Invited by the CUNY Asian American/Asian Research Institute and the Asian-American Entrepreneurs Network, Julia Cheng, Esq. speaks on this panel discussing the tricks of trade regarding monetizing a business’ intellectual property in various contexts such as company valuation, licensing and other related issues.
Ohio Creditor Protection Legacy Trust
Creditor Protection Trust (also known as an Ohio Legacy Trust)
Prior to 2013, if you created a Trust for your benefit (meaning you could still use the money or property) your creditors could reach the Trust assets. Effective on March 27, 2013, you will now be able to create a Trust, for your benefit, that is protected from creditors. In Ohio, this is known as an Irrevocable Legacy Trust; other states have referred to it as a Self-Settled Trust.
The Trust allows you to insulate a portion of your assets from creditors. This is important for professionals who have a large amount of potential liability (including doctors, dentists, chiropractors, financial advisors, accountants, attorneys, and professional athletes). This type of creditor protection trust could also be useful for individuals who would like to shelter assets from future medical and nursing home expenses; specifically for Medicaid planning.
How much of the Trust can you access?
If you put assets into a Legacy Trust, there are limitations on the use of those assets. For liquid, financial assets you can only use:
(1) The current income from the Trust assets and
(2) Up to 5% of the principal (annually)
The Trust assets can be used to pay the income tax attributable to the assets. In addition, the Trust can be used to pay debts, expenses, or taxes of your Estate after your life. At all times, an Ohio Legacy Trust would be managed by a third party (not the person who set it up). But, as the creator of the Trust, you can replace the Trustee at any time (provided you cannot appoint yourself).*
Does a Legacy Trust protect against all creditors?
The purpose of this type of Trust is to reward those who plan; not those who wait. There is a Fraudulent Transfer Statute in Ohio which prevents a person from giving away assets with the specific intent to avoid payment of known creditors. Thus, it is important to plan before the creditor protection is necessary.
If the Legacy Trust is created prior to a marriage, it is possible to limit the assets exposure to a potential property distribution in a divorce. This type of planning should be done along with a prenuptial agreement.
For purposes of public policy, this creditor protection cannot be used to avoid payment of child support or alimony.
For more information on Estate Planning in Cincinnati, Ohio contact Attorney Elliott Stapleton. Elliott is a partner with CMRK Law and provides Estate and Probate services to clients in Cincinnati. Elliott also represents startup companies and established businesses throughout the State of Ohio with LLC formation, Trademark and Copyright registration.
*A Legacy Trust also allows you to make a donation to a charity and retain an interest (which could pay you income for life remainder to the charity) or create a place your primary residence into the Trust and leave the remainder to your children.
Bank’s Acceptance of Late Payments in Commercial Mortgage Default Does Not Modify Mortgage, NJ Appeals Court Rules
In a recent decision that merits the attention of borrowers and lenders in commercial real estate foreclosures, the New Jersey Appellate Division held that a lender’s acceptance of numerous late payments did not constitute a modification to the mortgage or result in curing the borrower’s mortgage default. Bank of America v. Princeton Park Associates, L.L.C., Docket No. A-0927-11T3 (App Div., November 8, 2012). Consequently, the Appellate Division affirmed the trial court’s granting of summary judgment in favor of the lender.
The facts of the case are rather straightforward. Princeton Park Associates involved a commercial real estate loan transaction. The lender’s loan documents contained the standard default and acceleration provisions. Also, the promissory note included the following provisions: (i) no failure by the lender to accelerate the debt pursuant to the default provisions would constitute a waiver of the lender’s rights to insist on strict compliance with the terms of the note or any of the other loan documents; and (ii) the loan documents could be modified only by written agreement. The mortgage that secured the note contained a similar provision requiring modifications to be in writing.
The borrower, Princeton Park Associates, defaulted on the loan on September 10, 2007 by beginning to make payments 60 days past the due date. The reason for the default is immaterial for purposes of this discussion. In any event, the borrower’s practice of tendering late payments and the bank’s acceptance continued for almost a year. From September 2007 through March 31, 2008, Bank of America issued a series of default letters to the borrower declaring the loan in default, demanding payment of the entire balance owed, plus interest and late fees, and that it was not waiving any of its rights under the loan documents to foreclose on the loan. The parties continued discussing possible loan modification solutions, exchanged proposed agreements, and even met face-to-face, but no modification agreement was ever reached.
After August 6, 2008 the borrower ceased making payments on the loan. Regardless, the borrower and the lender’s servicing agent continued having discussions into 2009. After additional efforts to reach a settlement proved unsuccessful, Bank of America filed a foreclosure complaint on October 16, 2009 based upon the borrower’s default. The borrower filed a contesting answer denying it was in default because of the bank’s acceptance of the late payments.
Bank of America moved for summary judgment contending the borrower defaulted on the loan. In response, Princeton Park Associates argued that the terms of the loan had been modified because the bank accepted its late payments, and thus no default occurred. The trial judge rejected the borrower’s defense, relying on the express terms of the loan documents requiring modifications to be in the form of a written agreement. The trial judge remarked about the borrower’s failure to present any evidence that such a written modification had ever occurred, and concluded that the bank’s acceptance of late payments did not serve to modify the loan because the bank was entitled to these payments and disclaimed any waiver of rights in its default notices.
Following the trial court’s ruling, the lender obtained a final judgment by default. The appeal then ensued, with the borrower arguing that the trial judge erred in granting summary judgment because it was not in default on the loan because of the bank’s acceptance of the late payments. The borrower also presented an argument that the bank lacked standing, but that portion of the appeal is not discussed here. The Appellate Division affirmed the trial court’s ruling in all respects, though interestingly did not recite any case law to support its conclusion that the bank’s acceptance of late payments did not rise to the level of a loan modification agreement. Instead, the Appellate Division relied on the express terms of the loan documents, to wit:
PPA [Princeton Park Associates] also argues it was not in default because the terms of the loan were modified when Capmark accepted the late payments. However, the Loan Documents each specifically provided that they could not be modified orally and that a written agreement signed by both parties was needed before any modification could occur. In addition, Capmark continually advised PPA that its acceptance of the late payments would not act to waive the Bank’s rights under the Loan Documents to foreclose on the Building.
Opinion * p. 17.
Courts do not rewrite unambiguous contracts to provide a party with a better or different agreement than that bargained for. See, e.g., Washington Constr. Co., Inc. v. Spinella, 8 N.J. 212, 217 (1951); Bar on the Pier, Inc. v. Bassinder, 358 N.J. Super. 473, 480 (App. Div. 2003), certif. denied, 177 N.J. 222 (2003). While the Appellate Division in the Princeton Park Associates case does not cite this principal of law, it seems clear to me that the concept of enforcing an unambiguous commercial loan agreement as it is written stands behind the Court’s decision.
Contact our NJ foreclosure attorneys for questions about this case or any other aspect of New Jersey foreclosure law and procedure.
What Causes IRS Audits?
It’s estimated that only about 1 percent of taxpayers are audited by the Internal Revenue Service (IRS). If you’re playing by percentages and filing your taxes on time and correctly, chances are you’ll never hear a peep out of them. But for the taxpayers that do, seeing the words “you’re being audited” on a letter from the IRS can be frustrating, annoying and potentially very costly.
Specifically, being audited means that the IRS is checking up on you and your finances to ensure that your taxes were filed correctly. Although it’s not unheard of for the IRS to randomly select taxpayers and businesses to audit, the decision to audit is normally triggered by some sort of statistical outlier on your tax return compared to a pool of similar tax returns that yours is grouped in. The IRS is also more likely to audit the more high-income taxpayers. For instance in 2008, some 5.6 percent of those audited made more than $1 million, whereas fewer than 1 percent of taxpayers making less than $200,000 were audited.
We already told you about why the IRS may order an audit based on the statistical discrepancy reasoning, but here’s a look at more of the specific situations in which the IRS could check up on you and your tax returns:
- Improper Tax Deductions: When filing your taxes, it’s important to be truthful. And a common area where people either make a mistake or fudge the numbers a tad is in tax deductions. There are even certain deductions that send “red flags” to the IRS, such as deducting business expenses that were not reimbursed.
- W-2/1099 Discrepancies: Businesses are required to submit W-2 forms and 1099 forms to the IRS for each person they employ. And these forms are always cross-referenced by the IRS with the taxpayer them self. So if the numbers don’t add up between the two forms that were submitted on behalf of the business and by the employee, the computers the IRS uses will catch it. The result could be an audit, either to the business itself or the employee taxpayer.
- Schedule C: Solo proprietors are required to fill out Schedule C forms, which detail profits or loss from a business. Solo proprietors pay significantly less in taxes than those that are incorporated, so the IRS more carefully examines these forms to make sure you’re paying the correct amount of taxes. Even if you file correctly, the IRS may still want verification.
- Early Filing: Believe it or not, timeliness may not be in your favor when filing. It’s projected that those who file their taxes closer to the deadline are less likely to be audited compared to those who file early.
- Entertaining: If you own a business, chances are at one time or another you’re going to be out there entertaining customers. Businesses can claim up to 50 percent of dining and entertainment expenses on their tax returns. However, the IRS doesn’t like to see expensive parties written off and may ask for clarification between what’s an entertainment expense or just a regular business expense.
Bottom line: To avoid being audited, always be truthful on your tax return. You might even consider hiring an expert to help you understand what can and cannot be deducted when filing. If you have IRS tax issues, learn how to stop wage garnishment problems from a reputable tax attorney.
Weird Tax Laws Around The World
As everyone knows, tax laws are one of the certainties of life. Most of us are aware of income tax and sales tax, but did anyone know that most countries around the world taxes prostitution. We had a closer look at some of what we call the weirdest tax laws around the world.
Weird Tax Laws From Different Parts of The World
Just look at Tennessee’s tax law on the possession of illegal drugs. Apparently, you have up to 48 hours to report the fact that you are in possession of illegal drugs to the Department of Revenue. Wouldn’t you assume that such a tax would not be paid for fear of getting arrested on reporting being in possession of illegal drugs?
Why Weird Tax Laws Gets Enforced
Often times some weird tax laws get passed to help some states to close their budget gaps. Just take a look at some weird tax laws that were passed in the US back in 2010:
- Making candy without flour was taxed by the state of Washington. “Lemon Drops” and “Rainbow Whirly Pops” were taxed due to this law being passed while “Peppermint Bark Shortbread” was exempt of any tax.
- In Texas, belt buckles were taxed while belts on its own were exempt.
- Then there was another strange tax law on bagels that were eaten at the bagel shops in New York. If you eat the bagel as the shop, then you must pay tax on it. But, when you took it home with you, it was exempt from any sales tax.
- If you are ready for some laughter, then you need to hear this. Taxes were proposed on cow flatulence in some European countries, including Denmark and Ireland. The Irish managed to quickly squash the laws that they wanted to pass on penalizing cow owners at $18 per animal for emitting methane through burping and flatulence. In Denmark, the tax officials wanted to charge as much as $110 per cow due to the Food and Agriculture Organization claiming that as much as 18% of the green house gases are being emitted from livestock.
- In Ohio if you happen to ignore an orator on Decoration Day by playing croquet of by pitching horseshoes within a mile of where the speaker stands, you can expect to be fined as much as $25. It is also regarded as illegal to get a fish drunk.
- Apparently back in 2009, people in China (Hubei province) were forced to buy more cigarettes than what was normally the case. Government official were pushed to smoke close to a quarter of a million packs of cigarettes in an effort to stimulate the economy during the financial crisis.
Isn’t it just strange and weird what tax laws are brought out in an effort to boost the particular country or state’s revenue?
OFCCP Proposes Regulation Requiring Contractors to Set Hiring Targets for Disabled Workers
This article provides details and policy opinions about a plan recently proposed by the Office of Federal Contract Compliance Programs (OFCCP) which would require federal contractors and subcontractors to have a certain percentage of disabled workers in their workforce. The article also notes the thorny complications this requirement would pose, and poses a number of unanswered questions surrounding this proposal.
– Summary by FizzLaw Team
Read the Article at:
OFCCP Proposes Regulation Requiring Contractors to Set Hiring Targets for Disabled Workers
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