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Los Angeles, CA Estate & Business Planning Blog

Friday, May 23, 2014

Buying an Existing Franchise

While purchasing and establishing a new franchise unit may seem easier than starting from scratch with your own business model, it is still a time consuming and expensive undertaking. Franchisees must find a location, make needed renovations and secure various licenses or permits. Of course, even after the business opens its doors, it will take more time to acquire loyal customers and generate revenue. With big expenses and minimal revenue, it should come as no surprise that most new businesses operate in the red for the first year or two. If you are an aspiring entrepreneur who is looking to hit the ground running, it might be a good idea to avoid the laborious setup process and consider buying an existing franchise, often referred to as a “resale.”

As with any business venture, buying an existing franchise can be profitable and rewarding but it doesn’t come without risks. If you are contemplating the purchase of an existing unit, consider the following:

Get to Know the Franchisor
Although you will own the unit, you will have to continuously work with the franchisor. It’s important that you take time to understand the company’s approach to business, what type of resources they will provide to you and understand any requirements that might be set forth for the businesses that bear its name. Take time to speak with other franchisees to learn about their experiences as owners and carefully review the Uniform Franchise Offering Circular (UFOC).

In some cases, the franchisor may have a right of first refusal meaning that they ultimately have a say in whether you can join the franchise group as an owner. A business law attorney can help you sort through these issues and position you for success.

Identify the Real Reason the Existing Owner is Trying to Sell
There may be many reasons why a current franchisee is looking to sell his or her unit. In some cases, it may be because the owner is planning to retire or wants to relocate. In other situations, you may find that the business isn’t profitable and the owner wants to cut his losses and try his hand at something else. Understanding the reason for sale will help you to better understand whether it makes sense for you to buy the business. If it is a failing franchise unit, you have to reasonably ask yourself if you will be able to turn it around. On the other hand, a retiring owner may have amassed a loyal customer base which will help you to be immediately profitable.

Review the Current State of the Unit
During the discovery process, it’s imperative that you carefully review all of the financials for the resale unit. You will also want to look at things like employee turnover and speak to current employees to learn whether or not they are interested in continuing on with the business once ownership is transferred. If not, you may have the burden of hiring and training a new team very early on. Another thing you will want to examine is the state of the building and equipment – has everything been serviced regularly? A repair to a machine may seem minor but it could cost you a great deal.

The sale of an existing franchise unit can be complex. Not only do you have to understand the motives and terms of the seller, but you must also understand the role and requirements of the franchisor. Due to the complicated nature of these types of transactions, it’s absolutely imperative that you consult a business law attorney who can help you perform your due diligence and make sure all of the proper legal steps are taken during the transaction.

 


Friday, May 9, 2014

Returning to the U.S. After Deportation

Each year, hundreds of thousands of individuals are deported from the United States. For many of these people the dream of living and working in the U.S. is far from over. Unfortunately after deportation, the path to reenter and live in the U.S. is incredibly difficult. Depending on the reason for removal and number of violations, a deported individual may have to wait several years before reentry or they may be permanently banned from ever returning to the United States.

If you or a loved one has been removed and now want to return to the U.S., it’s important that you first identify whether or not an Order of Removal was issued. This order will impact your options for reentry. In some cases, you may have been granted voluntary departure (rather than an Order of Removal) which may make the process of returning an easier one.   If you’re unsure of the type of order, you should contact an immigration attorney who can help you obtain your U.S. Citzenship and Immigration Services (USCIS) and Immigration Court Records.

If you do have an Order of Removal against you, you may not be able to re-enter the United States for a set time period ranging from 5-20 years. If a removed individual is perceived as posing a threat to national security or has been convicted of a felony, he or she may be permanently banned from the country.

If you have a new basis on which you are looking to return to the United States (e.g. you have been offered a job with an emerging tech company in Silicon Valley or a relative who can now sponsor you) during the time period that you are ineligible, you may be able to return by filing a waiver request,  Form I-212, “Permission to Reapply For Admission Into the United States After Deportation or Removal” which essentially requests that the immigration authorities consider the new situation and forgive the past removal.  Along with the form, you may be required to submit supporting documentation showing proof of sponsorship or employment, moral character and even evidence of rehabilitation (if you were arrested during your time in the United States).

Depending on the grounds for your removal, you may have to wait a certain length of time before filing the request. An immigration attorney can help you better understand your options, assist with the form and compilation of supporting documentation to ensure have the best chance of successfully reentering the United States.

 


Wednesday, April 30, 2014

Protecting Your Business through Tactical Electronic Evidence Management

Email, intra-office messaging and digital image transference are hardly new concepts, however few business owners realize the long-term implications of this style of free-flowing communication, particularly in light of litigation and e-discovery requests. If you are a business owner either engaged in litigation or preparing for possible conflict in the future, one of the best strategies for your company is to implement and maintain an electronic evidence policy for employees. Too often, damaging information, accidental concessions or discriminatory language is casually exchanged between two employees -- believing to be engaged in a private chat -- only to be uncovered by a sweeping e-discovery request from opposing counsel. To avoid this result and protect your business from unnecessary exposure to liability, consider meeting with a business litigation lawyer about your company’s electronic information policies.

Electronically Stored Information and Litigation Holds

Once a civil complaint is filed, both parties are entitled to request and receive evidence from the opponent in a process known as discovery. Requests for information need not be necessarily admissible at a subsequent trial, however any non-privileged information that may be relevant to a party’s claim or defense is discoverable. In the context of electronic discovery, it is considered routine discovery practice to require opponents to place a “litigation hold” on electronically stored information, thereby preventing companies from destroying or erasing data. These holds generally include all emails, voicemails or electronically stored documents. In fact, various software companies have developed products to help organizations manage and store data pursuant to a litigation hold.

Disastrous Consequences for Employers

In preparation for possible litigation, it is vital for your employees to carefully consider all electronic communication, as one pejorative email could bring your case to a screeching halt. In the context of employment litigation, a plaintiff claiming workplace discrimination could prevail, thereby costing your company thousands of dollars, all due to the discovery of derogatory jokes uncovered by electronic discovery. The same is true in the context of any other area of business law wherein one employee admits wrongdoing, breach or fraud in a casual email to a colleague. Once the litigation hold is in place, there is no telling what the opponent could uncover, thereby placing your business at an increased risk of liability.

Speak with a Reputable Business Litigation Attorney Today

E-discovery is a complex area of the law. However, with the proper workplace policies, businesses like yours can work to minimize the potential consequences of the vast, boundless litigation hold and can rest assured that office emails do not contain inadvertent confessions, admissions or disclosures. If you are facing upcoming litigation and are seeking counsel on these issues, it’s important that you contact an experienced attorney with extensive knowledge on electronic evidence and information policies.

 


Sunday, April 20, 2014

Top 5 Overlooked Issues in Estate Planning

In planning your estate, you most likely have concerned yourself with “big picture” issues. Who inherits what? Do I need a living trust? However, there are numerous details that are often overlooked, and which can drastically impact the distribution of your estate to your intended beneficiaries. Listed below are some of the most common overlooked estate planning issues.

Liquid Cash: Is there enough available cash to cover the estate’s operating expenses until it is settled? The estate may have to pay attorneys’ fees, court costs, probate expenses, debts of the decedent, or living expenses for a surviving spouse or other dependents. Your estate plan should estimate the cash needs and ensure there are adequate cash resources to cover these expenses.

Tax Planning: Even if your estate is exempt from federal estate tax, there are other possible taxes that should be anticipated by your estate plan. There may be estate or death taxes at the state level. The estate may have to pay income taxes on investment income earned before the estate is settled. Income taxes can be paid out of the liquid assets held in the estate. Death taxes may be paid by the estate from the amount inherited by each beneficiary. 

Executor’s Access to Documents: The executor or estate administrator must be able to access the decedent’s important papers in order to locate assets and close up the decedent’s affairs. Also, creditors must be identified and paid before an estate can be settled. It is important to leave a notebook or other instructions listing significant assets, where they are located, identifying information such as serial numbers, account numbers or passwords. If the executor is not left with this information, it may require unnecessary expenditures of time and money to locate all of the assets. This notebook should also include a comprehensive list of creditors, to help the executor verify or refute any creditor claims.

Beneficiary Designations: Many assets can be transferred outside of a will or trust, by simply designating a beneficiary to receive the asset upon your death. Life insurance policies, annuities, retirement accounts, and motor vehicles are some of the assets that can be transferred directly to a beneficiary. To make these arrangements, submit a beneficiary designation form to the financial institution, retirement plan or motor vehicle department. Be sure to keep the beneficiary designations current, and provide instructions to the executor listing which assets are to be transferred in this manner.

Fund the Living Trust: Unfortunately, many people establish living trusts, but fail to fully implement them, thereby reducing or eliminating the trust’s potential benefits. To be subject to the trust, as opposed to the probate court, an asset’s ownership must be legally transferred into the trust. If legal title to homes, vehicles or financial accounts is not transferred into the trust, the trust is of no effect and the assets must be probated.


Thursday, April 10, 2014

Do Restrictive Immigration Laws Drive Undocumented Immigrants Out of America?

Proponents of strict immigration laws often state that stricter laws can significantly reduce the number of undocumented immigrants in the US.  However, according to a study released by the Center for American Progress, increasing regulation will not necessarily drive America’s estimated 10 million unauthorized immigrants out of the country. The study “Staying Put but Still in the Shadows: Undocumented Immigrants Remain in the Country Despite Strict Laws” instead suggests that several other factors influence whether unauthorized immigrants stay or leave.

According to the study, proponents of “attrition through enforcement,” a measure whereby law enforcement puts into effect strict measures against unauthorized immigrants to encourage them to leave, are mistaken in their basic premise. The basic idea of “attrition through enforcement” revolves around making life miserable enough for unauthorized migrants that they “self-deport” to their home country. But the authors of the study argue that such restrictive measures against unauthorized migrants are not only costly – they’re ineffective. Instead, the measures “complicate” already-tense relationships between law enforcement agencies and unauthorized immigrants.

Family ties are a primary reason unauthorized immigrants hesitate to leave the US, despite pressures which may be placed on them by stricter laws. According to the study, most undocumented immigrants have lived in the United States for upwards of 10 years. Uprooting would mean leaving their nuclear and extended family units. The cost of travel is also an issue. The study notes that the lack of opportunities in the unauthorized immigrant’s home country is also a significant factor. Despite the effects of the American recession, the authors added that for most immigrants, dwindling opportunities in their home countries offered even less incentive to leave.

The study further notes that many unauthorized immigrants do not even take anti-immigrant laws into consideration when deciding whether they should stay or leave the United States. Instead, these laws merely shuffled unauthorized immigrants from place to place. The study noted that the displacement of unauthorized immigrants by anti-immigration laws further estranged them from law enforcement officials by driving them deeper underground. As a result, unauthorized immigrants are less likely to report crimes, in order to avoid interaction with the police.

The authors of the study offer a counter-solution to “attrition through enforcement”:

"Instead of burdensome state and local legislation, sensible policy solutions lie with the federal government and with Congress, which has the power to pass comprehensive immigration reform, bringing immigrants out of the shadows to vet them in a secure and orderly way rather than further criminalizing them. Reforming the legal visa system will help diminish the impetus for clandestine migration in the first place. Revamping the cumbersome, slow, and backlogged system will curtail illegal entry and promote the complementary goals of economic growth and family unification. Rather than unsuccessfully trying to drive unauthorized immigrants out of the country, we should work to integrate them, which will keep families together, improve community safety, and better the economy all at the same time."

Others would argue that even if such laws are not successful in terms of pressuring undocumented immigrants to leave the country, they will serve as a deterrent to those who may be contemplating immigration outside legal channels, especially those who do not have close family members already in the United States.


Sunday, March 30, 2014

Estate Planning: How Certificates of Shares Are Passed Down

How is the funding handled if you decide to use a living trust?

Certificates represent shares of a company. There are generally two types of company shares: those for a publicly traded company, and those for a privately held company, which is not traded on one of the stock exchanges.


Read more . . .


Thursday, March 20, 2014

Where to Incorporate Your Small Business

Should you incorporate your business in your home state? What about Delaware or Nevada, long known as havens for corporate entities? This decision should not be taken lightly because incorporating your business in a particular state will determine, to a significant extent, the laws that will apply to your business.

Often times, the best choice for corporate jurisdiction is the home state where your business is located.  There are several reasons for this. First, filing in a different state will not absolve you of the obligation to pay corporate taxes and comply with filing requirements in the state where your corporation has its operations. For example, if the corporation is located in California it will be subject to California fees and taxes, either as a domestic California Corporationor as a “foreign corporation” doing business in California. Additionally, if you are incorporated in a state other than where you are physically located, you will likely incur another set of filing fees and expenses for a registered agent who is physically located in the state of incorporation.


Read more . . .


Monday, March 10, 2014

Important Changes in Immigration Policy for LGBT Couples

The U.S. Supreme Court repealed Section 3 of the Defense of Marriage Act (DOMA) in June 2013, which resulted in a slew of enhanced rights for lesbian, gay, bisexual, and transgender, or LGBT, families. LGBT couples and families who are binational benefit from the repeal of Section 3 as it pertains to immigration.


Read more . . .


Tuesday, February 25, 2014

Overview of Life Estates

Establishing a Life Estate is a relatively simple process in which you transfer your property to your children, while retaining your right to use and live in the property. Life Estates are used to avoid probate, maximize tax benefits and protect the real property from potential long-term care expenses you may incur in your later years. Transferring property into a Life Estate avoids some of the disadvantages of making an outright gift of property to your heirs. However, it is not right for everyone and comes with its own set of advantages and disadvantages.

Life Estates establish two different categories of property owners: the Life Tenant Owner and the Remainder Owner. The Life Tenant Owner maintains the absolute and exclusive right to use the property during his or her lifetime. This can be a sole owner or joint Life Tenants. Life Tenant(s) maintain responsibility for property taxes, insurance and maintenance. Life Tenant(s) are also entitled to rent out the property and to receive all income generated by the property.

Remainder Owner(s) automatically take legal ownership of the property immediately upon the death of the last Life Tenant. Remainder Owners have no right to use the property or collect income generated by the property, and are not responsible for taxes, insurance or maintenance, as long as the Life Tenant is still alive.

Advantages

  • Life Estates are simple and inexpensive to establish; merely requiring that a new Deed be recorded.
  • Life Estates avoid probate; the property automatically transfers to your heirs upon the death of the last surviving Life Tenant.
  • Transferring title following your death is a simple, quick process.
  • Life Tenant’s right to use and occupy property is protected; a Remainder Owner’s problems (financial or otherwise) do not affect the Life Tenant’s absolute right to the property during your lifetime.
  • Favorable tax treatment upon the death of a Life Tenant; when property is titled this way, your heirs enjoy a stepped-up tax basis, as of the date of death, for capital gains purposes.
  • Property owned via a Life Estate is typically protected from Medicaid claims once 60 months have elapsed after the date of transfer into the Life Estate. After that five-year period, the property is protected against Medicaid liens to pay for end-of-life care.

Disadvantages

  • Medicaid; that 60-month waiting period referenced above also means that the Life Tenants are subject to a 60-month disqualification period for Medicaid purposes. This period begins on the date the property is transferred into the Life Estate.
  • Potential income tax consequences if the property is sold while the Life Tenant is still alive; Life Tenants do not receive the full income tax exemption normally available when a personal residence is sold. Remainder Owners receive no such exemption, so any capital gains tax would likely be due from the Remainder Owner’s proportionate share of proceeds from the sale.
  • In order to sell the property, all owners must agree and sign the Deed, including Life Tenants and Remainder Owners; Life Tenant’s lose the right of sole control over the property.
  • Transfer into a Life Estate is irrevocable; however if all Life Tenants and Remainder Owners agree, a change can be made but may be subject to negative tax or Medicaid consequences.

Saturday, February 15, 2014

How to Get Your School “I-20 Certified”

How to Get Your School “I-20 Certified”

Student and Exchange Visitor Program (SEVP) certification enables schools to enroll foreign students and issue a Certificate of Eligibility for Student Status (Form I-20), declaring the prospective student is eligible for the F-1 student visa. Once certified, the school is authorized by the Department of Homeland Security (DHS) to enroll nonimmigrant students.

How to Get Your School “I-20 Certified”

Student and Exchange Visitor Program (SEVP) certification enables schools to enroll foreign students and issue a Certificate of Eligibility for Student Status (Form I-20), declaring the prospective student is eligible for the F-1 student visa. Once certified, the school is authorized by the Department of Homeland Security (DHS) to enroll nonimmigrant students.

Under the Immigration and Nationality Act, the following schools are considered to be academic institutions and may be approved to enroll nonimmigrant students:

  • A college or university (i.e., an institution of higher learning which awards recognized bachelor's, master's doctor's or professional degrees);
  • A community college or junior college which provides instruction in the liberal arts or in the professions and which awards recognized associate degrees;
  • A seminary;
  • A conservatory;
  • An academic high school;
  • A private elementary school; and
  • An institution which provides language training, instruction in the liberal arts or fine arts, instruction in the professions, or instruction or training in more than one of these disciplines.

To apply for SEVP certification, a school must submit Form I-17,Petition for Approval of School for Attendance by Nonimmigrant Student. Certain eligibility requirements must also be met prior to filing the Petition. To qualify for certification, a school must prove that it:

  • Is a bona fide school;
  • Is an established institution of learning or other recognized place of study;
  • Possesses the necessary facilities, personnel and finances to conduct instruction in recognized courses; and
  • Is, in fact, engaged in instruction in those courses, prior to the time the Petition is filed.

Additionally, institutions applying for “M” certification (vocational or technical) and English language school programs must meet for a minimum of 18 hours per week if the program is primarily classroom instruction, or 22 hours per week of the program is primarily lab work.

Some educational programs are not eligible to apply for SEVP certification, including:

  • Home schools;
  • Pre-school or day care institutions;
  • Public elementary and junior high schools (grades K-8);
  • Online or distance education programs;
  • Adult education programs, if the program receives funding under the Adult Education and Family Literacy Act, or any other federal, state, county or municipal funding; and
  • Flight schools that are not Part 141 or Part 142 certified by the Federal Aviation Administration

The certification process includes many steps which must be followed with precision. The process typically takes at least 16 weeks, often longer. Petitions are processed on a “first-come, first-served” basis. Errors or incomplete information can significantly increase the amount of time it takes to complete the process. Legal counsel should be involved early in the process, to ensure a thorough understanding of, and compliance with, all regulations governing the qualification and application to become an “I-20 school.”

In processing a Petition for Approval of School for Attendance by Nonimmigrant Student, the SEVP’s School Certification Branch will:

  • Review the Petition in detail;
  • Conduct a site visit inspection;
  • Perform necessary research;
  • Review supporting documentation; and
  • Make a ruling on the entire submitted package.

Once your school has been SEVP certified, the school can access the Student and Exchange Visitor Information System (SEVIS) and issue Forms I-20 to prospective students.
 


Wednesday, February 5, 2014

Filial Responsibility Laws

Filial Responsibility Laws

Filial responsibility laws impose a legal obligation on adult children to take care of their parents’ basic needs and medical care. Although most people are not aware of them, 30 states in the U.S. have some type of filial responsibility laws in place. The states that have such laws on the books are Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia and West Virginia.

Filial responsibility laws and their enforcement vary greatly from state to state. Eleven states have never enforced their laws, and most other states rarely enforce the laws. Currently, Pennsylvania is the only state to aggressively enforce its filial responsibility laws.

One of the main reasons why filial responsibility laws are not widely enforced is due to the fact that in the context of needs-based government programs such as Medicaid, federal law has prohibited states from considering the financial responsibility of any person other than a spouse in determining whether an applicant is eligible. However, as many local programs aimed at helping the elderly continue to struggle with insolvency, many states may consider more aggressive enforcement of their filial responsibility laws.

Twenty-one states allow lawsuits to recover financial support. Parties who are allowed to bring such a lawsuit vary state by state. In some states, only the parents themselves can file a claim. In other states, the county, state public agencies or the parent’s creditors can file the lawsuit. In 12 states, criminal penalties may be imposed upon the adult children who fail to support their parents. Three states allow both civil and criminal penalties.

In some states, children are excused from their filial responsibility if they don’t have enough income to help out, or if they were abandoned as children by the parent. However, the abandonment defense can be difficult to prove, especially if the parent had a good reason to abandon the child, like serious financial difficulties. Sometimes, children’s filial responsibility can be reduced if prior bad behavior on the part of the parent can be proven.


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