Important Issues to Consider When Setting Up Your Estate Plan

Often estate planning focuses on the “big picture” issues, such as who gets what, whether a living trust should be created to avoid probate and tax planning to minimize gift and estate taxes. However, there are many smaller issues, which are just as critical to the success of your overall estate plan. Below are some of the issues that are often overlooked by clients and sometimes their attorneys. 

Cash Flow 
Is there sufficient cash? Estates incur operating expenses throughout the administration phase. The estate in California may have to pay federal estate taxes, filing fees, living expenses for a surviving spouse or other dependents, cover regular expenses to maintain assets held in the estate, and various legal expenses associated with settling the estate. 

Taxes 
How will taxes be paid? Although the estate may be small enough to avoid federal estate taxes, there are other taxes which must be paid. If the estate is earning income, it must pay income taxes until the estate is fully settled. Income taxes are paid from the liquid assets held in the estate; however, estate taxes could be paid by either the estate or from each beneficiary’s inheritance if the underlying assets are liquid. 

Assets 
What, exactly, is held in the estate? The owner of the estate certainly knows this information, but estate administrators, successor trustees and executors may not have certain information readily available. A notebook or list documenting what major items are owned by the estate should be left for the estate administrator. It should also include locations and identifying information, including serial numbers and account numbers. 

Creditors 
Your estate can’t be settled until all creditors have been paid. As with your assets, be sure to leave your estate administrator a document listing all creditors and account numbers. Be sure to also include information regarding where your records are kept, in the event there are disputes regarding the amount the creditor claims is owed. 

Beneficiary Designations 
Some assets are not subject to the terms of a will or trust. Instead, they are transferred directly to a beneficiary according to the instruction made on a beneficiary designation form. Bank accounts, life insurance policies, annuities, retirement plans, IRAs and most motor vehicles departments allow you to designate a beneficiary to inherit the asset upon your death. By doing so, the asset is not included in the probate estate and simply passes to your designated beneficiary by operation of law. 

Fund Your Living Trust 
Your probate-avoidance living trust will not keep your estate out of the probate court unless you formally transfer your assets into the trust. Only assets which are legally owned by the trust are subject to its terms. Title to your real property, vehicles, investments and other financial accounts should be transferred into the name of your living trust. 

If you have any questions regarding estate planning, please do not hesitate to contact an Estate Planning Attorney at Schneiders & Associates, LLP for advice and counsel.

By: Roy Schneider, Esq.

Enforceability of Arbitration Agreements in Employee Handbooks

There is no law that state that companies must have employee handbooks or how often an employee handbook should be updated. However, crafting an employee handbook and frequently reviewing and updating employee handbooks are good ideas once a company has more than two employees. In addition, employers may consider implementing an arbitration agreement within their employee handbook and obtain a signed receipt and acknowledgment form from each employee, showing receipt and understanding of the handbook.

On August 26, 2020, in the case of Conyer v. Hula Media Services, LLC. Et al., the California Court of Appeal reversed a trial court ruling invalidating an arbitration agreement contained within an employee handbook. Plaintiff employee Michael Conyer singed and acknowledged receipt of his employer’s, Hula Media Services, employee handbook. The signed acknowledgement read as follows:

“This is to acknowledge that I have received a copy of the Employee Handbook. This Handbook sets forth the terms and conditions of my employment as well as the right, duties, responsibilities and obligations of my employment with the Company. I understand and agree that it is my responsibility to read and familiarize myself with all of the provisions of the Handbook. I further understand and agree that I am bound by the provisions of the handbook. I understand the Company has the right to amend, modify, rescind, delete, supplement or add to the provisions of this Handbook, as it deems appropriate from time to time in its sole and absolute discretion.”

When Conyer was terminated two months later, he sued Hula for claims under the Fair Employment and Housing Act for unreimbursed business expenses. Hula filed a motion to move the case from court to an arbitrator pursuant to the arbitration agreement in the employee handbook. The trial court denied Hula’s motion and kept the case in court. Hula appealed the decision. Conyer argued that Hula never mentioned the arbitration agreement. The Court of Appeal ruled that in California a party is bound by a contract even if he did not read the contract before signing it.

This case highlights the importance of frequently reviewing and updating employee handbooks and including employee receipt and acknowledgment forms. Employers can update any policy within their handbooks at any time without prior notice to employees. Revised versions of the handbook should be provided to all employees and a new signed receipt and acknowledgment obtained.  

The employment law attorneys at Schneiders & Associates, L.L.P. work with employers of all sizes to develop a tailored and specific employee handbook. Whether you are contemplating crafting an employee handbook for your business, or would like us to review or update your existing handbook, contact our office to request an Employee Handbook Questionnaire and to schedule an appointment to discuss your company’s policies and handbook needs.

By: Ted Schneider, Esq.

Returning Employees to Work During COVID-19

Ventura County is entering Stage 2 of California’s Resilience Roadmap. That means office-based businesses are now being permitted to reopen; however, before doing so business owners must be sure that they can affirmatively answer the following four questions:

  1. Is re-opening consistent with applicable governmental orders?
  2. Can the business implement the recommended health and safety actions?
  3. Can the business conduct ongoing monitoring?
  4. Have you registered with the County of Ventura?

In order to satisfy the above criteria, businesses must implement the following, prior to reopening their doors:

Develop and implement a COVID-19 Prevention Plan

To satisfy the above criteria, businesses must implement a workplace plan of action prior to reopening its doors. Employers must have a written “worksite-specific COVID-19 Prevention Plan” that must be posted throughout the workplace. There must also be at least one employee whose sole job is to make sure that the Prevention Plan is being followed.

Social-Distancing Requirements

Employers should promote, encourage, and enforce social-distancing rules, such as complying with 6-feet of social-distancing at all times and limiting the number of employees in one workspace (cubicles, warehouses, open spaces, mail room, etc). Other steps should include removing or blocking common area seating, limiting, or prohibiting non-employees from coming into the worksite (including spouses, rides, friends, and customers/clients when possible). Following this practice will keep the number of people in a given location at a minimum.

If employees eat on site, provide an adequate number of tables to meet social-distancing requirements. Employees who are friends should not pull up additional chairs, etc. Encouraging employees to eat outside will also limit the number of people sitting together during rest breaks. Remember to provide adequate shade, water, and access to the building.

Enforcement will require the business owner to be proactive and attentive to things that they may have taken for granted in the past. Enforcement includes notifying employees that they will be disciplined for violating the workplace social-distancing polices and posting the requirements in obvious places.

Cleaning and Disinfecting

Cleaning and disinfecting the workplace will require businesses to provide sanitizer stations and sanitary hand wipes. Reducing the risk of exposure, such as sanitizing desks, tabletops, work-stations, and keyboards – especially if employees share workstations or computers – is an important part of reopening. New signage, such as “Wash Hands” should be numerous and in visible locations (entrances, bathrooms, inner office doors, elevators, keycard scanners, etc.).

Face Mask Requirement

If your business is requiring the use of face masks for people entering your place of business, post adequate signage and provide notice when possible. Consider having face masks available. Do not put employees in a position to enforce the face mask requirement. Have a system in which employees can notify management or security. Face masks mandates are becoming stricter "around the world," which includes Ventura County employers! Here are some things to remember:

  • Cloth face masks are acceptable.
  • Face coverings do not protect the wearer and are not personal protective equipment (PPE).
  • Face coverings can help protect people near the wearer, but do not replace the need for physical distancing and frequent handwashing.
  • Employees should wash or sanitize hands before and after using or adjusting face coverings.
  • Avoid touching eyes, nose, and mouth.
  • Face coverings should be washed after each shift.

Remote Work and Staggered Shifts

Let employees work remotely when possible or stagger work shifts, alternating remote and office on Monday, Wednesday, Friday and Tuesday and Thursday. Staggered rest breaks and staggered meal breaks do not violate California Labor Code.

If you are an employer and need help with implementing the proper return-to-work procedures, or if you have questions, please contact an experienced employment law attorney at Schneiders & Associates today!

By: Chris Correa, Esq.

Other Resources:

WHO: https://www.who.int/emergencies/diseases/novel-coronavirus-2019/technical-guidance-publications?healthtopics=b6bd35a3-cf4f-4851-8e80-85cb0068335b&publishingoffices=aeebab07-3d0c-4a24-b6ef-7c11b7139e43&healthtopics-hidden=true&publishingoffices-hidden=true

CDC: https://www.cdc.gov/coronavirus/2019-ncov/index.html

OSHA: https://www.osha.gov/Publications/OSHA3990.pdf (brochure)

DOL: https://www.dol.gov/agencies/whd/pandemic

Ventura County: https://www.vcemergency.com/vc-reopens (attestation forms for reopening and forms for Prevention Plans)

Authorities: World Health Organization (WHO), Center for Disease Control (CDC), Occupational Safety Health Administration (OSHA), Department of Labor (DOL), Ventura County Emergency (VCEmergency)

Continuing to Operate Your Corporation During A Global Pandemic

COVID-19 has presented corporations with never-before-seen obstacles due in part to social distancing requirements, which have disabled directors and shareholders from meeting. Now is the time to update your corporate bylaws to allow your board to continue to operate during this global pandemic!

In January of 2014, the Corporations Committee of the California State Bar, spearheaded adding new provisions to the California Corporations Code to provide some flexibility in corporate governance during a state of emergency. The Corporations Code was amended in three important ways.

First, an article was added to acknowledge that bylaws may contain provisions to manage and conduct ordinary business during an “emergency,” such as COVID-19. The Code allows for bylaws to be amended to allow the board of directors to continue operations with special rules for calling board meetings and designating additional or substitute directors, if some directors are unavailable to participate.

Second, the California Corporation Code allows corporations to amend the lines of succession in the event of incapacity of a director, officer, employee or agent of the corporation, resulting from crises such as the COVID-19 emergency.

Third, corporations may give notice to directors of board meetings in any practical manner, when notice cannot be given as otherwise required by the bylaws or by the Code.  If necessary, corporations may also deem that one or more officers present is a director, in order to achieve a quorum.

The Code does not, however, eliminate the requirement of shareholder approval when it is otherwise required by law or the articles of incorporation. Under the current circumstances, because directors and shareholders may not able to meet, the Code and amendments to bylaws can address current pandemic or similar emergency situations in the future. These recommended amendments can allow the corporation to be operated properly.

If you have questions about updating your bylaws, please contact a business law attorney at Schneiders & Associates, L.L.P. for advice and legal guidance.

By: Roy Schneider, Esq.

Expert Trial Testimony on the Corporations Code

An attorney may competently testify as an expert witness on a seemingly pure legal question if the testimony involves the intersection of corporate articles or by-laws, on the one hand, and the Corporations Code on the other hand. I recently testified in a bifurcated trial, where the judge decided the first half and then the second half was reserved for a jury decision. The bifurcated issue required the trial judge to form a complex understanding of a corporation’s by-laws as compared to the Corporations Code. Luckily, I brought my Corporations Code book with me to the witness stand.

Was the board of directors meeting properly noticed? The by-laws and the Code supported my opinion—yes, the meeting (which plaintiff skipped) was correctly noticed and could properly be conducted with the remaining directors present and voting. I concluded that the director who called the meeting was permitted to delegate responsibility for sending meeting notification by email to her assistant who was not a corporate director.

Electronic notice of a directors or shareholder meeting is proper under some by-laws. If not specified in the by-laws, the Corporations Code permits notice by electronic transmission by the corporation. [Corp. C. §§ 307(a)(2); 601(b)]

Was the meeting properly suspended and reconvened the next day? The by-laws can limit the body’s ability to suspend and reconvene. If the by-laws do not set any limit, the Corporations Code permits it.

Was the vote count correct? The absent director claimed he actually held a double vote, so his absence cancelled the remaining directors’ power to take action. My opinion— no, the director did not have a double vote and no, the absent director did not destroy the quorum at the meeting he skipped.

The court was appreciative of my two-hour seminar on corporations law, and I was even nice enough to loan my code book to opposing counsel during my testimony. After forty (40) years teaching and practicing corporations and business association law—counseling many LLCs on whether to incorporate or form as an LLC—I have seen just about every type of partnership, LLC and corporation dispute there is. The Code is like a bible when it comes to meeting compliance.

By: Roy Schneider, Esq.

Roy Schneider recently testified as an expert witness in a shareholder dispute trial on issues of shareholder and director voting, meeting notices, and the process for removal of a director. Roy has almost 40 years of experience as a corporate attorney and is available to serve as an expert witness in corporate disputes and to assist litigators preparing for trial. Roy regularly speaks before business and community groups about corporate compliance. Roy is also an Adjunct Professor of Business Law at California Lutheran University in Thousand Oaks.

Please contact our office at 805-764-6370 regarding Roy’s availability.

Lunch & Learn: Annual Employment Law Update 2020 – Santa Barbara Chamber of Commerce

Name: Lunch & Learn: Annual Employment Law Update 2020

Date: February 25, 2020

Time: 12:00 PM - 1:30 PM PST

Website: Register Now

Event Description:

New employment laws have gone into effect since January 1, 2020! Topics include new laws and requirements that will affect employers in 2020. The Chamber of the Santa Barbara Region invites employers, human resource professionals and business owners to a 2020 Employment Law Update. Attorneys Roy and Ted Schneider of Schneiders & Associates will present topics including employment classification, employment arbitration agreements, expansion of paid family leave, and much more! Event Media:

Location: Workzones
351 Paseo Nuevo 2nd Floor
Santa Barbara, CA 93101

Date/Time Information: Tuesday February 25, 2020

12:00pm - 1:30pm

Fees/Admission: $5 for Members
$15 for Non-Members

Lunch will be provided.

Roy Schneider Elected to Community Memorial Healthcare Foundation Board of Directors

It is with great pleasure that we announce that Schneiders & Associates’ Partner Roy Schneider has been elected to serve on the board of directors of the Community Memorial Healthcare Foundation!

Community Memorial Healthcare Foundation is a charitable, nonprofit organization that helps elevate the quality of healthcare in our community by supporting Community Memorial Hospital (CMH) to offer state-of-the-art healthcare facilities, industry-leading programs, and comprehensive, accessible health services.

Community Memorial Healthcare Foundation is led by a member-elected board of directors that includes dedicated, hardworking individuals from throughout Ventura County. The board members volunteer their time because they are passionate about supporting healthcare in our community, and they receive no compensation for their services. Each member contributes a unique blend of knowledge, skills and resources, and together their diverse capabilities and strengths position the board to achieve its goals now and in the future.

Congratulations, Roy! Thank you for your service!

The Latest IRS Mindset – ENFORCEMENT!

The IRS Commissioner, Charles “Chuck” Rettig, a former Los Angeles-based tax lawyer of 38-years, has been diligently making his rounds at virtually every major tax conference around the country. 

The message –

            “I’m an enforcement guy, I’m a taxpayer service guy. I hope to touch every aspect of the tax service.”

he said to an audience of over a thousand accountants at the 2019 American Institute of CPAs’ Engage conference. 

He went on to say:

            “The IRS has the ability to help this country, and this country has the ability to help the world, and as tax pros, you have the ability to help the IRS.”

He called on tax practitioners to help taxpayers and the IRS resolve issues quickly and transparently, by saying:

            “It’s the responsibility of everyone here to get there first -- if your clients have issues, clean it up fast. I believe tax practitioners need to do the right thing. If you discover problems in preparing for an IRS exam [audit], let us know.”

On the tax enforcement front, he said: 

            “Taxpayers who are trying to do it right will have my support. Those who wake up with an idea of a creative way not to pay tax,  I’m paying attention to that. We will have a much greater presence on enforcement than before. We will be in every neighborhood that we can be, we’ll be touching people, but a fair touch.”

PAYROLL TAXES

One area where the new enforcement mindset has taken hold is in the payroll tax arena.  

Inside word has it that IRS agents recently received a one-week long refresher course to help them better spot payroll tax non-compliance problems.

The new approach is simple, somewhat harsh, but not necessarily unfair.  If a company paid someone as an independent contractor and did not issue a 1099, the IRS will give the company 3 options (take your pick):

  1. The auditor can open a payroll tax case and assess:
  2. the payroll tax (15.6% for Social Security and Medicare), plus
  3. the employee’s income tax that should have been withheld, plus
  4. failure to file penalties (25% of the taxes assessed), plus
  5. failure to deposit penalties (15% of the taxes assessed), plus
  6. Interest on the taxes and penalties at the current rate (ranging between 4% to 6% per year); or,
  7. The auditor can impose a Backup Withholding Penalty of 24% on the amount paid to the contractor; or,
  • Disallow (throw out) the expense and assess additional tax on the amount (depending on the taxpayer’s tax rate, that could cost between 25% to 37% of the amount disallowed), plus perhaps a 20% penalty on the tax, and interest too.

Which road a taxpayer chooses depends on the taxpayer’s particular circumstances, and whether this is a one-off situation; or, whether the taxpayer has many service providers that fall under this scenario.

THE NIGHTMARE SCENARIO

The biggest consideration is trying to contain the problem to the year under audit, and hope the IRS does not go back in time 3 or more years; and, whether the State of California may follow the IRS’ approach, or take a harsher approach. 

A business can be crippled by a payroll tax audit.  A stitch in time…

By: John Balian, Of Counsel

Don’t Let Your Social Networking Activities Undermine Your Divorce Negotiations

According to the American Academy of Matrimonial Lawyers, in the past five years 81% of its members have represented clients in cases involving evidence from social networking sites, such as Facebook, Twitter, YouTube and LinkedIn. Posted pictures and comments can make the job all-too-easy for your former spouse’s attorney to attack your credibility and ensure you do not receive the relief that you are requesting from the court.

A picture is worth a thousand words. And that picture you posted of yourself, in various stages of undress, or with a marijuana cigarette in one hand and a drink in the other, speaks volumes to the court and can result in unfavorable rulings regarding child custody or visitation. But the information posted doesn’t even have to be tawdry or illegal to land you in trouble. What about the ex-husband who claims he has no income, but his Facebook profile is chock-full of photos of luxury purchases or exotic vacations? What about the parent who posts profanity-laden status updates, insulting the judge’s competence? Should it find its way into the court, none of this information is going to help your case.

All of these communications can be considered by the court in making its rulings. Nothing you post online is 100% private, regardless of your privacy settings. Opposing attorneys can always subpoena the records, share your dirty secrets with the court, impeach your credibility, and obtain a favorable ruling for their client – your ex-spouse.

The lasting implications of a negative court ruling can far outweigh the momentary, fleeting satisfaction of venting your frustration at the judge or your ex, or sharing “fun” photos on your Facebook profile. The bottom line is that you have to think before you post. What if that comment you are about to make, or the photo you are about to post, were to fall into the hands of your ex-spouse’s lawyer? This can have far-reaching consequences, affecting your income and support obligations, or visitation and custody of your children.

To avoid the pitfalls of information sharing in the digital age, you must assume that anything and everything you post will be obtained by opposing counsel and find its way into the courtroom. Family law cases involve some of our most private matters and care should be taken to ensure you protect your own privacy. Preserve your attorney-client privilege by refraining from sharing any details of your relationship or conversations with your attorney. Avoid posting compromising photos, or making derogatory remarks on your social networking profiles.

Above all, do not post anything you wouldn’t want your ex, his or her attorney, or the judge to see. Regardless of how restrictive your privacy settings may be, this information can easily be subpoenaed and become a part of the court record. If there is any doubt, do not post. You cannot “unring that bell!”

If you are in need of a family law attorney, contact Schneiders & Associates to speak with a Family Law Specialist today.

Neighbor Disputes: Property Boundaries

Disputes with neighbors can range widely, from loud parties, to poor upkeep, to boundary encroachments. If you are like most property owners, you take great pride in your land, and you do not want anyone to use property that is rightfully yours. When neighbors start taking down shrubs, planting trees, or putting up fences on your property, that is exactly what they are doing—using your real estate. What can you do to deal with these issues?

Know Your Property Lines

Many people generally understand where their property reaches, but they may not know precisely where the property line is located. In many situations, merely pointing out where you think your property lines lie can halt encroachments in their tracks. In other circumstances, it may be a good idea to call in a professional.

You can get a formal land survey done that indicates exactly where your property ends and where your neighbor’s land begins. Having this information can be extremely valuable in dealing with any boundary issues. You may learn that you have misunderstood where your property line is located, or that your neighbor was mistaken about where your property begins.

Land surveys do cost money, but some neighbors will agree to split the costs. In other situations, it may be worth the expense to avoid litigation down the road.

Common Property-Related Problems

Many property-related disputes have similar causes. These may include:

  • Debris or damage from trees or other plants. In most situations, plant debris such as leaves or seeds are natural occurrences. As a property owner, you are responsible for dealing with this waste, even if you do not own the tree or another plant. However, if a tree causes damage by, for example, falling on your house, then the tree owner is responsible for that type of damage. You can carefully trim the branches of a tree that is rooted in your neighbor’s yard but that overhang into your yard, but you may not kill or damage the tree in the process.
  • Dogs and other pets. Pets can wander onto your property if they are not restrained or appropriately contained. They may soil in your yard or dig up your flowers. While these activities are generally just a nuisance, wandering animals can be dangerous in some situations. As a rule, a pet owner is responsible for any damage that their furry fiend causes, especially if the pet crosses into a neighbor’s yard.
  • Trespassing neighbors. Some neighbors have very little respect for your property. If they are coming on to your land without your permission, they are trespassing. Talk to them about this issue. If it cannot be resolved, then you can begin legal proceedings to keep them off your land. In fact, trespassing is often a criminal offense!

Dealing with Neighbor Disputes

It is almost always a good idea to talk to your neighbor about any problems you are having first. Many people can work things out informally. If your neighbor is unreasonable or you cannot come to an agreement, you likely have other options. For example, you may be able to sell a portion of your property to the neighbor who is encroaching. If you simply want the land back, starting a civil suit may be a good option as well. If you are having difficulty with your neighbor over your property lines, a real estate attorney at Schneiders & Associates can certainly provide with you advice and guidance.

By: Ted Schneider, Esq.