Articles Posted in Business structuring

Do you own a home health care agency or nurse registry? Safeguard your referral sources through a non-compete agreement and enforce it!

The home health care industry generally includes businesses that provide skilled nursing, physical therapy, and other health-related services to homebound patients.  If you run a home care company, you know that referrals are crucial.  This is because patients typically seek out home care services after a referral from a “middle man,” such as a physician, hospital, or skilled nursing facility. As a result, home care companies hire marketing representatives to promote the companies and cultivate relationships with the middle men in hope of securing future patient referrals for their business.

Imagine that you hire such a marketing representative, train her, and give her access to your company’s internal referral source database, preferences, and strategies.  Naturally, you want to protect your sources, so the representative signs a confidentiality and non-compete agreement as part of her employment contract.  After some time, the representative quits, and all of a sudden you start receiving significantly less referrals from the sources that the representative worked on while employed by you.  Coincidence?  It turns out that the representative started working for your direct competitor and used her relationship with your precious referral sources to your competitor’s benefit, in direct violation of the non-compete agreement.  Surely the law is on your side, right?

Great news for Creditors! Up to 20 years to enforce a domesticated foreign judgment

Over 30 years ago, Florida enacted the Florida Enforcement of Foreign Judgments Act (FEFJA) providing a simplified procedure for domesticating foreign judgments.  In other words, FEFJA allows a judgment from any other US state or the US federal government to be recognized and enforced as if it were a Florida judgment.  Until recently, Florida creditors remained uncertain as to one crucial aspect of this important mechanism – what is the “expiration date” of a domesticated foreign judgment?

To understand the implications of this issue, we must look to the applicable statute of limitations.  Under Florida law, the expiration date for a judgment or decree issued by a Florida court is 20 years.  Fla. Stat. 95.11(1).  Contrarily, a judgment or decree of any court of the United States, any other state or territory in the United States, or a foreign country, expires after only five years.  Fla. Stat. 95.11(2).  Therefore, the question as to which of these time limitations apply to a domesticated foreign judgment clearly bears far-reaching consequences.

MORE MONEY, MORE PROBLEMS? 6 DO’S AND DONT’S OF ESTATE PLANNING AND INTELLECTUAL PROPERTY

At the end of last year it seemed as if every day there was a new report of a celebrity dying unexpectedly. As fans around the world mourned the death of some of Hollywood’s most iconic figures, reports of their estate planning, or lack thereof, also filled the headlines.

Prince: Intestacy and streaming music rights collide

FIRPTA: Increased Withholding and Other Changes

Most professionals have familiarity with the Foreign Investment in Real Property Tax Act (“FIRPTA”), especially those that have foreign clients investing in U.S. real estate. On December 18, 2015, the President signed into law the Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”).  The PATH Act significantly alters FIRPTA withholding for foreign persons disposing of investments in U.S. real estate.  Realtors, accountants, closing agents and title companies need to familiarize themselves with the changes.

The PATH Act increases the FIRPTA withholding rate from 10 percent to 15 percent on certain dispositions and distributions of United States Real Property Interests (“USRPIs”).[1]  Similarly, the withholding rate for the transfer of a partnership interest or the beneficial interest in a trust or estate has been increased from 10 percent to 15 percent.[2]  The new withholding rate applies to all such dispositions that take place after February 16, 2016.[3]  However, the new FIRPTA rules allow for a 10 percent withholding rate where the amount realized on the disposition of property being used as a residence is between $300,000.00[4] and $1 million.[5]  In other words, if a foreign person sells his or her personal residence for $999,000.00 the amount to be withheld shall be $99,900.00.  However, if the foreign person sells his or her personal residence for $1,000,100.00, the amount to be withheld on the sale shall be $150,015.00.  The amount withheld is offset by the gain on the disposition of the USRPI and is refundable to the extent the amount withheld exceeds the underlying tax liability.[6]  The increased FIRPTA withholding rate is not an actual increase in tax, but a means of ensuring compliance with U.S. tax law.  An exemption found in the old rule remains in place, providing that a foreign person is not subject to FIRPTA withholding where the property sold is used as a residence and the amount realized does not exceed $300,000.00.[7]

Trust Protectors: An Extra Layer of Protection

Traditionally, a trust has three main participants, a settlor, a trustee, and one or more beneficiaries.  A settlor creates and/or contributes property to the trust.  A trustee manages and holds the property in the trust for the benefit of other people who are said to have a “beneficial interest” in the trust.  Beneficiaries are the people who have those beneficial interests.  For example, a father, acting as a settlor, might create a trust, naming his wife as the trustee, to distribute money for the benefit of their children, who are the beneficiaries of the trust.  However, a fourth participant has increasingly been used in trusts: the trust protector.

Historically, trust protectors were mainly used in offshore trusts and rarely in domestic trusts.  A trust protector acts as an extra layer of protection for the settlor.  A trust protector is customarily appointed to supervise the trust and ensure that the settlor’s intent is effectuated.  A trust protector may have the power to modify terms of a trust to ensure that the settlor’s intent is carried out.

When Wills Mean Business: Planning for Your Business’s Future

Planning for the future is not only necessary in your personal life, but also in your professional life, especially if you either own a business or invest in a business.  Putting an estate plan in place early on, and keeping it updated to reflect changes in the business, can protect your business in the event of your death.  Two South Florida examples illustrate the necessity of planning ahead for your business.

In November 2015, Pebb Enterprises LLC, based in Boca Raton, suffered the loss of two of its managing principals and five employees in an airplane crash.  The plans put in place by the principals kept the company in business after the devastating event.  In contrast, after the death of its president, Naples based Vantage Lighting was undervalued and dissolved, because the president died without a will.