Legal Articles

Court decision muddies the waters for ‘safe harbor’ for user-generated online posts

A recent decision from a federal appeals court in California will likely have broad implications on what screening procedures, if any, a service provider adopts for user-generated posts and material.

The case, which is called Mavrix Photographs LLC v. LiveJournal Inc., limits the availability of safe harbor protection for social media platforms and other sites that use moderators to review user-submitted posts, even when the website has processes in place for expeditiously removing materials identified in takedown notices under the federal Digital Millennium Copyright Act.

Safe harbor protection can shield you from liability for the copyright infringements of your site’s users if you establish effective notice-and-takedown procedures and promptly remove content when you’ve been notified it is infringing. [Read more…]

Is a patent enough? How to protect your intellectual property

You had a great idea and you started a business around it. Now, you need to protect that intellectual property.

First, check to be sure that your idea is original. Conduct patent and trademark searches early in the development of new products and processes to make sure there isn’t anyone else already protecting the same ideas or concepts.

If you do have an original, patentable idea, go ahead and file a patent application. Filing an initial patent application gives you time to develop or sell your idea, complete market research and/or raise money. [Read more…]

Traditional office vs. co-working space: Which is right for your business?

Collaborative work environments with shared spaces are an increasingly popular take on traditional office space, but can come with less than ideal leasing terms.

Most co-working spaces operate using an occupation license agreement that allows members to use the space for a particular purpose or set of purposes. But it is much easier for a landlord to revoke a licensee’s right of access to than it is to evict a tenant.

A commercial leasing agreement for traditional office space provides tenants more rights and a greater level of security. Such leases can be overly restrictive for startup operations planning to grow quickly, however. Those with smaller teams and budgetary constraints may benefit from the collaborative environment and reduced costs a shared space can provide. [Read more…]

Cybersecurity essentials for small to mid-size businesses

A strong cybersecurity program is designed to protect the confidentiality, integrity and availability of a business’s information systems. These systems can include any computer or networked electronic system used by a business, and certain sensitive business and consumer information.

Programs should be designed to perform three primary functions:

  • Identify and assess threats and risks;
  • Protect information systems and sensitive information from malicious use and unauthorized access; and
  • Detect, respond to and recover from cybersecurity “events” such as breaches.

[Read more…]

Know the risks associated with using targeted advertising for your business

Many companies employ third-party advertising services that use online consumer data and automated software to place advertisements on websites, in apps and within user-generated video services.

But this wide-reaching marketing tool comes with the risk that your advertisement and brand could be displayed alongside offensive content. Third-party targeted advertising services, such as AdSense from Google and Bing Advertising from Microsoft, offer the ability to exclude targeted ads from pornographic or gambling sites. But beyond that it is difficult to prevent your ad from appearing on a website that you would prefer not be associated with your business. Many times, when an advertising service identifies a user that matches the intended audience of the advertisement, the user will see the advertisement even on offensive sites.

The rise of fake news sites further complicates matters, as new sites are created every day in an effort to reap advertising revenue. In one recent example of the challenges this presents, Allstate saw one of its ads appear next to an article denying the occurrence of the Sandy Hook school shooting on a fake news site. [Read more…]

Tips are considered wages, court decides

Employers in the service industry should consult with an employment lawyer before requiring workers to pool their tips. That’s because the laws regarding tip pooling can be complex and employers who engage in certain tip-pooling practices run the risk of violating the federal Fair Labor Standards Act and state wage laws.

This happened recently in South Carolina. Zen 333, a restaurant in Charleston, didn’t allow bartenders or wait staff to take tips directly from customers. Instead they had to put them into a tip pool that was divided among the staff. Servers also had to contribute 4.5 percent of their gross food and alcohol sales directly to “the house” and 3.5 percent of their alcohol sales to the bartenders, who in turn had to contribute a percentage of their alcohol sales to “the house.” According to bartenders and waiters, the restaurant’s owners would withdraw these mandatory contributions from the tip pool and if the cash tips didn’t cover those contributions they’d take the difference from credit-card tips.

The bartenders, who were paid $40 plus tips for all shifts worked, and the servers, who were paid $2.25 an hour plus tips, took the restaurant to court, claiming that this practice violated FLSA and the state wage law because it resulted in them not being paid the wages they earned. [Read more…]

Employers take note: ‘Hostile environment’ claims can be costly

A “hostile” work environment is one where an employee is constantly confronted with offensive behavior by co-workers or supervisors. This can include sexually charged or bigoted comments and jokes, repeated requests to engage in sexual activity, taunting, or insulting personal comments. An employer that doesn’t properly investigate workers’ complaints of a hostile environment , or that investigates but fails to take proper action in response, can face discrimination and sexual harassment claims, as Kansas City, Missouri recently found out.

In that case, LaDonna Nunley, an African-American woman who had worked as a chemist for Kansas City’s water department for 24 years, claimed that a co-worker had engaged in a pervasive pattern of offensive speech directed toward her, including comments referencing genitalia and comments comparing President Barack Obama to a bowel movement. She said she reported the comments to supervisors but they failed to discipline the co-worker.

Ultimately Nunley, who also claimed that she was passed over for promotions in favor of less qualified, younger white workers, brought age, sex and race discrimination claims against the city along with a claim of hostile work environment. [Read more…]

Signature not enough to bind worker to arbitration clause

Mandatory arbitration agreements, which require employers and employees to forego court if they get into a legal dispute with one another and take the case to a private third-party arbitrator to resolve, are a popular way for employers to avoid the unpredictability and expense of the court system.

But if you plan on subjecting workers to such agreements, it’s critical to give actual notice of the terms, as a restaurant in North Carolina recently learned.

In that case, two white employees who worked under a Latino supervisor alleged that he often made racist remarks to them, saying among other things that because they weren’t Hispanic, they couldn’t relate to customers or co-workers or handle day-to-day situations. [Read more…]

Disabled workers may need accommodations beyond FMLA leave

Under the federal Family and Medical Leave Act (FMLA), companies with more than 50 employees must allow workers to take up to 12 weeks of unpaid leave to deal with medical issues. But if a worker isn’t ready to return after 12 weeks, employers should talk to an employment attorney before taking any disciplinary action. That’s because an employee who’s used all of his or her FMLA leave may still be entitled to more leave time as an accommodation under the Americans with Disabilities Act (ADA).

In a recent Massachusetts case, bank employee Amanda LePete took 12 weeks of FMLA leave when she had a baby. While she was out she developed post-partum depression. As her return date approached she was still suffering symptoms so she sought medical help and tried to extend her leave. When her counselor couldn’t pin down a specific date when she might be able to return the bank sent her a letter setting a hard deadline, telling her she’d be fired if she didn’t return on that date. Panicked, she and her attorney appealed to human resources to extend her leave but the request was denied. She subsequently got a letter telling her she was fired.

LaPete filed a disability discrimination claim against the bank under the ADA and state anti-discrimination law. [Read more…]

When is employee travel time compensable?

If you’re a “non-exempt” employee — typically someone who doesn’t work in a professional, executive or managerial capacity and who earns an hourly wage — your compensation structure is pretty simple. Under the federal Fair Labor Standards Act (FLSA) you get paid for the hours you work and if you put in more than 40 hours in a week, you get overtime.

But what about time you spend traveling for work? That seems simple too. You don’t get paid for commuting time to and from work. But you do get paid for time you spend traveling around during the workday.

This seems straightforward on the surface. But there are little wrinkles and nuances that workers and employers need to understand. [Read more…]

New year, new job

5 tax tips for job changers

There are a lot of new things to get used to when you change jobs, from new responsibilities to adjusting to a new company culture. You may not have considered the tax issues created when you change jobs. Here are tips to reduce any potential tax problems related to making a job change this coming year.

  • Don’t forget about in-between pay. It is easy to forget to account for pay received while you’re between jobs. This includes severance and accrued vacation or sick pay from your former employer. It also includes unemployment benefits. All are taxable but may not have had taxes withheld, causing a surprise at tax time.
  • Adjust your withholdings. A new job requires you to fill out a new Form W-4, which directs your employer how much to withhold from each paycheck. It may not be best to go with the default withholding schedule, which assumes you have been making the salary of your new job all year. You may need to make special adjustments to avoid having too much or too little taken from your paycheck. This is especially true if there is a significant salary change or you have a period of low-or-no income. Keep in mind you’ll have to fill out a new W-4 in the next year to rebalance your withholding for a full year of your new salary. [Read more…]

4 business year-end tax moves

Even though the end of 2017 is near, it is not too late to get your business into the best possible tax position for the new year.

Here are some year-end tax moves to consider:

  • Update the office. A fresh coat of paint and new office furnishings not only make your place of business more comfortable, they also provide another tax deduction. How you handle deducting these expenses will vary depending upon whether you own or lease your office space, so reach out for assistance if you have questions. [Read more…]

Get ready to save more in 2018

You can save more for retirement next year using tax-advantaged accounts, thanks to a boost in the maximum 401(k) contribution rate by the IRS. The maximum rate increases by $500 to $18,500, which is the first increase in three years. Those aged 50 or older can still contribute an additional $6,000 on top of that amount.

This is good news, because a 401(k) is one of most potent tools in your retirement arsenal. It offers many benefits over other forms of saving, including: [Read more…]

Tax filing reminders

  • December 15 Due date for calendar-year corporations to pay the fourth installment of 2017 estimated income tax.
  • December 31 –
    • Deadline to complete 2017 tax-free gifts of up to $14,000 per recipient.
    • Deadline for paying expenses you want to be able to deduct on your 2017 income tax return.

New Hampshire Real Estate Transfer Tax

Attorney David M. Beliveau submitted an article to the New Hampshire Bar discussing the real estate transfer tax and the change in the law as it pertains to real estate transfers to revocable trusts and LLCs. Read the entire article below.

Tax Law: Amended Last Year: A NH Real Estate Transfer Tax Primer

By: David Beliveau | New Hampshire Bar

The New Hampshire real estate transfer tax (NH RSA 78-B) – a tax on the transfer of New Hampshire real estate – is $0.75 per $100 of the full price of or consideration for the real estate for the purchaser and the seller (meaning half of the total tax is paid by the purchaser and half by the seller).

The tax, collected by the NH Department of Revenue Administration (DRA), requires filing DRA forms PA-34, Inventory of Property Transfer; CD-57-P, Declaration of Consideration Real Estate Purchaser (Grantee); and CD-57-S, Declaration of Consideration Real Estate Seller (Grantor). The law changed last year in the case of real estate transfers to revocable trusts and LLCs.

During a person’s life, he or she may establish a trust and transfer assets to it. As a result, such assets will avoid probate when the person dies. Real estate may be transferred to the trust.

Prior to last year, a transfer of New Hampshire real estate to a revocable trust was subject to a minimum $40 real estate transfer tax. In such case, the applicable deed language was something like: “This is a non-contractual conveyance for which no consideration is paid. Therefore, the minimum $40 State of New Hampshire real estate transfer tax liability is payable.” All three of the above-referenced DRA forms were required to be prepared and filed. [Read more…]

Medicaid Irrevocable Trusts – Do They Protect Assets?

The New Hampshire Bar Association recently published an article written by Attorney David M. Beliveau discussing the use of Medicaid irrevocable trusts as a legal tool to protect assets (typically, a residence) in the case one has to be admitted to a nursing home and apply to receive Medicaid to cover the respective cost. The question is, do such trusts work? Read the entire article below.

Elder, Estate Planning & Probate Law: Medicaid Irrevocable Trusts: A Tale of Two Cities?

By: David M. Beliveau | New Hampshire Bar Article

With the increasing cost of nursing home care, some elders are using Medicaid irrevocable trusts to try to protect their assets (typically, their residences) in case they have to be admitted to a nursing home and apply to receive Medicaid to cover the respective cost. The question is, do such trusts work? Last year, both the New Hampshire Supreme Court in In re Petition of Braiterman and a Massachusetts appellate court in Heyn vs. Director of the Office of Medicaid answered the question.

Both Braiterman and Heyn turned on each court’s interpretation of the “any circumstance” test. Under 42 USC Section 1396p(d)(3)(B), if there are any circumstances under which payment from the trust could be made to or for the benefit of the Medicaid applicant, then the Medicaid irrevocable trust is deemed countable for the purpose of determining the Medicaid applicant’s eligibility for Medicaid. In Braiterman, the New Hampshire court appears to have interpreted the “any circumstance” test broadly and, consequently, found the Medicaid irrevocable trust at issue problematic. In contrast, in Heyn, the Massachusetts court appears to have interpreted the “any circumstance” test narrowly and, consequently, found the Medicaid irrevocable trust at issue not problematic. [Read more…]

Planning to move out of state? Your current custody situation matters

According to a recent ruling from a New Jersey family court, your current custody arrangement can make a big difference if you’re thinking of relocating to another state with your child.

The mother in that case had emigrated from Cuba in 1999 and lived in Florida until 2004, when she moved to New Jersey to work in pharmaceuticals. That’s apparently where she met her husband, who she married in 2009 and with whom she had a daughter.

The couple divorced in 2015. The divorce agreement said they’d share joint legal custody and the mother would be considered the “parent of primary residence.” Once the mother vacated the marital home, the father would be the “parent of alternate residence.” The father was to have the daughter on Mondays, Wednesdays and alternate weekends. The agreement didn’t discuss the issue of out-of-state relocation. [Read more…]

Things to think about when your intended has bad credit

Love can blind a person to many things, and bad credit is one of them. But that’s an issue that can come back to bite you later. If your spouse-to-be has bad credit, it can cause huge problems, keeping you from having the kind of married life you’d planned on. It will rear its ugly head when you’re thinking about buying a house, when you’re trying to give your kids the best possible educational, athletic and enrichment opportunities and even when you’re trying to plan the wedding of your dreams. That’s why it’s important to sit down with your intended before getting married and having an honest financial conversation.

One thing you need to talk about is what kind of debt you’re both bringing into the marriage.  For example, do you or your significant other have “good” debt? In other words, long-term debt at a reasonable interest rate, like a student loan, a mortgage or perhaps a business loan? If your fiancé has this kind of debt and a solid job with a promising career trajectory and a good track record of making payments on time, chances are you’re OK.

But what if your intended has a lot of “bad” debt: short-term high-interest debt, like credit cards and car loans that show he’s living beyond his means and which he can’t realistically pay back? This is the kind of situation that could ultimately put a huge crimp in your lifestyle, serve as a source of tension and perhaps imperil your marriage. [Read more…]

Wedding cancelled; Jilted fiancé can get engagement ring back

There was a time when many states allowed a person to sue another person for breach of a promise to marry. This resulted in a lot of colorful lawsuits that provided for sensational trials and plenty of entertaining gossip in otherwise dull towns. The ability to bring such suits resulted in runaway verdicts and abuse, which is why so many states have adopted “heart balm” laws that forbid jilted suitors from bringing such cases.

But that doesn’t mean a heartbroken suitor has no recourse at all. If a recent Virginia case is any indication, a man who’s left at the altar can still sue to recover the engagement ring.

The case involved Ethan, an accountant who proposed to Julia in 2012. But the relationship went bad over the course of the next year and the engagement was called off. [Read more…]

Wife can share in ex-husband’s ‘post-employment compensation’

A divorced man could be ordered to share with his ex-wife a sum of money that he received from his employer after he stopped working, the Rhode Island Supreme Court has decided.

The husband, Richard Beverley “Bev” Corbin III, had started working with a division of megabank Wells Fargo in July 2006. He signed an agreement to work as an at-will employee for two years.  By June 2008, things started to go sour. By September 2008 he and the employer couldn’t come to an agreement about his continued employment, so he took part in Wells Fargo’s dispute resolution process, signed a departure agreement and release of any claims he might have against the company and was given a $175,000 lump sum payment.

Corbin and his wife Anne subsequently decided to divorce. During the divorce proceeding, a family court judge ruled that the $175,000 lump sum payment represented “back wages” that should be considered part of the marital estate and awarded 50 percent of it to Anne. [Read more…]

Prenups can be challenged if terms aren’t fair

Most people who are getting divorced assume that if they agreed to a prenuptial agreement before they got married they’re going to be stuck with its terms.

That’s generally the case, which is why if you’re being asked by your betrothed to sign a prenup, it’s a good idea to consult with a lawyer of your own beforehand and to make sure you speak to a family law attorney instead of a generalist who’s dabbling in divorce law.

Still, contrary to general belief prenups are not necessarily bulletproof. In fact, depending on the circumstances and where you live, a divorce court judge may be willing to toss a prenup aside if the terms are legitimately unfair. [Read more…]

Long-term care benefits for veterans and surviving spouses

Long-term care costs can add up quickly. But for veterans and the surviving spouses of veterans who need in-home care or are in a nursing home, help may be available. The Veterans Administration (VA) has an underused pension benefit called Aid and Attendance that provides money to those who need assistance performing everyday tasks. Even veterans whose income is above the legal limit for a VA pension may qualify for the Aid and Attendance benefit if they have large medical expenses for which they do not receive reimbursement.

Aid and Attendance is a pension benefit, which means it is available to veterans who served at least 90 days, with at least one day during wartime. The veteran does not have to have service-related disabilities to qualify. Veterans or surviving spouses are eligible if they require the aid of another person to perform an everyday activity, such as bathing, feeding, dressing or going to the bathroom. This includes individuals who are bedridden, blind or residing in a nursing home.

To qualify the veteran or spouse must have less than $80,000 in assets, excluding a home and vehicle. In addition, the veteran’s income must be less than the Maximum Annual Pension Rate (MAPR). Following are the MAPRs for 2017: [Read more…]

Hospitals now must provide notice about observation status

All hospitals must now give Medicare recipients notice when they are in the hospital under “observation.”  The notice requirement is part of a law enacted in 2015 that just took effect.

Signed by President Barack Obama in August 2015, the law was intended to prevent surprises after a Medicare beneficiary spends days in a hospital under “observation” and is then admitted to a nursing home. This is important because Medicare covers nursing home stays entirely for the first 20 days, but only if the patient was first admitted to a hospital as an inpatient for at least three days.  Many beneficiaries are being transferred to nursing homes only to find that because they were only under observation and were therefore hospital outpatients all along, they must pick up the tab for the subsequent nursing home stay — Medicare will pay none of it.

The law, the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, does not eliminate the practice of placing patients under observation for extended periods, but it does require hospitals to notify patients under observation for more than 24 hours of their outpatient status within 36 hours, or upon discharge if that occurs sooner. The Act required hospitals to begin giving patients this notice as of March 8, 2017.  Some states, including California and New York, already require such notice. [Read more…]

Short-term care insurance: An alternative to the long-term care variety

A little-known insurance option can be an answer for some people who might need care but are unable to buy long-term care insurance. Short-term care insurance provides coverage for nursing home or home care for one year or less.

As long-term care premiums rise, short-term care insurance is gaining in popularity. This type of insurance is generally cheaper than its long-term care counterpart because it covers less time. Purchasers can choose the length of coverage they want, up to one year. According to the American Association for Long-Term Care Insurance, a typical premium for a 65-year-old is $105 a month.

People who can’t qualify for long-term care insurance because of health reasons may be able to qualify for short-term care coverage. This kind of insurance doesn’t usually require a medical exam and sometimes only has a few medical questions on the application. Another benefit of short-term care insurance is that there usually is not a deductible. The policies begin paying immediately, without the waiting period usually found in long-term care policies. [Read more…]

New protections for nursing home residents

Obama-era rules designed to give nursing home residents more control of their care are gradually going into effect. The rules give residents more options regarding meals and visitation as well as making changes to discharge and grievance procedures.

The federal Centers for Medicare and Medicaid finalized the rules, which are the first comprehensive update to nursing home regulations since 1991, in November 2016. The first group of new rules took effect in November. The rest will be phased in over the next two years.

Here are some of the rules newly in effect: [Read more…]

Four legal steps to take right after an Alzheimer’s diagnosis

If you or a loved one has been diagnosed with Alzheimer’s disease, it is important to start planning immediately. There are several essential documents to help you once you become incapacitated, but if you don’t already have them in place you need to act quickly after a diagnosis.

Having dementia does not mean that an individual is not mentally competent to make planning decisions. The person signing documents must have “testamentary capacity,” which means he or she must understand the implications of what is being signed. Simply having a form of mental illness or disease does not mean that you automatically lack the required mental capacity. As long as you have periods of lucidity, you may still be competent to sign planning documents.

Here are some essential documents for a person diagnosed with dementia: [Read more…]

6 must-dos when you donate to charity

Donations are a great way to give to a deserving charity, and they also give back in the form of a tax deduction. Unfortunately, charitable donations are under scrutiny by the IRS, and many donations without adequate documentation are being rejected. Here are six things you need to do to ensure your charitable donation will be tax-deductible:

  1. Make sure your charity is eligible. Only donations to qualified charitable organizations registered with the IRS are tax-deductible. You can confirm an organization qualifies by calling the IRS at (877) 829-5500 or visiting the IRS website.
  2. Itemize. You must itemize your deductions using Schedule A in order to take a deduction for a contribution. If you’re going to itemize your return to take advantage of charitable deductions, it also makes sense to look for other itemized deductions. These include state and local taxes, real estate taxes, home mortgage interest and eligible medical expenses over a certain threshold. [Read more…]

The Equifax breach and you: be proactive

Earlier this year, hackers were able to breach the security of Equifax, one of the three national credit reporting agencies. More than 143 million Americans – nearly half the entire country – were exposed to the attack, and may have had their personal information stolen (including names and birthdates, and Social Security and driver’s license numbers).

Equifax is still determining exactly whose data has been exposed. While you wait to find out, it’s worth taking a few proactive steps to make sure your info isn’t misused by hackers.

  • Start checking. Visit Equifax’s website at www.equifaxsecurity2017.com and enter your last name and last six digits of your Social Security number. The site will tell you whether it’s likely or not your data has been exposed, and put you on a list to get more information. You can also sign up for a year’s worth of free credit monitoring. [Read more…]

Year-end tax checklist

As the year draws to a close, there are several tax-saving ideas you should consider. Use this checklist to make sure you don’t miss an opportunity before the year is out.

  • Retirement distributions and contributions. Make final contributions to your qualified retirement plan, and take any required minimum distributions from your retirement accounts. The penalty for not taking minimum distributions can be high.
  • Investment management. Rebalance your investment portfolio, and take any final investment gains and losses. Capital losses can be used to net against your capital gains. You can also take up to $3,000 of capital losses in excess of capital gains each year and use it to lower your ordinary income. [Read more…]

Bank slapped with fine after failing to modify loan terms

In a move called “unprecedented in its magnitude,” a bankruptcy judge recently opted to levy a $45 million fine against Bank of America Corp. for its treatment of homeowners who had requested lower mortgage payments.

If it stands, the fine would be the largest punitive damages award for violations of the bankruptcy law’s automatic stay rules, which ban lenders from advancing foreclosures and taking other actions.

The case highlights the importance of consulting a lawyer in any situation involving requests for loan modifications or in any case involving a foreclosure. [Read more…]

What you need to know about paid leads on property-search sites

Popular property-search site Streeteasy.com recently rolled out a change to its Premier Agent program for real estate agents that is confusing potential buyers and angering brokers.

Until recently, the site featured the name of a property’s listing agent and company prominently, making the main contact clear and providing a direct “contact agent” button. But now when a potential buyer clicks “contact agent,” the message instead might be sent to a broker who has paid to receive referrals for a specific zip code.

The listing broker can still be reached, but the process is more convoluted. Now users must click on a less prominent button that says “seller’s agent info.” The name of the listing broker and firm are much further down on the page and harder to find. [Read more…]

What to consider before backing out of an offer

Standard real-estate contracts contain inspection and mortgage contingencies that allow buyers a limited amount of time to back out of the contract and receive a refund of their deposit. They also spell out the terms of the deposit and where the money is held in escrow, whether with the buyers’ agent, the title company, an attorney or the developer.

But once all contingencies are satisfied, buyers are locked in and attempts to back out could mean losing earnest money and potentially having to pay brokers’ commissions. That’s because even if the seller lets the buyer off the hook, he or she may still be liable to the broker for the commission. Contracts state that the commission is due when the broker finds a ready, willing and able buyer. Some brokers will work with the seller in this situation, but not all will.

If a buyer truly does want to back out of a deal, even if he can’t do so under the terms of the contract, he can try to negotiate with the seller for the return of at least part of the deposit. [Read more…]

Don’t let the end of a home-equity line of credit sneak up on you

The terms of home-equity lines of credit, or HELOCs, typically come due 10 years in, at a time at which many homeowners are unprepared for the fact that their monthly payments are about to go up significantly and sometimes double.

HELOCs are secured by a mortgage, require only interest payments and can be used to consolidate debt, fund major expenses, etc. But after the initial 10-year period the principal becomes due. At that point, homeowners can choose to pay off the balance, refinance it into a first or second mortgage or make monthly payments of principal and interest, typically for a 20-year term.

Homeowners who are unprepared may wind up defaulting, prompting the bank to take legal action to collect the balance or to begin the foreclosure process. [Read more…]

Reverse mortgages offer cash to homeowners, but it comes at a price

A reverse mortgage allows a homeowner to convert part of the equity in a home to cash without having to sell the property. The cash may be paid in installments or a lump sum, so typically you don’t need to pay anything back as long as you live in your house.

Factors such as age, the value of the property and how much remains on the mortgage all affect the amount of money a homeowner may borrow through a reverse mortgage.

There are important things to consider. Owners typically must remain in the home for at least 5-10 years to make a reverse mortgage economical. In addition, because they’re deferring repayment of the reverse mortgage, the amount they owe will grow substantially over time. Interest charges are added to the loan each day it’s held, so it’s possible the reverse mortgage could grow to equal the value of the home. [Read more…]

Investing IRAs in real estate often leads to more risk than reward

 There’s nothing simple about investing an IRA in real estate. But people do it because it offers an alternative to traditional retirement accounts that comes with the potential for high reward. Potential investors should be warned, however, that there can be more negatives than positives associated with these types of investments.

Minuses

  1. The IRS requires a qualified trustee or custodian to administer the assets. This person will typically handle transactions and manage paperwork and reports.
  2. The options for a qualified trustee or custodian are limited. So far, only about two dozen companies in the U.S. can act as custodians of self-directed IRAs.
  3. You’ll need to hire a property manager. A third-party property manager will make sure you adhere to any applicable landlord-tenant laws and avoid illegal transactions. Typical commissions are equal to the first month’s rent and 6 to 10 percent of the monthly rent thereafter.
  4. The rules for self-directed IRAs can be tricky to follow. Did you know something as simple as mowing the lawn of a property you own through your IRA could put you on the wrong side of the law? It’s true: IRA owners are forbidden from engaging in certain transactions at their property.
  5. The penalties are high. Running afoul of the law makes IRA owners more susceptible to losing the IRA’s tax-favored status. If that happens, taxes and penalties could be triggered.
  6. It’s cash only. IRS rules require contributions to an IRA to be made in cash, not services.

[Read more…]

Business tax: time to consider Section 179?

Section 179 expensing can be a very powerful tax-planning tool for small- and medium-sized businesses acquiring capital assets. While it doesn’t change the amount of depreciation you can take over the life of a capital purchase, it can change the timing by allowing you to deduct your purchase in the first year you place it in service.

Review these details if you’re considering depreciating your business assets under Section 179:

  • Section 179 allows deducting the expense of up to $510,000 of qualified business purchases.
  • A Section 179 deduction cannot create a loss for the business.
  • A Section 179 deduction must be for business use. If an asset is not entirely used for business, the allowance is reduced.
  • If you sell a Section 179 asset prior to the full depreciation period, you will have to record any sales proceeds as taxable income.
  • Many states limit the use of this federal shifting of depreciation.

Taking Section 179 for capital purchases can be useful, but it’s not for everyone. Using it for an immediate tax break means it’ll no longer be available for future years.

Renew your ITIN now

If you have an Individual Taxpayer Identification Number (ITIN) rather than a Social Security number (SSN) you may need to take action or you’ll be unable to file a tax return for 2017.

What to know about ITINs
ITINs are identification numbers issued by the U.S. government for individuals who do not qualify to receive an SSN. An ITIN can be used to file tax returns and is also a form of identification often required by banks, insurance companies and other institutions. Unfortunately, ITINs are also a source of identity fraud. To combat this, the 2015 PATH Act made substantial changes to the program. Now a number of ITINs will expire if not renewed by December 31, 2017.

No ITIN, no problem. If you do not have an ITIN, but have an SSN, this expiration does not affect you. [Read more…]

How to Ace the FAFSA

The Free Application for Federal Student Aid (FAFSA) is a tool that students use to apply for more than $120 billion in federal funds. Unfortunately, each year many students miss out.

Even if you don’t think you or your child qualify for federal aid, filling out a FAFSA is important because it could be used to determine eligibility for nonfederal aid and private funds.

FAFSA available October 1, 2017
Previously, the FAFSA was unavailable until January. A recent change makes the application available October 1, 2017. That’s because the 2018-19 FAFSA can be completed with your 2016 tax info. [Read more…]

Tax Filing Reminders

  • October 16
    • Filing deadline for 2016 tax returns for individuals or corporations if you requested/received a six-month extension. Pay taxes due by this date.
    • Deadline to recharacterize a Roth IRA to a Traditional
    • Deadline to fund your Keogh or SEP plans if you requested a filing extension.

Password sharing presents risks for family and fiduciaries

Keeping careful records of the usernames and passwords for your online accounts and sharing them with a trusted family member or agent may seem like the start of a responsible estate plan. But you need to be aware of the risks for those you empower with the information.

Even with your permission, fiduciaries (executors, trustees, conservators), agents and family members who manage assets as part of your estate plan could be committing a federal crime by accessing your online account with your password.

That’s because most terms of service agreements governing websites or online accounts specify that passwords not be shared and that third parties not be allowed to access a user’s account.  So even if you provide the person with the log-in information for your account, he or she could still be violating the terms of service by using it to access your account. [Read more…]

Are LLCs your best option for asset protection? Know the risks

Limited liability companies can offer better asset protection than ordinary stock corporations, but there are potential adverse economic and tax results if investors are not alert.

Investors increasingly use LLCs to operate a trade or business, to hold real estate or to hold other investment assets, as opposed to state law corporations. But when investors transfer LLC interests to a spouse, children, trust or others, as opposed to ordinary corporate stock, they can risk losing control of the business or decreasing the basis for heirs — with a corresponding increase in the beneficiary’s income tax.

An LLC owner or “member” has two types of rights: economic and management. Economic rights allow them to receive property from the LLC both during existence and upon liquidation, along with tax attributes and profits/losses. Management rights allow them the right to vote, participate in management or the conduct of company affairs and have access to company reports, records and accountings. [Read more…]

What millennials need to know about estate planning

A recent survey by senior-living focused website Caring.com, quoted in USA Today, revealed that 78 percent of Americans under the age of 36 don’t have a will or trust in place. But even with youth on their side, the millennial generation needs to be planning for the unforeseen. If most would consider the following three issues, they’d be off to a good start:

  • Incapacitation provisions: No one expects to be incapacitated, but there are at least two documents needed in the event that occurs. The first is a durable power of attorney that identifies who will make financial decisions on your behalf if you are unable to do so. The second is a health care advance directive (including a living will) that outlines preferences for medical care if you are unable to state these for yourself.
  • Death documents: These include a last will and testament and possibly the establishment of a trust, either revocable or testamentary.
  • Beneficiary designations: Keep these up to date for things including life insurance and 401(k) programs.

[Read more…]

Protect your power of attorney from legislative changes

Medical and financial powers of attorney are a critical aspect of effective estate planning, but did you know they must be kept up to date? It is recommended to have them reviewed every 2-3 years.

Several legislative changes over the years have given financial institutions and healthcare providers reasons to reject powers of attorney. As new laws are enacted, necessary provisions must be incorporated into your power of attorney, as failing to including certain language could mean your documents will not be accepted.

Notable issues include:

  • Your medical power of attorney was executed prior to your state adopting the Uniform Health Care Decisions Act. In 1993, this federal law was approved to expand and solidify the authority of a medical power of attorney. It has since been enacted state by state. Key changes include decision-making power surrounding life-prolonging procedures, authorization for organ donation and approval for admission to health care facilities for treatment. [Read more…]

Learn from celebrities’ estate planning blunders

There are many lessons to be learned about estate planning from the bad experiences of some of the world’s most famous people. The AARP recently gathered their stories, and here are the highlights:

Florence Griffith Joyner: Before her death in 1998, Olympic gold medalist Florence Griffith Joyner never told anyone the location of her will. Without the original document, it took four years to close her probate estate due to a long battle among her relatives.

Lesson learned: Don’t keep the location of your will a secret. [Read more…]

Take care with COBRA compliance — or pay big damages

In recent months, at least four companies have gotten into trouble for failing to provide Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) notices to health plan participants.

Suits of this nature can lead to big damages. Since 2015, courts have approved settlements ranging from $290,000 to $1 million.

Damages include statutory penalties of $110 per day, awards to qualified beneficiaries as relief for damages that occur due to the failure to provide an adequate COBRA notice, and attorney fees. The IRS can also assess excise tax penalties of up to $200 per day for each day that a plan fails to comply with COBRA. [Read more…]

Tips for avoiding a data security breach

Regardless of the size of your business, it’s critical that you work proactively to protect the sensitive and private information of your customers, clients and employees.

While you might hear more often about data breaches at bigger companies, the reality is that smaller companies and organizations are often targeted and typically have limited data security protections in place.

Your approach to protecting your company from a data breach must be comprehensive. [Read more…]

New law reaffirms right to post negative reviews online

Under a new federal law, individuals have a right to post truthful negative reviews about a product or service provider. That’s the case even if they previously signed an agreement that prohibited such reviews.

Over the past few years, this controversial business practice of including non-disparagement clauses in contracts or terms of service has led to a number of lawsuits. These so-called “gag clauses” are intended to deter customers from writing negative reviews, and require them to pay a fee if they do so despite the contract.

The new Consumer Review Freedom Act bars companies from using these clauses.  It gives the Federal Trade Commission and the states the power to enforce the law, allowing them to take legal action against businesses that fail to remove these clauses from their contracts.   [Read more…]

Conduct a website self-audit to ensure compliance with the ADA

Over the past couple of years, more than 200 plaintiffs have sued businesses nationwide arguing that their websites fail to provide access to people with certain disabilities, alleging a violation of the Americans with Disabilities Act. More recently, a law firm based in Pittsburgh sent demand letters to businesses, banks and others saying that they were willing to “work constructively” toward compliance for a fee.

While court rulings on whether the ADA applies to websites have been mixed, plaintiffs have been using the rulings in their favor to persuade businesses to settle.

The ADA, which went into effect in 1990, prohibits discrimination against people with disabilities. Title III of the Act prohibits discrimination on the basis of disability in “places of public accommodation.” The law doesn’t specifically mention websites, but some plaintiffs argue that a website should be treated as a “place of public accommodation.”   [Read more…]

Social media endorsements: How to pay influencers to endorse your brand

It’s becoming popular for companies to pay social media users with big followings to endorse their products or share content about their brand. It’s a great way to get your message out to a wider network of target customers in an authentic way.

But the Federal Trade Commission (FTC) is paying attention and enforcing rules that say you can’t do it without disclosing the relationship.

Recently, the FTC reached settlements with such brands as Lord & Taylor and Warner Bros. Home Entertainment over their failure to disclose such relationships. [Read more…]

Contractor or Employee? Knowing the difference is important

Is a worker an independent contractor or an employee? As an employer, getting this wrong could land you with an IRS audit and cost you plenty in many other ways. Here’s what you should know:

As the worker: If the worker is a contractor and not considered an employee, he/she must:

  • Pay self-employment taxes (Social Security and Medicare-related taxes).
  • Make estimated federal and state tax payments.
  • Handle his/her own benefits, insurance and bookkeeping.

[Read more…]