Quote of the Day - There is a certain inevitability to a couple of things. Death and taxes come to mind. However, death doesn't get worse every time the legislators come together.
What Adds Up When You Combine Trusts, Corporations, Foundations & Offshore Entities?
That's tax evasion, according to the United States Senate Permanent Subcommittee on Investigations, especially if you whip in a couple of foreign banks from Switzerland and Liechtenstein. A report issued by the Subcommittee today blames the loss of billons of tax dollars on this combination.
As most people know, there are two things very hard to avoid: death and taxes.
Even so, the report blames banks and U.S. citizens trying to avoiding taxes by moving money to these offshore banks. Unfortunately for both, former employees of the banks gave up information to the IRS about the banks and the people moving money offshore.
The Subcommittee is investigating and you can be sure the IRS isn't far behind. Big deals aren't just for the rich, however.
Even so, there are some common misconceptions about trusts and offshore entities. It's a legitimate tactic to move money offshore. It's legitimate to shelter your assets from just about everyone but the IRS. You still have to pay taxes. You may be able to use an offshore transfer to avoid a judgment, as long as you do so well before someone sues you.
The government will allow you to do so to avoid judgments and the like, just not income taxes. On the other hand, moving money into a trust will help avoid probate taxes. Perhaps avoid isn't the right term. Delay is perhaps better.
See the third paragraph above about death and taxes.
By moving money into a trust, you can pass assets along to heirs without going through probate because the trust doesn't die when you do. A trust "stays" alive. For asset protection, though, it's almost worthless. Trusts work for delaying taxes, just not for judgments.
As with just about everything else I write, this post isn't legal advice, and whether trusts and offshore banks are appropriate depends significantly on a great number of things I haven't included here. So, if you're in need of asset protection and delaying taxes, talk to your lawyer.
Consider the advice of my accountant: be happy if you're paying a lot of taxes; it means you're making a lot more money.
But I still don't like paying taxes, and I'm guessing you don't either.
Lawyer 2 Lawyer Internet Radio Gets Its Bearings on Bear Stearns
Last week Ralph R. Cioffi and Matthew M. Tannin, both former hedge fund managers for Bear Stearns, surrendered to federal agents and were charged with nine counts of securities, mail and wire fraud.
Please join me and my fellow Law.com blogger and co-host Bob Ambrogi as we welcome Attorney Rich Strassberg, a partner in Goodwin Procter's Litigation Department and chair of its White Collar Crime & Government Investigations Practice, to discuss the details of this criminal case.
We explore the Bear Stearns scandal, look into the criminal charges against the ex-managers, the state of the mortgage market, the evidence in their email correspondence, tackle the topic of white-collar crime and look at what criminally can happen to these once successful fund managers.
Lawyer2Lawyer Internet Radio Talks To Jonathan Zittrain About The Future Of The InternetTo many out there the internet is a necessity, but what will the internet look like 10 years from now? Join my fellow Law.com blogger and co-host Bob Ambrogi as he sits down with Harvard Law Professor and co-founder of HLS's Berkman Center for Internet & Society, Jonathan Zittrain, to discuss his new book, The Future of the Internet - And How to Stop It. Bob and Jonathan will also talk about the 10th anniversary of the Berkman Center and Jonathan's concerns and thoughts on the future of the internet.
City's Potholes May Be More Than A Trivial Defect
Admittedly, potholes are not a frequent occurrence here in Southern California. We don't have the freezing and thawing and snow plows scraping the asphalt off the road like they do Back East. I grew up in the snow, and as a kid used potholes as wintertime foxholes to hide and throw snowballs at one another. Some of those potholes even served as tunnels from one side to another.
But I overexaggerate slightly.
So when the Court of Appeal in the case of Strathoulis v. City of Montebello ruled that a one-inch deep pothole did not constitute a "trivial defect" that the City could use to avoid liability, I had to chuckle. But not too hard.
The front end suspension on my car agrees heartily with this ruling, even though the one-inch deep pothole would barely hold an ammunition-sized stack of cannonball-like stack of snowballs. Here, of course, those snowballs would have melted before I could reach the bottom of the pile. But again I overexaggerate slightly.
All joking aside, our plaintiff Joanne Stathoulis tripped and fell in what the court politely refers to as "shallow holes" in a residential street in the City of Montebello. She filed suit against the City of Montebello alleging negligence for the dangerous condition of its street. She fell, struck the pavement, fracturing teeth and causing lacerations to her face.
The City said it had never received a complaint about the potholes and therefore never repaired them. It denied liability for Joanne's injuries and the trial court agreed and granted judgment for the City. Joanne appealed, and the Court of Appeal reversed the trial court and ruled the City may be liable for Joanne's injuries.
Just to be precise, here's the court's characterization: "[The City Inspector] found three holes in the street, about nine feet from the curb. The southernmost gouge was 20 inches long, with a maximum width of six and one-half inches and a maximum depth of one inch. The middle gouge was 19 inches long, had a maximum width of four and one-half inches, and was half an inch deep. The northernmost hole was 24 inches long, a maximum of five inches wide, and had a maximum depth of one inch. The holes were one to four inches apart."
Potholes, plain and simple, and dangerous ones at that.
So now you know. Finally, potholes can get cities and towns into trouble in California. Now the repair trucks will be out in force with hot asphalt to repair those potholes.
No more snowball fights in the streets, though.
How to Get Sued Book Signing At Hollywood Book Festival
If you still don't have your autographed copy, then you can stop by on Saturday, June 12, 2008, from 10:00 a.m. to 5:30 p.m. at The Grove in the old Farmer's Market in Los Angeles. Barnes & Noble is sponsoring the Hollywood Book Festival. You can find How to Get Sued at the Los Angeles Press Club table.
Some 30,000 people are expected. If you stop by early, you can guarantee that you'll get an autographed copy of How to Get Sued, along with the special "Jury Verdict" stamp, and your choice of whether you or your gift recipient are found Guilty or Not Guilty!
Lawyer 2 Lawyer Internet Radio Gets Up Close and Personal with Judge (and Blogger) Nancy Gertner
A very special guest on this edition of Lawyer2Lawyer, Judge Nancy Gertner from the U.S. District Court for Massachusetts, speaks about her experience as a criminal defense attorney, her career rise to jurist and...blogging as a Judge.
Please join me and my fellow Law.com blogger and co-host Bob Ambrogi as we welcome the Honorable Nancy Gertner, recipient of the 2008 Thurgood Marshall Award of the American Bar Association Section of Individual Rights and Responsibilities, recognizing her contributions to advancing human rights and civil liberties.
The Fed Closes The Barn Door; Horses Reportedly Missing
The recession's in full swing and foreclosures are at an all-time high, Bear Stearns folded only to get federal brunch aid to bail it out and we're paying through the nose to import oil from Saudi Arabia while untapped reserves lay quietly beneath the coasts of Alaska, Texas, Louisiana and California.
Oh yes, and don't forget that prosecutors are going to slap those two Bear Stearns fund managers on the wrist to punish those responsible for the foreclosure crisis.
As if all of that weren't enough, now the Fed is going to pass new regulations to protect homeowners from this crisis happening again.
Thanks for protecting us from something that already happened.
In Iowa, we called that closing the barn door after the horses had escaped. In fact, those horses are so long gone their foals are now buying property. With homes on that property. Without jobs, without income and without documents. Such a deal.
Know any good rustlers? I mean mortgage brokers, excuse me. I want to refinance my house now that interest rates are at an all-time low.
If the Fed will let me.
Court Strikes Down Employment Contract Arbitration Provision
Lawyers In The HR Department?
Companies hire lawyers to draft contracts to protect them and the company president or general counsel typically expect the contract to do its job.
Then why do companies who spend attorneys fees get sued and then lose even when they use the attorney-prepared contract?
Here's why: no one explained to the line manager how to handle the contract, or things just got too busy and it fell between the cracks.
Let me give you the setup. Airborne Express hires an employee and uses its attorney-prepared contract to ensure the employee can never get in front of a jury and instead be forced into arbitration. Sounds like it should work, right?
Hold on to your britches. The employee sued for sexual harassment and now will end up in front of a jury and not in arbitration. Here's the uncontroverted statement from the employee, right out of the Court's opinion in Ontiveros v. DHL Express, which struck down the arbitration provision as unconscionable:
"At no time did [my manager] explain or describe the contents of the documents in that hiring packet. The hiring packet contained documents like an Immigration Form I-9, documents pertaining to health care coverage, documents relating to my base compensation, documents welcoming me to the company and other documents the content of which I do not recall. The hiring packet came in a binder file. At no time did anyone inform me that I was signing an Agreement to Arbitrate Claims or explain what that was or how it affected my substantive rights. At no time did anyone inform me that I was required to give up any rights I might have to a jury trial in order to work for Airborne. When I was hired, I was informed that I needed to sign the paperwork in order to get paid and start my new job, and I was not afforded an opportunity [to] negotiate further the terms of my employment. I was already working long hours at that point in time and did not have any real opportunity to review the documents I was told to sign. I was not told that I should review the documents with a lawyer or discuss my rights with a lawyer. The first time I can recall knowing about the Agreement to Arbitrate Claims was when DHL raised this issue in this lawsuit. I had not been given a copy of the agreement prior to filing this lawsuit."
With that statement, it's not hard to understand why the Court wasn't comfortable with the arbitration provision in the employment contract.
As an employer, do you have to explain all of this to an employee? Well ... while I might have answered this question differently before this opinion came out, now I would say yes. In fact, I would probably recommend that the company send the employment package to the employee with the hire letter, allowing enough time before the start date to casually read everything and consult with a lawyer, if necessary. Then I'd make the employee go through a long, pre-employment interview in the Human Relations Department and sign innumerable acknowledgements that each and every piece of paper was explained and understood, and afterward, ask if the employee was still interested in accepting the job given all the terms and conditions in the employment contract, and then have the HR staffer sign the contracts on behalf of the company.
Ugh. More paperwork. What will they think of next?