible employees who are told up front that they may need to “wear many hats” as new duties must be assigned.
  • Check out your competition ahead of time and properly fund adequate marketing of your goods and services. Never assume all your company’s offerings are completely unique. Fully handle all due diligence tasks in a timely manner so you can hopefully determine how your competitors have been successfully reaching the very customers you hope to win over. Be sure the market (or location) you’re targeting can handle all the current competition – and make adequate plans to distinguish your brand from all the others.

While the suggestions shared above should help you, always be ready to consult with others as you broaden your web of industry experts and colleagues. If you need to raise more capital for your business, keep in mind that it’s often wise to befriend employees at companies currently funded by the specific venture capitalists you hope to meet with in the future.

Always Place a High Value on Customer Feedback – Readily Making Changes as Needed

No matter how good your in-house experts may be, your customers can often offer you invaluable information about how you may need to periodically change specific products or services. You should also ask them for their ideas on how you might improve your marketing efforts. Consider offering fee discounts to current customers if they’ll undergo brief interviews about your company. You might also simply ask customers to complete brief online surveys about your products and services.

If you’ll meet regularly with your co-founders and openly discuss problems as soon as they arise, chances are your new business will succeed.

Steps Required to Dissolve a General Partnership in Texas

Steps Required to Dissolve a General Partnership in Texas

Even when business partners get along well with each other and succeed, a time may come when they may develop new interests, decide to retire or move elsewhere for business or pleasure reasons. While the Internet and modern communications make it possible to still run businesses with partners scattered around the globe, it’s still quite common for partnerships to break apart or take on new members when others leave.

Do You Need a Written Partnership Agreement in Texas?

Normally, Texas law doesn’t require general (or “at-will”) partnerships to create a written partnership agreement. However, it’s always best to draft one so that when the entity breaks apart (or any partner leaves), you’ll know exactly how to pay off all partnership debts and distribute the remaining assets among everyone.

When general partnerships don’t have an agreement, then Texas law expects the partners to govern their “wind-up” activities in keeping with our state’s default partnership laws.

Here’s a broad overview of the tasks that you and your partners must handle as you dissolve your partnership. Should you have any questions at this early stage, it’s always wise to schedule an appointment with your Houston business law attorney.

First Steps to Take When Preparing to Dissolve Your Partnership

Schedule a meeting so everyone can discuss how your written partnership agreement requires you to dissolve the partnership. During this meeting, you must take a vote to determine if all parties still holding majority rights (or financial interests equal to or greater than 50% of the partnership assets) favor dissolving it. Next, ask this same majority to vote whether they’re ready to draft and sign a written resolution stating that the partnership will now wind up all its affairs and be dissolved.

At this point, all partners who want to keep working together under a new partnership agreement can indicate this desire to everyone else – and offer to buy-out the partnership shares of those who are leaving.

Handling Debt Payments and Winding Up All Remaining Matters

Every current partner should expressly agree to complete certain tasks approved by all those winding down the partnership’s affairs – and to refrain from negotiating any new business that could potentially obligate all partners after the dissolution.

As referenced above, those leaving the partnership are free to sell their shares in it to others, in keeping with their original partnership agreement (or the state’s laws governing such transactions when there is no written agreement). To help the partnership pay off existing debts, all partners can vote on which current partnership assets (if any) may be sold for cash.

The laws governing the pay-off of all partnership debts are set forth in our state’s Uniform Partnership Act. It basically states that you must pay off all your creditors first – before paying back each partner for all past capital contributions to the partnership.

Are There Any Remaining Wind-Up Steps You Must Address?

  • Paperwork filing with the state. In Texas, there’s no need to file anything when dissolving an at-will (general) partnership;
  • Providing notice to all creditors, customers and other parties. It’s customary to send out notices through the mail to all your business contacts so they’ll know that your partnership is being dissolved as of a certain date. However, there’s no law which requires this to be done. You can also just simply publish a notice about the dissolution in your local newspaper;
  • Updating all out-of-state registrations. To prevent your partnership from owing any more fees to other states where you’ve registered for the right to do business, you need to formally notify the correct offices via certified mail that you’re dissolving your partnership;
  • Paying all taxes that are owed. Although Texas doesn’t require you to obtain a tax clearance before winding-up your partnership, you must make sure all taxes owed have been paid before dissolving it. This step includes filing a final federal tax return for your partnership in keeping with Texas law.

Should you have any specific questions about dissolving your partnership – or making sure that you’re handling all tax matters properly – please contact our law firm so we can provide you with all pertinent legal advice.

An Overview:  Winding Up Texas Corporate Activities

An Overview:  Winding Up Texas Corporate Activities

Corporate officers can choose to formally “wind-up” all business activities when many different factors change. For example, when smaller corporations are involved, key parties may simply want to retire or pursue new goals. In other situations, market trends may change so significantly that corporate officers may want to choose more advantageous business structures. Regardless of why any specific Texas corporation decides to go through the termination process, basic legal steps must be followed carefully.

Since this process can involve different statutes, including detailed sections of the state’s Business Organizations Code, it’s always best to confer with your Houston corporate law attorneys. They’ll readily understand the termination process that the Texas Secretary of State’s Office expects each corporation to complete. (Of course, in some instances, a corporation may be involuntarily terminated for various reasons – including the failure to file annual reports).

Here’s a look at some of the steps you must be ready to take based on our state’s governing laws and the specific realities involved with your business. Although other states may speak of “dissolving” corporations, Texas usually refers to “winding up” corporate matters.

The Texas Business Organization Code’s Two Main Ways to “Wind Up” Activities

  1. The board of directors adopts a resolution. It should state that they are recommending that the corporation “wind up” its activities — after submitting this proposal to all the shareholders. At a properly convened meeting, the shareholders must then vote on this proposal. In general, a two-thirds majority of the shareholders must approve this decision before the winding-up process can begin;
  2. All shareholders must sign a “consent” document. Once this has been done, the “consent” document must be entered into the corporate records. This approach is most common when smaller corporations are involved. Great care must be taken to cover all key termination matters within this consent agreement.

Once this early internal activity has been concluded, numerous other steps must be taken to properly conclude all corporate business matters.

Common Additional Steps Required to “Wind Up” Your Corporation

  • All known parties with claims against the corporation must be served with notice of the current intent to terminate the corporation’s existence;
  • Every necessary corporate lawsuit must be properly initiated and concluded;
  • All corporate property must be properly collected and sold – depending on whether its value is owed in some manner to the shareholders;
  • All corporate liabilities must be properly discharged – including the payment of any taxes owed to the IRS or the state of Texas.

General Tax Issues and Obtaining Required Certificates

While your Texas corporate attorney may be prepared to handle all your corporation’s tax payment issues involved with the “winding up” process, you may also want to confer with a tax attorney.

Keep in mind that your corporation must obtain a “certificate of account status” from the Texas Comptroller of Public Accounts — and a final federal tax return must be properly filed once all corporate finances have been finalized.

Filing a Certificate of Termination

After you’ve obtained a certificate of account status from the Texas Comptroller of Public Accounts, you’ll need to file Form 651 (a certificate of termination) with the Secretary of State’s Office. Once this step has been taken and approved, your corporation’s existence has legally ended.

Added Issues That May Need to Be Addressed

Keep in mind that the information provided above was simply intended as an overview of the Texas corporate “winding up” process. Your attorney will be able to provide you further advice about whether additional paperwork is required. Fox example, certain Texas laws governing corporate mergers may or may not apply to your situation.

Please feel free to contact our law office with any questions you may have about possibly terminating your Texas corporation – or any other business entity. We can provide you with the advice you’ll need to properly handle all required stages of this process.

A Basic Understanding of Trust Documents

A Basic Understanding of Trust Documents

Although many people still request Wills from their attorneys, it’s now often best for tax purposes to have the bulk of your estate transfer to others through one or more trusts. To better understand how trusts work, you first need to understand that there are living trusts and testamentary trusts.

Living trusts, also known as “inter vivos” trusts, are created during the grantor’s (or requesting party’s) own lifetime. By contrast, a testamentary trust is created within a Will and doesn’t become legally enforceable until after the grantor has died. As your estate planning attorney will tell you, there are two types of living trusts – those that are revocable and those that are irrevocable.

Revocable trusts let you maintain control over the trust assets, allowing you to revoke or change the trust’s terms whenever you believe it’s necessary. Should you instead create an irrevocable trust, the law no longer views the assets in the trust as yours – therefore, you normally cannot make any changes to the trust without the trust beneficiary’s consent.

While there are many different types of trusts and ways to set them up, the following ones are among those commonly requested by clients.

Frequently Requested Trusts

The Charitable Lead Trust. This type of trust can be created during the grantor’s own lifetime or upon that individual’s death. It provides for a type of annuity to be given to a charity for life or for a specific term of years. If there are any remaining trust assets, they are passed on to non-charitable beneficiaries when the trust terminates.

The Credit Shelter Trust. Many married couples with children often choose this type of trust because the surviving spouse can maintain full rights to the trust assets until his or her death. At that time, the trust benefits can then pass to the children. This trust is also commonly used because it allows the creator to escape estate taxes when passing the trust assets on to heirs.

The Irrevocable Life Insurance Trust. When you move your life insurance out of your estate by having this type of trust created, it’s no longer part of your taxable estate. The funds are then readily available to help pay for any possible estate costs or for other immediate cash needs of your beneficiaries.

Generation-Skipping (or Dynasty) Trusts. Grandparents often like to set these up because they’re designed to allow grantors to give tax-free money to beneficiaries who are two or more generations their junior.

The Qualified Terminable Interest Property (Q-TIP) Trust. If you’re in a second or third marriage and you and your current spouse had children during earlier marriages, you’ll want to learn more about this trust. It helps you not only leave your surviving spouse with income, it also lets you leave specific assets to your various children.

The Qualified Personal Residence Trust. You can use this to remove the value of either your main residence (or a vacation home) from your estate. It’s especially wise to create this type of trust regarding a property that’s very likely to increase in value over time.

The Special Needs Trust.  Many families have at least one member who suffers from some type of serious physical or mental disability. When you set up this type of trust, its terms can be restricted regarding how the assets can be used – thereby still allowing your loved one to qualify for certain types of government benefits.

As this article indicates, there are many different types of trusts that offer distinct advantages and disadvantages. Please feel free to contact our firm with any questions you may have about the specific types of trusts that may best suit your goals and preferences.

Sexual Harassment: How Should Witnesses Respond?

Victims and witnesses of sexual harassment often feel robbed of their sense of safety and peace of mind. After all, when someone is sexually harassed in an overt and physical manner, an actual assault and battery may have occurred. Sexually harassing others is a coward’s game, arguably born of narcissism or self-hatred – coupled with a desperate grab for perverse power.

However, many eyewitnesses aren’t sure what they should do. Some of them worry that if they simply turn away and pretend they didn’t see anything, they may be enabling the abuser. Yet how can safety be restored when no one will report these offensive acts? Fears of retaliation and other related issues are discussed further below.

Few people ever “win” in these situations — even employers often feel trapped since they have a duty to maintain safe work premises.

What Do Co-Workers Fear Most When They Witness Sexual Harassment?

Several studies and surveys have revealed that victims of sexual harassment – and those who witness it – often fear the same repercussions. Their most common concerns are set forth below.

  • Public or private shaming of the victim (or witness). Harassers often enjoy the turmoil they know they’re creating for others. In many ways, they’re like arsonists who take an initial pleasure in both setting a fire and then watching from afar to see everyone scurry around trying to minimize the damage.
  • Retaliation. While American laws exist to minimize the effects of retaliation, the fact remains that, once a harassing party decides to “silence” an accuser or witness, that person’s career may be permanently damaged.
  • Failing to adequately describe the offensive behavior. Since abusers often have few moral constraints on their behavior, they may have taken great pride in at least partially hiding their offensive acts – purposefully making it harder for witnesses or accusers to step forward.
  • Uncertainty about whether – as witnesses –they should first speak with the harassed victim before or after contacting human resources. Sadly, there are no foolproof steps for safely handling this type of matter. One of the most pragmatic and safest first steps forward is to consult your employer’s handbook on reporting such behavior.

You may also want to contact your Houston employment law attorney for further advice on how to proceed. If the harassing party knows that you witnessed the offensive behavior – your job and future promotions may already be at risk. It’s always wise to quickly find what your best legal options and choices are — based on your specific circumstances;

  • Concerns that retaliation may ruin your career (at least temporarily). This is a very valid concern. After all, abusers will often stop at nothing to hide their behavior since they greatly enjoy it, view it as a privilege – and think any punishment would be unfair. The true stories about how Hollywood producer Harvey Weinstein went about trying to silence his accusers (and possibly, the witnesses to his abuse) are shocking. However, victims and witnesses who report most types of sexual harassment can still win major lawsuits that can compensate them for their suffering and restore their careers.
  • Uncertainty about whether reporting the abuse may take a permanent emotional or psychological toll on them. Numerous studies have indicated that women suffer extensively when they report sexual harassment at work. Since their truthful reports are often not believed, their loss of positive self-esteem can cause serious problems with both depression and even PTSD. Furthermore, if the person reporting the gross behavior has ever previously been sexually harassed or abused, the long-term psychological damage of the newest abuse can take decades to resolve.

You Must Decide Which Steps Forward Best Suit Your Circumstances

Besides speaking to a lawyer, here are some other steps you believe you should consider taking.

  • Carefully study your employee handbook sections addressing sexual harassment. Decide if you feel comfortable doing what’s advised.
  • Keep a journal. Record the dates on which you take any steps to try and address the problem, who you’ve spoken with – or met with – and their responses to you. Note all perceived acts of apparent retaliation, if any. (Be aware that you may later need to turn over a copy of this journal to others if a lawsuit is filed).
  • Make a copy of any written reports or complaints that you decide to file. You must seriously consider asking a lawyer to review anything of this nature first;
  • Confide in one or two long-term, trusted mentors about your situation – people who do not work where you do. This may prove crucial if you need to find a new job while pursuing litigation.
  • Ask your employer for an immediate copy of any reports being placed in your file about your current complaints.

Always keep in mind that if you personally do decide to report the sexual harassment that you’ve witnessed, you’re playing a critical role in trying to resolve a very serious problem.

Our firm is always available to discuss any workplace problems affecting you. These can include sexual harassment, unfair pay issues, denied promotions, various forms of discrimination, wrongful termination — or any other matter that’s unfairly denying you the right to achieve your full potential.

Does the Issuance of a 1099-C Discharge Debtors from Liability?

Does the issuance of a 1099-C discharge debtors from liability? The answer is no, the issuance of a 1099–C does not discharge debtors from liability from the subject debt. The filing of a Form 1099–C is a creditor’s required means of satisfying a reporting obligation to the IRS; it is not a means of accomplishing an actual discharge of debt, nor is it required only where an actual discharge has already occurred.

The fact situation is simple and straightforward. A creditor who has loaned money to a debtor makes an internal decision to “write off” of the debt on its books. At that point in time, the creditor is required by IRS regulations to report the write-off.

While only a handful of courts across the United States have addressed this issue, most have arisen in the context of a bankruptcy. Almost every court that has addressed the issue and the few reported decisions in Texas have concluded that the issuance of a 1099–C does not discharge debtors from liability of the subject debt.

The most thorough analysis of the issue and most cited opinion is In re Zilka, 407 B.R. 684 (Bankr. W.D. Pa. 2009), a bankruptcy decision from Pennsylvania. The Court in In re Zilka found four separate independent legal basis upon which to hold that the issuance of a 1099–C does not discharge debtors from liability. The four legal bases are as follow:

1. The IRS requires the issuance of a 1099-C. 26 U.S.C. § 6050P(a) provides, in pertinent part, that “[a]ny applicable entity which discharges . . . the indebtedness of any person during any calendar year shall make a return . . . setting forth . . . the name, address, and TIN of each person whose indebtedness was discharged . . .  [as well as] the date of the discharge and the amount of the indebtedness discharged.” The information return just referred to is a Form 1099–C.

However, “a discharge of indebtedness” is “deemed to have occurred . . . if and only if there has [been] an identifiable event described in paragraph (b)(2) of this section, whether or not an actual discharge of indebtedness has occurred on or before the date on which the identifiable event has occurred.” 26 C.F.R. § 1.6050P–1(b)(2) sets forth eight identifiable events that can trigger the filing and issuance of a Form 1099–C, among which is “(G) [a] discharge of indebtedness pursuant to a decision by the creditor, or the application of a defined policy of the creditor, to discontinue collection activity and discharge debt.”

2. The IRS does not view a Form 1099–C as an admission by the creditor that it has discharged the debt and can no longer pursue collection. In an IRS Information Letter issued in October 2005 it addressed concerns regarding the impact of a creditor’s compliance with the Form 1099–C reporting obligation and the continuing liability of a debtor on the subject debt. The IRS assured a concerned creditor that filing a Form 1099–C satisfies the reporting requirements of the statute and implementing regulations, neither of which “prohibit collection activity after a creditor reports by filing a Form 1099–C.”

3. That a Form 1099–C does not constitute an admission by the creditor that it has discharged the debt and can no longer pursue collection thereon is consistent with the fact a creditor can issue a corrected Form 1099-C if a recovery of some or all of the monies owed by the debtor subsequently occurs. In another IRS Information Letter issued in October 2005, the IRS responded to a creditor that it “does not view a Form 1099–C as an admission by the creditor that it has discharged the debt and can no longer pursue collection.”

4. The issuance of a Form 1099–C does not constitute one of the means of discharging debt pursuant to the Uniform Commercial Code, § 3.604 governs Negotiable Instruments. Section 3.604 of the Tex. Bus. & Comm. Code, Discharge by Cancellation or Renunciation provides that:

• A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument:

(1) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party’s signature, or the addition of words to the instrument indicating discharge; or

(2) by agreeing not to sue or otherwise renouncing rights against the party by a signed record.

The most recent Texas court to address the issue was Capital One, N.A. v. Massey, No. 4:10 CV–01707, 2011 WL 3299934 (S.D. Texas Aug. 1, 2011) wherein the United States District Court for the Southern District of Texas “adopt[ed] the view that a 1099–C does not discharge debtors from liability” because the form is “issued to comply with IRS reporting requirements” and the IRS does not view it “as a legal admission that a debtor is absolved from liability for a debt.”

Lasting, pursuing collection of a debt that has been written off and reported on a 1099-C does not violate Tex. Fin. Code § 392.304(a)(8) which prohibits the collection a debt that was “discharged and/or extinguished against them.”

All Stock Purchase Agreements Must Include Key Provisions

Every stock transfer is important, regardless of its size. Therefore, your corporation must draw up a comprehensive stock purchase agreement to govern all such transactions. If you fail to do so, shares of stock could easily wind up in the hands of company outsiders whose interests are at odds with those of most shareholders.

Corporations usually choose to prevent this type of problem by including a “right of first refusal” in their written agreements so that their shareholders’ interests remain fully protected. As the term implies, the corporation itself (or one of its current shareholders) will always have the right to try and purchase all shares being sold before an outsider can try to buy them. This is just one of the many basic provisions your Houston corporate law attorney will address when drafting a stock purchase agreement for you.

The following information covers some of the other basic provisions that should normally be included to fully protect your most important corporate interests during sales of stock.

Added Legal Protections Offered by Professional Stock Purchase Agreements 

Even when a buyer and seller know each other well, it’s always best to capture all the terms governing their sales transactions in writing. In addition to describing different warranties, your lawyer may suggest that you also cover some of the topics set forth below in your stock purchase agreement.

  • Details about the parties and the specific stock being sold. For example, you’ll need to state the names of the seller and buyer, the number of shares being sold, and the current dollar value of each share of common stock. The date of the transaction should also be noted, along with a statement that the seller is conveying all ownership of the endorsed stock certificates to the buyer. It’s also customary to note that the seller will pay all applicable taxes on the sale;
  • Proper warranties and representations should be included. It’s important to state (1) that the corporation is legally entitled at the time of the sale to transfer ownership of the stock and that the corporation itself is in good standing with all governing agencies; (2) that the seller is currently the valid owner of the stock and has the right to fully convey all rights in the shares to the seller; (3) that all federal, state and local laws and guidelines intended to govern such transactions are being followed; and (4) that all critical facts have been disclosed regarding the transaction;
  • In some cases, you may want to state that the buyer will pay in two installments. When this happens, a percentage of the purchase price is paid upon both parties signing the stock purchase agreement. On a second date set forth in the agreement, the remainder of the purchase price is paid for the shares (when the contract is fully executed). It’s always preferable to have at least one witness sign the agreement in case either party later tries to challenge the entire transaction in court;
  • Clear definitions should be provided in the opening paragraphs of the agreement. These should always include a description of how the corporation currently pays stock dividends to shareholders. A paragraph should also clearly indicate which dispute resolution or mediation groups may be consulted if any problems arise later concerning the sale of the shares;
  • A specific statement as to whether this sale is governed by the SEC (Securities and Exchange Commission). Depending on the type of corporation you’re running, it may be necessary for your attorney to file paperwork regarding the sale with the SEC.

While the list above isn’t intended to be comprehensive, it should provide you with a clear idea of the many critical topics that most stock purchase agreements should cover. It’s always best to have your lawyer go over your corporation’s specific needs with you before drafting this type of document since federal, state and local laws are constantly changing.

Members of our firm are readily available to provide you with professional legal advice concerning all your corporate needs and interests. We look forward to meeting with you soon.

Some Pros and Cons of Having an Adult Guardian Appointed

While most middle-aged and older adults recognize their need for a Will and a basic estate plan, far fewer understand when it may (or may not) be in their best interest to have a formal guardian appointed to help them manage all their personal and financial (estate) decisions. In general, if you’re still capable of making fully competent decisions regarding your finances, basic living arrangements, and medical care needs, you probably don’t need a guardian appointed for you.

However, if you’re currently suffering from some form of mental incapacity or dementia that impairs your ability to handle such matters, then you may need to have a guardian appointed to help you manage your affairs (either temporarily or permanently).

This article first reviews some of the dangers that can occur when the wrong person becomes your guardian and then lists the various legal documents that can help all adults provide for their general medical, financial, and everyday needs should they unexpectedly become very ill or need extensive medical treatment.

Can Courts Abruptly Take Away Elderly People’s Rights to Live as They Choose?

The New Yorker magazine recently published an article in October 2017 entitled, “How the Elderly Lose Their Rights.” It details the real-life experience of many seniors who suddenly found themselves under the control of a “questionable” court-appointed guardian in Clark County, Nevada. In some cases, these older Americans were in regular contact with family members – when a local court guardian decided that they could no longer live on their own and required her overbearing control of their lives.

In some instances, all it took was a hired home healthcare aide’s statement that the elderly person could no longer properly care for himself or his spouse, even though appropriate outside care had obviously been employed for such purposes. One court guardian (who’s been indicted for her actions), would simply arrive at an elderly person’s apartment or senior care facility and announce that she had just gotten herself appointed as that person’s (or couple’s) legal guardian. That same day, the individuals were then forced to leave where they had been living and go move in where this previously unknown woman directed.

Immediate attempts by family and other outsiders who tried to help proved futile. Instead of the court allowing the elderly to appear in court to respond to concerns about their mental competency, the court allowed a court-appointed, professional guardian to file emergency ex parte petitions indicating that immediate decisions had to be made regarding the seniors’ best interests. One couple’s daughter who tried to help her parents after they suddenly disappeared from their home had to endure various types of character assassination before she finally won their freedom. By that time, all her parent’s finances had been drained – supposedly spent in their best interests.

Sadly, the article also contains the chilling observation that this type of elder abuse has become far too common in many counties across this nation – especially in areas where seniors tend to congregate. Hopefully, more states will follow Nevada’s current plans to soon pass legislation that will expressly give seniors the right to be represented by attorneys during all guardianship competency hearings.

Conclusions

Since no adult ever wants to be suddenly “kidnapped”  or taken somewhere (at any age) by a court-appointed guardian or “professional” — it makes sense for all older adults to have their lawyers provide them with the following critical documents:  an Advance Directive for Medical Care, a Durable Power of Attorney and a Declaration of Guardian in the Event of Later Incapacity or Need of Guardian. By naming someone you know and trust in these documents, it should make it easier for your relatives and friends to help you in a manner that fully comports with your stated preferences should you one day become very ill or incapacitated.

Please contact our law firm if you need to ask any questions about creating an estate plan or having the types of documents referenced in this article prepared for you and other loved ones.

What Really Constitutes Sexual Harassment in the Workplace?

The latter part of 2017 may always be remembered as a watershed time in America’s cultural history regarding sexual harassment. After numerous women stepped forward and complained about the allegedly crude sexual behavior of Hollywood film producer Harvey Weinstein(1) and other men in high-ranking entertainment and news media positions, major corporations responded swiftly.

Men like Charlie Rose, the Today Show’s Matt Lauer – and even Garrison Keillor(2) were suddenly fired or saw valuable work contracts cancelled. Perhaps the earlier charges against Bill Cosby involving at least 50 women had played a role in convincing the public that far too many women may actually be suffering routine sexual harassment. Whatever caused this seismic shift in consciousness, a clear message was sent that all offensive sexual behavior in the workplace – regardless of the victim’s gender — must stop now.

However, since a small number of people still question some of these allegations, that issue should be briefly addressed now – before explaining much more basic information about what legally constitutes sexual harassment.

Are False Reports of Sexual Harassment Common?

Women usually gain nothing when sharing past stories about sexual harassment and abuse – especially when most are not rushing to nearby courthouses to file charges against those who mistreated them. There is no pride in sharing such stories – only a sense of vindication when believed. Furthermore, false reports of sexual harassment are rare. In fact, it’s currently estimated that they only constitute about five to seven percent of all allegations.

What follows now is a brief survey of how the EEOC (Equal Employment Opportunity Commission) and others define sexual harassment, along with specific examples of sexually offensive words and behaviors that should never be tolerated in any work-related environment. After all, everyone is more productive when treated with respect.

How Does the EEOC Define Workplace Sexual Harassment?

This unacceptable activity usually includes offensive words or behavior directed toward job applicants or employees by people in positions of authority (or co-workers). However, in some instances, sexual harassment can also include an employer’s customer or client behaving in a grossly offensive manner toward an employee.

All employers must recognize that sexual harassment is a type of sexual discrimination that is forbidden by Title VII of the Civil Rights Act of 1964. That law covers all workplaces with 15 or more employees – including people working for state and local governments. It also applies to members of labor organizations and those working for employment agencies and the federal government.

Sexual harassment may often be considered so offensive that a reasonable person might describe the workplace atmosphere as being intimidating or hostile. Although most sexual harassment tends to be directed at women – it should be emphasized that women may also be found liable for this type of illegal behavior.

While no list could ever fully indicate every set of words or behaviors that constitute sexual harassment, there’s one posted on the website of the United Nations that provides helpful guidance.

Words and Actions Frequently Considered Sexually Inappropriate in the Workplace

  • Repeatedly asking the same person to go out on a lunch date (or to various social events) with you when no special interpersonal relationship has been consensually established;
  • Touching other workers when there is no excuse to do so – or rubbing up against someone when there’s plenty of room to avoid doing so while handling your job;
  • Making offensive gestures with your fingers, hands or body in a manner that suggests that you would like to have sex with someone;
  • Handing out (or posting) offensive drawings or pictures involving sex that a reasonable person would know might be offensive to some people;
  • Making noises or sounds as though kissing another person or having some type of sex with them;
  • Spreading false sexual rumors about co-workers or others in the workplace in hopes of jeopardizing their job security;
  • Repeatedly telling jokes or stories about sexual “conquests” that others might consider offensive;
  • Looking at others in a manner that indicates that you are “sizing them up” sexually in a suggestive manner.

If you still find it hard to decide what’s acceptable workplace behavior – then always act as though every interaction you have with others at work is being videotaped and recorded. Better yet, simply treat everyone with the same level of respect in the workplace that you normally show to your most important clients or customers.

Please feel free to contact our office if you need help drafting the “sexual harassment” sections of your employee handbook or need advice on evaluating appropriate workplace training programs that address this topic. We can also help you evaluate any formal or informal sexual harassment complaints that employees may have filed with the EEOC or your human resources department.

(1) https://www.barna.com/research/behaviors-americans-count-as-harassment/?utm_source=Barna+Update+List&utm_campaign=59e62a6e6f-EMAIL_CAMPAIGN_2017_11_28&utm_medium=email&utm_term=0_8560a0e52e-59e62a6e6f-171985045&mc_cid=59e62a6e6f&mc_eid=c0385fd205

(2) https://www.barna.com/research/behaviors-americans-count-as-harassment/?utm_source=Barna+Update+List&utm_campaign=59e62a6e6f-EMAIL_CAMPAIGN_2017_11_28&utm_medium=email&utm_term=0_8560a0e52e-59e62a6e6f-171985045&mc_cid=59e62a6e6f&mc_eid=c0385fd205