Before You Start a Business…

March 13, 2014

Both heart and mind must be working well if the owners of a new small business are to experience success. While it is only human nature–not to mention fun–to indulge one’s imagination about what a new business started from scratch could be like, would-be entrepreneurs need to engage in some cold, hard thinking and planning before taking the plunge. At the risk of pouring cold water on some of the anticipation and excitement, what follows is a guide for how to plan for, and think through, the many decisions that must be made well before you have that “Grand Opening” sign made.

Why?

This may seem obvious, but you should know just what your reasons are for wanting to start a new business. If the motivations are weak, odds are the business will be a bust, whereas well-founded reasons can help a business persevere through good times and bad. Some common reasons for starting a new business include escaping the whole nine-to-five routine (though it may be replaced by an eight-to-eight routine), answering to no one else, upgrading your standard of living, and being convinced that you can provide a needed product or service.

Why Me?

Let’s face it, not everyone is cut out to be a captain of industry, or even captain of a small business. Maybe you need not subject yourself to an intensive psychological and life-experiences evaluation, but be honest with yourself about whether you have the necessary characteristics, skills, and experience. A few examples give you the idea:

* Can you make yourself pull the trigger on an important decision?

* Do you see competition as exciting or just stress-inducing?

* Are you willing and able to plan ahead?

* Do you like interacting with people you don’t know?

* Do you have the perseverance, not to mention the physical stamina and health, to put in long hours if that’s what is needed to make the business succeed?

* Are you, and anyone else financially dependent upon you, prepared to risk your savings in pursuit of the business dream if that’s what it takes?

* Unless you are planning a one-man band of a business, are you comfortable with hiring, supervising, and possibly having to fire other people?

* Are you reasonably well organized?

* Do you know anything about the paperwork and legal side of running a business, such as payroll and accounting, the permits or licenses you will need, or the regulations and laws that may apply to the business?

Why This Business?

You may have the best motives and a skill set that would be the envy of any MBA graduate, but if there is no niche for your planned business or, simply put, if not enough people will want to buy what you are selling, the new business will fail. The variables here include timing, location, and simply whether your business is feasible or practicable, so that you can be the one to fill that niche that you have first identified. Don’t make your business the equivalent of carrying coals to Newcastle.

In economic terms, you want to do some investigation to determine whether there is some currently unmet demand for the product or service you want to supply. Then you want to meet that demand with a product or service that is competitive in quality, selection, price, and/or location.

In short, learn as much as you can about the market you will be in. Learn who your customers will be, and try to understand their needs and desires. Anticipate how your fledgling business will compare with any established competitors. What can you do in setting up and running the business to make sure you get your share of whatever market there is for your product or service?

How?

Turning the idea into bricks and mortar (literally or figuratively) involves a lot of decisions, some of which are best made only after getting professional advice. Still, you should acquire at least a layperson’s understanding of the pros, cons, and consequences of each decision.

Choose a name for the business that you find appealing but also one that is informative for someone hearing it for the first time. Select the most appropriate business form, such as a sole proprietorship, a partnership, or a corporation. Investigate which local, state, and federal laws and regulations will apply to the business. This will run the gamut from laws of universal application (e.g., taxes) to laws specific to your business.

Make an unflinching and detailed examination of your financial picture. How much do you have now, how much will you need to start the business, and how much will you need to stay in business? Projecting cash flow into the future means taking into account such variables as seasonal trends in sales, the amount of cash taken out of the business for personal expenses, whether and when to expand the business, and the rate at which customers will pay off accounts if credit is extended to them.

Find a location for the business that is convenient for customers, appropriate in size and configuration, and zoned so as to allow your type of business. When you have settled on the product or service you will sell, calculate the inventory you should create, and maintain and locate reliable suppliers.

Finally, if you go to all the trouble and expense involved in creating a small business, don’t forget to think about protecting against losing the business from such threats as fire, theft, robbery, vandalism, and liability for an accident. This means taking measures to provide security but also arranging for the appropriate types and levels of insurance.

Salem, VA Locksmith Acquitted of All Child Sexual Abuse Charges

February 13, 2014

Read news coverage from the Roanoke Times on the original charges and the final case results.

Read coverage of the case from Virginia Lawyers Weekly.

Background

In July 2012, a 41 year old Salem locksmith, Robert Marshall Hickson, Sr., was charged by indictment with one count of Animate (Digital) Anal Penetration involving one of two nieces and five counts of Aggravated Sexual Battery involving one of his daughters and two nieces.  All accusers were under 18 years of age.  The Virginia Department of Criminal Justice Services immediately revoked his locksmith’s license.  Based on the alleged ages of the accusers, he faced a maximum possible punishment of life plus 100 years.  Sixteen months later, after a three day jury trial and seven and a half hours of jury deliberation, at approximately 9:00 p.m. on Friday, November 15, 2013, a jury of seven men and five women found him Not Guilty on all counts.  There were several notable features about this case.

Four of the indictments broadly alleged the crimes were committed over approximately four year periods, while the two involving his daughter alleged specific dates in July 2012. Two indictments charged Aggravated Sexual Abuse of a Child Less Than 13 Years of Age.  One charged Sexual Abuse of a Child of At Least 13 Years of Age But Less Than 15 Years of Age.  Due to the chronologically vague nature of the crimes broadly alleged to have occurred over four years, the defense sought to pin down the alleged crimes described by the accusers to specific events and time frames in the lives of the defendant, accusers and witnesses.  The defense sought to isolate the events with specificity from the vague indictments as a foundation for a specific defenses and then to prove that Hickson could not have perpetrated the crimes alleged to have occurred at the time of these specific life events.  The defense hoped to argue that if one could not believe abuse had occurred at the time of a specific event as identified by an accuser during her testimony, then how could one believe any accusations from the accusers that any abuse occurred at all?

Broad Allegations Narrowed Down To Specific Events

The defense benefitted from the fact that it not only had the initial statements of the accusers given to the police, but also that the cases had originated on warrants and that a preliminary hearing  held in the Juvenile and Domestic Relations District Court.  The defense, of course, had a court reporter present during that hearing, it had the court reporter sworn by the Judge, and had that transcript prepared for use at trial.  During trial, there were a number of inconsistent statements made by the accusers when compared to both the preliminary hearing transcript and their initial statements to the police.  During the preliminary hearing, the defense was able to pin down the specific allegations of sexual abuse as having occurred during specific events with specific details of those events, with the accusers asserting the vents were precisely why they could remember the abuse incident.

One such event was a day when the defendant supposedly abused a niece while she was in a bunk bed with two other younger children of the Defendant’s girlfriend in his basement apartment in his parents’ home and at a time when the defendant’s girlfriend had supposedly left the premises with the defendant’s daughter.  However, the defense was able to prove that on that particular day, which was the morning after the only night ever when that niece spent the night downstairs, he actually was on a weekend camping trip with friends (who all testified) approximately 45 miles away.  Furthermore, although his girlfriend had left the premises that morning with all of her children and the defendant’s daughter to go clean an apartment she had recently rented under a lease, which cleaning was part of a free first month’s rental payment, she had sent the niece upstairs to the defendant’s parents because she did not have room in her vehicle to transport all of the children.  The grandparents testified they specifically recalled these details and the child coming upstairs that morning, and they affirmed that had been the only night ever that said niece spent the night downstairs.

Another occasion of alleged abuse (the animate penetration charge) supposedly occurred on a Friday in 2009 in the defendant’s basement apartment.   However, at this time the defendant’s girlfriend was with his children downstairs in the apartment and was making a t-shirt that contained the hand prints of all of his children, which was to be a surprise for the defendant the following Father’s Day (Sunday).  The defense produced work records in the form of invoices and payments showing that the defendant had been on “lock calls” all that day, which was supported by his girlfriend testifying that he was not present during the making of the t-shirt because, after all, it was a surprise.  The girlfriend remembered the niece coming downstairs, staying only a few minutes, and returning upstairs.  The defendant’s mother remembered the niece coming back upstairs and asking the niece why she did not stay down there any longer than she did, to which the niece replied that there was not enough room for her down there due to everyone else being down there.  The defense was fortunate in that the defendant’s girlfriend had found the t-shirt in storage and so she and the defendant were able to display the shirt to the jury with all of the children’s hand prints, including those of the accusing daughter, and with “09” centered on the front.

One more occasion of note when abuse allegedly occurred on that same niece in her upstairs bedroom, where she often stayed with the defendant’s parents, was in 2011.  Here, the defense showed that the defendant did not have a key to any of the doors leading to that part of the house, which were consistently locked, and that although he was a locksmith, he could not have gained access to keys for that part of the house because they had Medco locks and so would not have been able to get keys made due to Medco technologies, policies, and procedures.  The defendant’s father testified that he had put Medco locks on all of his doors years ago when a State Trooper was killed nearby on Interstate 81 and the killers broke into the home behind his, killing the husband of that family and abducting and later killing the wife.  He testified that, as was his custom, he checked all the door locks before he left for a doctor’s appointment that morning at the VA in Salem (he had his appointment schedule and VA records at trial) and he further testified that his son had not had a key to the upstairs portion of the house since approximately 2005, when the locks were re-keyed, because the defendant’s daughter (who was an accuser in this case) would steal things and lie about it and they did not want her to have access to a key through her father when she visited him in his basement apartment.  Supposedly, according to the niece, when she woke up in her bed Hickson was in bed with her and abuse her and after Hickson had molested this niece on this occasion, she then rode with him to a shopping mall in Christiansburg for a “lock call”, rode with him to visit an uncle in Christiansburg (she gave conflicting testimony about even being at that visit, but the uncle’s girlfriend testified she recalled the visit and noted the niece acted normal), and then rode with him to a store near her friend’s home in Floyd County to go on a pre-planned trip with the friend, which she also denied was pre-planned.  It was shown at trial by the defense that she could have driven her own car, which she owned, used, and which was present at the Hickson home on that very date.  When asked on cross at trial why she would ride with Hickson on this trip immediately after he abused her she stated: “I just wanted to get out of there”, to which defense counsel retorted, “Why didn’t you just drive your own car when something so terrible had just happened to you?”

There were numerous other discrepancies as to the defendant’s opportunity to have done specific acts alleged for specific time periods and specific events.  The defense produced evidence and testimony with specificity to combat each allegation as was done in the preceding three example instances.  If other evidence was not available, the defense produced “lock call” records to cast doubt on the various stories given.

Accuser Motivation

The defense also put on evidence for possible motivation on the parts of the accusers, one of which was the elder niece consistently wanting the defendant to move out of his basement apartment so she and her friend could move into it, and another being the hatred of the daughter for her father after he confronted her boyfriend and her lying about her sneaking over to the boyfriend’s house whenever she visited her father, which resulted in the defendant barring the boyfriend from his home.  The father and the daughter had an intense argument on July 5, 2012 after defendant got home from work because he forbade the boyfriend from picking his daughter up, the very day that the accusers first reported allegations of abuse to the defendant’s parents upstairs.  Testimony revealed that she had stated to him “I hate you, this isn’t fair”.  Both of the defendant’s parents testified at trial that when the girls were making their reports to them, they were laughing, smiling, and texting, causing both grandparents to think the reports must have been some sort of joke.  Seven days later when one of the niece’s sister learned of the allegations, all of the accusers’ mothers were informed, and the police were called, thus beginning the legal momentum against the defendant that was not stopped until trial and the ultimate verdict.

The defense was able to get this accusing daughter of the defendant to admit on cross examination that she was “a liar and a thief”, that she “hated” her father, and that the issues with the boyfriend was part of what lead her to report the allegations to her grandparents.  When this witness testified on rebuttal, the defense had a Facebook posting made made the first day of trial which stated:  “Two more days until I put him in jail”, which posting was put into evidence and used on cross.  The jury became wide-eyed on that evidence being presented.

Sexual Abuse Prevalence and Jury Selection

An interesting aspect of the case was a pre-trial motion filed by the defense asking the Court for individual voire dire or at least three person voire dire.  The defense produced a scholarly article analyzing a Los Angeles Times national survey which found that 26% of women and 19% of men had been sexually abused or had been the victim of some sort of sexual misconduct.  The Court granted 3 person voire dire.  During voire dire, 20% of the women in the first 30 jurors called expressed an inability to dispassionately serve because of their own personal history with sexual abuse or misconduct.

The defense was consistently concerned about tainting jurors against the defense during voire dire by asking “personal questions” about their, their families, and their friends’ histories as to sexual abuse and misconduct.  The defense attempted to resolve this issue by advising each set of three jurors that personal questions had to be asked of them by defense counsel to gauge their fairness and fitness to hear the case because the prosecution had asked that a jury be impaneled to hear the case.  Defense counsel believes this took the edge off the defense having to ask such questions and put the onus on the prosecution.

Jury Deliberation

During their deliberations, the jury sent out questions on three different occasions, approximately two hours apart each.  The first set of questions asked for the specific dates of birth of each accuser.  Defense counsel suspected throughout the case that the ages of the alleged victims at the times of the alleged specific crimes did not fit the age ranges specified in the indictments, which events the defense was able to pin down to specific dates.  With the alleged victims’ testimony as to their birth dates presented at trial confirming the defense’s previous suspicions, the defense agreed that the jury should be given the dates of birth by the Judge as requested because it was apparent the jury was concerned about the specificity of the ages in the charges and the date ranges of the alleged crimes.  The Commonwealth had argued during closing that the girls had testified that the abuse was ongoing over the date ranges specified in the indictments and that the jury did not have to find the defendant guilty of one specific crime for each indictment, but the defense had argued if the jury did not believe the abuse had occurred at the time of a specific event by the child during her testimony, then how could they believe any abuse occurred at all even during the date ranges.  The stated reason the defense used in agreeing that the Court could give the jury the birth dates was because the defense was certain that the birth dates had already been testified to anyway and it did no harm in giving them evidence already presented.  The Judge gave the dates of birth to the jury.

The second set of questions asked specifically about two of the instructions and whether the ages of the girls fit the charge for each instruction, which affirmed the defense’s conclusion as to why the jury wanted the birth dates in the first set of questions.  The defense agreed with the Judge that the jury should be instructed that the burden was on the Commonwealth to prove all of the elements of the crimes charged and if all the elements of the chrimes are not proven, then the defendant should be found Not Guilty.

The third set of jury questions came an hour and a half before the verdict.  These questions were:  “What is the definition of circumstantial evidence?” and “Is witness testimony circumstantial evidence?”  The defense agreed that the Judge should tell the jury that they had all of the evidence and all of the instructions before them and they should decide the case based on what they have,  The defense felt that it would be even more confusing to the jury to give them additional definitions or responses.

Postscript

Defense counsel assisted the defendant in getting his state locksmith license reinstated with the Criminal Justice Services Department.

In addition, an appeal was filed with the Social Services Department for Roanoke County which had made an investigation into the girls’ complaints and made a “founded” Child Protective Services decision that would have labeled him a sex offender in their records for between 12 and 18 years.  The initial appeal was denied by the local department head and that decision was appealed to a hearing officer for the Commonwealth of Virginia.  After a nearly full day hearing by video conference, the founded complaints were reversed and he was totally cleared of all allegations within that Department.

Limited Liability Companies – The Best of All Worlds?

January 13, 2014

A limited liability company (LLC) is a business structure that combines some of the best features of sole proprietorships, partnerships, and corporations. LLC owners, like their counterparts for partnerships or sole proprietorships, report profits or losses on their personal income tax returns. Like a corporation, however, the owners of an LLC have “limited liability,” that is, they are shielded from personal liability for debts and claims arising from the business.

Limited Liability

The limited liability for LLC owners is not absolute. Owners still can be held liable if they (1) personally and directly injure someone; (2) personally guarantee a loan or business debt on which the LLC defaults; (3) fail to deposit taxes withheld from employees’ wages; (4) intentionally commit a fraudulent or illegal act that harms the company or someone else; or (5) treat the LLC as an extension of their personal affairs rather than as a separate legal entity.

The last exception to limited liability is the most significant. It carries the potential for complete removal of the protections for individual owners. If the line between LLC business and personal business becomes too blurred, a court could find that a true LLC does not exist, leaving the owners personally liable for their actions.

Ownership

Most states allow a single individual to be the sole owner of an LLC. An LLC makes the most sense in circumstances where there is a concern about personal exposure to lawsuits stemming from operation of the business. Most laws prohibit establishment of an LLC in the banking, trust, and insurance fields.

Unlike corporations, LLCs can carry on their business without holding regular ownership or management meetings. Of course, formal meetings backed up by written minutes still may be advisable to document important decisions, such as a change in membership or a major expenditure.

Formation

Setting up an LLC is relatively simple. Articles of organization must be filed with the appropriate state office, usually the Secretary of State. The articles of organization include the name and principal office for the LLC, the names and addresses of its owners, and the name and address of the person or company that agrees to accept legal papers on behalf of the LLC.

Even if it is not legally required, the owners should prepare an operating agreement that spells out the owners’ rights and responsibilities. The absence of an operating agreement will mean that state statutes will govern the operation of the LLC by default. An operating agreement acts as a guide for resolving common issues that an LLC will face, and thereby helps to avert misunderstandings between the owners. It also underscores the authenticity of the LLC itself, which can be helpful when a judge is deciding whether the owners are protected from personal liability.

A standard operating agreement includes the members’ percentage interests in the business; the members’ rights and responsibilities; the members’ voting power; allocation of profits and losses; how the LLC will be managed; rules for holding meetings and taking votes; and “buy-sell” provisions that control what happens when a member wants to sell his interest, becomes disabled, or dies. Although it is frequently overlooked when an LLC is created, a buy-sell agreement is important as a sort of “premarital agreement” among the owners. The buy-sell provisions can clarify and ease the transition when the inevitable changes come to the members of the LLC.

Taxes

Since an LLC is not considered separate from its owners for tax purposes, the LLC pays no income taxes itself. Like a partnership or sole proprietorship, an LLC is a “pass-through entity.” Each owner pays taxes on a share of profits, or deducts a share of losses, on a personal tax return. The IRS regards each member as a self-employed business owner, not an employee of the LLC. There is no tax withholding, and owners must estimate taxes owed for the year, then make quarterly payments to the IRS.

Conversion

By converting to the LLC business structure, sole proprietors and partnerships can gain the protection afforded to LLC owners without changing the way their business income is taxed. Conversion usually can be accomplished either by filling out a simple form or filing regular articles of organization. Federal and state employer identification numbers will have to be transferred to the name of the new LLC, as will such items as sales tax permits, business licenses, and professional licenses or permits.

The process for creating an LLC is streamlined and free of highly technical considerations. However, there is an important place for professional advice concerning such matters as choosing an LLC over other business structures, preparing or reviewing the operating agreement, and setting up accounting systems.

Protect Your Plastic

December 13, 2013

As new technologies change the way we pay for things, criminals are managing to keep pace as they devise ways to separate you from your money. Doing what you can to protect yourself is one part understanding the technology and at least equal portions of vigilance and common sense. Still, we can all benefit from some reminders.

“Phishing” refers to out-of-the-blue e-mails, text messages, or phone calls from superficially legitimate sources, often couched in urgent tones, asking for your credit card or debit card information. The thieves then set up counterfeit cards and run up charges on your accounts. Don’t take the bait. You might think that these appeals are too brazen to work, but obviously they work often enough to be a tool in the con artists’ toolbox. Follow this rule: Never give out your payment card information in response to an unsolicited communication, no matter its apparent source.

Be careful and attentive when using payment cards at ATMs, shops, and gas stations, and not just because of suspicious-looking characters. The bad guys sometimes steal account information by attaching their own devices over legitimate card readers. Beware of plastic sleeves inside the slot where you swipe a card. Another sign of potential trouble arises when the person you are paying swipes your card on two different devices. One of those swipes may be taking your account information for later fraudulent use.

Don’t stick your account statements in the pile of bills to be paid without scanning them closely for discrepancies or suspicious items, such as unauthorized withdrawals. Today you can usually do this online, or even on a mobile phone. Even small bogus transactions are worth reporting to your bank, as thieves sometimes hope to escape the consumer’s notice with many small transactions.

Recently, thieves allegedly racked up over $25 million in charges, all in small individual amounts, from hundreds of thousands of cardholders. Let your financial institution know right away if a statement or bill is unusually late. That can signify theft of your information that may be used to commit fraud.

Periodically review your credit reports from the three major credit bureaus. If an unfamiliar card or transaction shows up, you may already be a victim of identity theft. You get one free report from each of the credit bureaus in a year, so, to maximize your monitoring, get one free report from one of the bureaus every four months.

If, despite your best efforts, you fall prey to the thieves, all is not lost, but neither should you be complacent. As a rule, the federal Truth in Lending Act puts a $50 cap on the consumer’s liability for unauthorized charges on a credit card. However, for lost or stolen debit cards and ATM cards, or unauthorized transactions in your checking or savings accounts, the $50 cap is imposed by law (the federal Electronic Fund Transfer Act) only if you notify the institution within two business days. Wait longer than that, and the ceiling rises to $500, or even more in some cases. The policies of individual institutions may further limit losses beyond those imposed by statute, so it is a good idea to ask your card issuer about any such limits it uses.

Identity Theft Policies for Businesses

November 13, 2013

The Federal Trade Commission (FTC) has revised and clarified its “Red Flags Rule” to help covered businesses comply with requirements for preventing and responding to identity theft directed at their customers. The Rule requires many businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs (or “red flags”) of identity theft in their day-to-day operations.

The ultimate goal is to make businesses better able to spot suspicious patterns that may arise and to thwart identity theft. Obviously this is good for customer relations, but it also may avoid the necessity for the stressful and costly process of cleaning up the mess once thieves have struck.

The FTC describes an Identity Theft Prevention Program as a “playbook” that must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft. With such a program in place, an organization should be able to (1) identify relevant patterns, practices, and specific forms of activity–the “red flags”–that signal possible identity theft; (2) incorporate business practices to detect red flags; (3) detail appropriate responses to any uncovered red flags, to prevent and mitigate identity theft; and (4) update the program periodically to reflect changes in risks from identity theft.

The Red Flags Rule includes guidelines to help financial institutions and creditors develop and implement a program, including a supplement that offers examples of red flags.

Some general categories of red flags are notifications or warnings from a consumer reporting agency or from the customer himself; suspicious-looking documents or personal identifying information; and unusual use of, or suspicious activity related to, a covered account. The FTC and the federal financial agencies also have issued Frequently Asked Questions and answers to help businesses comply with the Rule.

The Rule requires “financial institutions” and “creditors” that hold consumer accounts designed to permit multiple payments or transactions–or any other account for which there is a reasonably foreseeable risk of identity theft–to develop and implement an Identity Theft Prevention Program for new and existing accounts. The definition of “financial institution” includes all banks, savings associations, and credit unions, regardless of whether they hold a transaction account belonging to a consumer; and anyone else who directly or indirectly holds a transaction account belonging to a consumer.

A 2010 change in the law amended the definition of “creditor” and limits the circumstances under which creditors are covered. The previous definition of “creditor” was so broad in its language and interpretation that it swept too many within the Rule’s reach.

The new law covers creditors who regularly, and in the ordinary course of business, meet one of three general criteria. They must (1) obtain or use consumer reports in connection with a credit transaction; (2) furnish information to consumer reporting agencies in connection with a credit transaction; or (3) advance funds to, or on behalf of, someone, except for funds for expenses incidental to a service provided by the creditor to that person.

Homeowner’s Associations Can Regulate Common Areas

October 13, 2013

Kirk owned a home in a residential community that was overseen by a homeowners association. His property abutted one of a handful of lakes in the community. Legally, the lakes were regarded as common areas controlled by the association. When Kirk bought his home many years ago, the only recorded document imposing restrictions on his use of the property was a two-page document with general restrictions for all homeowners in the community. The only mention of the lakes was an irrelevant limit on how far a boat pier could extend into a lake.

The association amended its rules to prohibit the use of pontoon boats having more than two pontoons on the lake next to Kirk’s property. As it happened, Kirk had planned to use just such a vessel, called a “tritoon boat,” on that lake. When the association expressed its determination to enforce its regulation, litigation ensued.

Kirk’s strategy, which, with the benefit of hindsight, may have been flawed, was to argue that the association did not have the power to impose the ban on tritoon boats, because there was nothing in the recorded covenants that referred to or authorized such a restriction. The court that ruled against him at least intimated that his lawsuit may have gained more traction had he challenged the regulation as unreasonable, even if it was within the association’s powers.

It is a legal truism that restrictive covenants should be strictly construed in favor of full and unlimited use of property by the property owner and that restrictions against the free use of property are generally not favored. However, these brakes on the power of homeowners associations usually are applied to restrictions that are imposed on a homeowner’s use of his own property.

In this case, the lake was common property for the benefit of all in the community and subject to management by the association; it was not Kirk’s property. The absence of any explicit references to pontoon or tritoon boats in the recorded covenants was not fatal to the association’s position. The homeowners association had the responsibility of administering the lakes for the common good of the members, and with that responsibility came the implicit power to make reasonable regulations regarding the use of that common property. Kirk would have to settle for the usual two pontoons on his boat.

Employees Are Responsible For Beneficiary Designations

September 25, 2013

The Federal Employees’ Group Life Insurance Act of 1954 (FEGLIA) establishes an $824 billion program providing low-cost life insurance for hundreds of thousands of federal employees. FEGLIA allows an employee to name a beneficiary of life insurance proceeds, and specifies an “order of precedence” providing that the employee’s death benefits accrue first to that beneficiary ahead of other potential recipients.

In 1996, when he was one of those federal employees who could participate in the FEGLIA program, Warren named Judy, his wife at the time, as the named beneficiary on his life insurance policy. In 1998, the couple divorced. In 2002, Warren married Jacqueline. Warren died suddenly in 2008, without ever having changed the named beneficiary from Judy to Jacqueline. As a result, the ex-wife Judy filed a claim for the $125,000 in life insurance proceeds, and was paid them.

Jacqueline sued Judy in a state court to recover the life insurance proceeds, and she had more to support her claim than just a supposition that Warren would have wanted it that way. In short, she claimed with some justification to have state law on her side.

A state statute revokes a beneficiary designation in any contract that provides a death benefit to a former spouse where there has been a change in the decedent’s marital status. In addition, in the event that this provision is pre-empted by federal law, a separate provision of the state law provides a cause of action making the former spouse liable for the principal amount of the proceeds to the party who would have received them if the first provision was not preempted.

The U.S. Supreme Court sided with Judy, the former wife, notwithstanding that there was a certain logic to the position that Warren most likely would have preferred that the proceeds go to his wife at the time of his death. The unassailable fact was that, though he had ten years after his divorce from Judy and six years after his remarriage to Jacqueline to do so, Warren never changed the named beneficiary on his policy.

Most importantly from a legal standpoint, his selection of a named beneficiary could not be overridden by operation of any state law. Such a result was foreclosed by the doctrine that federal law preempts state law where the two conflict. Thus, even the state statute that sought to foresee the possibility of federal preemption and accomplish an end-run around it could not do so.

Simply put, if a beneficiary, Judy in this case, is properly named for a FEGLIA policy, the insurance proceeds owed to that person cannot be allocated to another person, in this case Jacqueline, by operation of state law. Apart from the legal precedent it set, the case is an object lesson in the importance of keeping one’s estate plans, including beneficiary designations, current. Had Warren taken the simple step of filling out the form to change beneficiaries on his policy sometime before he died, assuming that was his wish, the protracted litigation that ensued after his death could have been avoided.

Fincastle Traffic Lawyer

November 15, 2012

Fincastle, Virginia Traffic Offenses and Their Defense

If you have been ticketed or arrested for Reckless Driving in Botetourt County, you need a good traffic defense lawyer.  If you have received a ticket for a lesser traffic offense, retaining a Fincastle traffic attorney can also be very helpful to you in Botetourt County General District Court.  Botetourt County is one of the strictest jurisdictions in Virginia for Reckless Driving, Speeding, and other traffic violations.

Botetourt County is located immediately north of Roanoke along the Interstate 81 (I-81) corridor (map).  Many travelers to Fincastle, Roanoke, Blacksburg, and Salem, and those just passing through the Commonwealth of Virginia receive tickets in Botetourt County.

Botetourt County Courthouse, Where Botetourt County Traffic Cases Are Heard
Botetourt County Courthouse, Where Botetourt County Traffic Cases Are Heard

On I-81 in Botetourt County, Reckless Driving, Speeding, and other traffic tickets are primarily issued by the Virginia State Police.  The Virginia State Police also patrol major highways in Botetourt County, such as Route 220.  The Botetourt County Sheriff’s Office also patrols Botetourt County highways, and is the primary law enforcement agency patrolling and issuing tickets along secondary highways and roadways in Botetourt County.  Botetourt County traffic tickets are tried in Botetourt County General District Court, housed in the historic Botetourt County Courthouse in beautiful Fincastle, Virginia.

The consequences of a conviction for Reckless Driving, Speeding, and other moving violation are serious, especially in Botetourt County.  Not only can traffic tickets lead to skyrocketing car insurance rates, demerit points on your driving record, the suspension or revocation of your driver’s license, but in Botetourt County, high fines and jail time are common.

If you have received any kind of Reckless Driving, Speeding or other traffic ticket in Botetourt County, you need a Fincastle traffic lawyer who knows what to do.  Talk to an experienced Fincastle traffic attorney at the law offices of Harry F. Bosen, Jr., located just a few minutes from the Botetourt County General District Court.  We will explain your options and what we can do to help you.  Contact us today for a free consultation.

The IRS Is Here To Help

September 13, 2011

To help struggling taxpayers who owe back taxes, the Internal Revenue Service (IRS) recently unveiled a series of new steps to help people get a “fresh start,” to use the phrase invoked by the IRS Commissioner, with their tax liabilities. The general idea is to recognize the challenging economic environment the country faces while also keeping the tax revenue flowing in at acceptable levels. The focus is on changes to the tax lien system and other collection tools already used by the IRS that will make paying taxes a little easier on taxpayers.

Tax Lien Thresholds

The IRS will significantly increase the dollar thresholds for when liens are filed to a new dollar amount that will be in keeping with inflationary changes that have occurred since the number was last revised. Currently, liens are automatically filed at certain dollar levels for people with past-due balances.

A federal tax lien is no trivial matter. It gives the IRS a legal claim to a taxpayer’s property for the amount of an unpaid tax debt, and it can establish priority rights against certain other creditors. Since a tax lien can also adversely affect a taxpayer’s credit rating, taxpayers are well advised to arrange for the payment of taxes as quickly as possible.

Tax Lien Withdrawals

The IRS will make it easier for taxpayers to obtain lien withdrawals under certain circumstances, including the IRS’s determination that the lien filing was premature or that the taxpayer has agreed to an installment payment plan. To facilitate the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the liens.

Direct Debit Installment Agreements and Liens

The IRS is making other important changes to liens when taxpayers enter into a Direct Debit Installment Agreement (DDIA). For taxpayers with unpaid assessments of $25,000 or less, the IRS will now allow lien withdrawals in a few different situations: for a taxpayer entering into a DDIA; for a taxpayer converting a regular Installment Agreement to a DDIA; for a taxpayer already on an existing DDIA, upon the taxpayer’s request; and for a taxpayer demonstrating after a probationary period that direct debit payments will be honored.

Installment Agreements and Small Businesses

The IRS has made streamlined Installment Agreements available to more small businesses by raising the dollar limit to allow more small businesses to participate. Small businesses with $25,000 or less in unpaid taxes can participate. Previously, only small businesses with under $10,000 in tax liabilities could participate. Small businesses will have 24 months to pay.

Small businesses with an unpaid assessment balance greater than $25,000 may qualify for the streamlined Installment Agreement if they pay down the balance to $25,000 or less. But small businesses will need to enroll in a DDIA in order to participate.

Offers in Compromise

The IRS is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of taxpayers who can use the help. Taxpayers with annual incomes of up to $100,000 can participate. Participants must have a tax liability of less than $50,000, doubling the previous limit of $25,000 or less.

An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. As you might expect, it is something of a last resort. Generally, an OIC will not be agreed to by the IRS if the IRS believes, given the taxpayer’s income and assets, that the liability can be paid in full as a lump sum or through a payment agreement.

Yet Another Hazard On the Golf Course

August 13, 2011

Hazards to a golfer’s health and safety that come most readily to mind involve swinging clubs and golf balls in flight, usually on unintended flight paths. But the sport also has other dangers lurking, including the garden variety slip and fall. When James, a golfer, sued a golf resort recently over such a mishap, his claim was dismissed, essentially because the particular risk at issue in his case should have been apparent to him and, as such, it was up to him to avoid it.

On an overcast and rainy day, James was playing golf with three friends at a private golf course. It began to drizzle early in the round, and by the 14th hole, the rain was coming down hard. Approaching the 15th hole, James and his friends discussed stopping play but decided to press on.

As James walked toward the green with one of his companions, they used stairs made of bricks and wooden railroad ties. James was familiar with the golf course, having played there on prior occasions. Although he had never before used the stairs leading to the 15th green, he had seen them.

After his friend walked down without incident, James followed and slipped on one of the first steps, breaking his ankle. At the time, it was raining and James was looking down, talking, and holding his putter in his right hand. Without incident, the other two in the foursome had taken an entirely different route on the grass, avoiding the steps.

James’s lawsuit did not fail for lack of effort, in that he enlisted an expert witness to buttress his theory that the resort’s negligence had caused his injury because the stairs had not been made slip resistant in wet conditions. The argument never got off the first tee, as it were, because the expert relied upon building code requirements pertaining to making “floor surfaces” slip resistant and the federal court hearing the case ignored the entire line of reasoning as “irrelevant.”

As the court saw it, it was obvious that such a building code requirement was never meant to apply to an outdoor golf course. For that matter, the stairs embedded in the ground at the 15th hole were not even part of a “building or structure” to which building codes apply.

Because of the court’s dim view of the expert evidence offered, James was left exposed to the resort’s contention, with which the court readily agreed, that James could not blame his unfortunate slip and fall on the resort or anyone else. In legal parlance, James had “assumed the risk” of walking on the wet stairs. The risk was obvious, inherent in the activity, and not so serious as to justify placing a greater precautionary burden on the resort operating the course. The court noted that this legal principle “facilitates free and vigorous participation in athletic activities.”