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DUI Laws & Consequences: What Every Driver Must Know

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Driving Under the Influence (DUI) is a serious crime in the United States. According to the National Highway Traffic Safety Administration (NHTSA), the estimated deaths resulting from DUI’s were 13,470 victims. To help alleviate these numbers and crack down even harder on DUI offenders many states, under the sanction of the NHTSA, are holding “No Refusal Weekends” where officers are able to instantly obtain warrants for blood tests of suspected DUI drivers, ensuring that evidence is gathered in a timely way.

 

Laws and Penalties

A DUI is defined as driving under the influence of any legal or illegal substance. While the most common offenders are those using alcohol, drugs and even medications found in the blood will also result in a DUI charge. Some states separate the two laws by referring to alcohol related offense as Driving While Intoxicated (DWI). While states are permitted to set harsher laws, Federal law requires that a DWI is issued when the suspect’s blood alcohol content (BAC) is above .08 percent. Additionally, a DUI is issued when the BAC is under .08 percent or for traces of any other substances. Occasionally, officers may be lenient and issue a DUI if someone is a first time offender and only slightly over the .08 percent BAC. Penalties for DUI include fines, loss of license, alcohol rehabilitation classes, community service, and jail time.

 

Tests

When you are first pulled over for DUI and as the investigation quickly commences, the law requires officers to pursue certain tests in determining whether you are in fact driving under the influence. After being either stopped at a DUI checkpoint or pulled over for suspicious driving, an officer will ask you to step out of the car and perform some basic tasks. This test is referred to as a field sobriety test. While some states still use their own versions of the field sobriety test, the standardized test includes three different actions for which the officer determines a numerical level of intoxication. These tests include the Walk and Turn test, the One Leg Stand test, and the Horizontal Gaze Nystagmus test.

If a suspect sufficiently fails the field sobriety test, they have then established reasonable cause to pursue further testing. An officer will then ask for your consent to perform a breathalyzer test. If you agree then they will perform the test immediately to determine your BAC. If you refuse, they will contact a judge and obtain a warrant, typically on-site, to perform the test. While this may delay the process by 15 or 20 minutes, it will not affect the results of the breathalyzer test.

If the breathalyzer test comes back with a high enough BAC, the officers will arrest you and take you to the nearest police station. At which time they may or may not also acquire a blood test for final determination of your levels. While this test is not required by federal law, some states prefer that all three tests are completed.

 

Arrest Process

After the officer determines that you do have the sufficient BAC, you will be formally placed under arrest. In the United States, the officer will recite your Miranda Rights and if they haven’t already, take you to the police station. Once at the police station you will be formally booked and jailed to await your arraignment. The formal booking process includes a complete search for weapons, finger printing, taking your picture and asking you basic questions about your name, address and any medical conditions that may require treatment. All of your personal possessions including jewelry will be taken from you and inventoried. After these initial processes, the police officers will want to question you further. This is the best time to contact and hire an attorney. It is never recommended to answer police questions without an attorney present.

You will remain in jail until your arraignment and the posting of bail. Once you post bail, then you may leave the jail and your possessions will be returned to you. You will meet with your attorney and discuss your case. While there are not many defenses that can be argued for your case, there are some that your attorney can attempt. Low BAC is the first defense that attorneys will attempt. This defense will not result in a dismissed case, but will result in a plea bargain. If this is your first offense and you act appropriately, your attorney may be able to lessen the penalties to community service and alcohol rehabilitation classes. Finally, if the officers made any mistakes during your booking, such as they forgot to read you your Miranda rights or they improperly administered one of the tests, then your case may be thrown out entirely.

You will also be responsible for returning to court on the day of your trial. After the trial, you will complete whatever sentence is given to you. This ends your commitment and consequences as far as the state is concerned, so long as you do not repeat the offense.

 

Civil Consequences

Along with the state’s penalties, you will also have consequence directly from your insurance company to deal with. There is no way to hide your DUI from your auto insurance company. In fact, most states require that you obtain an SR 22 form from your insurance company to present to the court as proof of insurance. This form immediately tips off the insurance company that you have been convicted of a DUI (click here to read about DUI car insurances). Depending on your contract with your insurance company, they will either cancel your policy entirely at this point or drastically raise the premiums. Should you repeat the offense, your premiums will continue to be increased.

Life and disability insurance companies also evaluate and obtain information about any previous DUI convictions. These companies consider a conviction evidence of a dangerous lifestyle the result of which is a drastic increase in life insurance and disability insurance coverage. The reason for it affecting these forms of insurance is that studies show that those who are addicted to drugs and alcohol have a higher correlation of motor accidents, industrial accidents, suicides and crimes. Also, insurance companies are knowledgeable of studies that reveal correlations of substance abuse with deterioration of a person’s metal and physical health, damage to the heart, elevated blood pressure, liver disease, and cancer; all of which are negative outcomes for a life insurance company. Many repeat offenders are simply denied life and disability insurance when they apply. For a single conviction, you may be able to persuade the insurance company that it was a willful but bad decision.

 

Getting Back Your License

One of the penalties for any DUI conviction is suspension or even loss of your driver’s license. For many, getting your license back is essential to job security and survival. The first step to getting back your driver’s license is completing all of the required and recommended courses mentioned by the judge. You can typically sign up for these classes online through your DMV’s website or through the mail if you the judge gave you a form. These classes involve alcohol awareness education and general guidance in avoiding situations where you may find yourself driving under the influence. Additionally, the judge may require that you complete a alcohol rehabilitation program. These programs are offered through private clinics and sometimes may involve you spending a required amount of time at the clinic under the supervision of physicians and councilors.

Next, you will need to contact your insurance company, if you have not already done so and obtain an SR-22 form showing that have proper car insurance coverage. This form must be taken to the DMV when you apply for your license. If this is your second DUI offense the judge will also require you to attend a driver’s license hearing before your license is reinstated. This hearing is meant to establish to the judge that you are remorseful for your actions. Finally, you’ll be required to pay your state’s reinstatement fee at the time you take all of your forms to the DMV.

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Resources that you might want to visit:

1. The Century Council – http://www.centurycouncil.org/

2. National Highway Traffic Safety Administration – http://www.nhtsa.gov/

3. CDC Fact Sheet about DUI: http://www.cdc.gov/MotorVehicleSafety/Impaired_Driving/impaired-drv_factsheet.html

4. Mothers Against Drunk Driving: http://www.madd.org/

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Categories: DUI Laws - Tags: blood alcohol level, driving under the influence, driving while intoxicated, drunk driving laws, dui, dui attorney, dui car insurance, dui conviction, dui laws, DUI penalties, dui statistics, get your license back, license suspension, national highqay traffic safety administration

How to choose the right location for your law practice

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One of my very first law students was a New York policewoman I’ll call Amy who left the police force on a disability pension. Amy was from a small, blue collar town in upstate New York whose population was declining ever since the area’s largest employer had relocated. It hardly seemed like the ideal place to open a law practice. But because she was committed to caring for an elderly aunt and because she owned property there, she returned to her hometown.

Yet the situational analysis we did revealed otherwise. First Amy converted an old barn on her property into an office. Then she established a relationship with the only other attorney in town who was elderly, close to retirement, and unable to take on every case that arose. Soon, he began referring cases to her; she hopes to buy out his business when he retires.

Meanwhile, the quality of her daily life is precisely what she hoped it would be. She lives near her friends and relatives those who know her best. For her, this real estate is “prime” because it satisfies both her personal and professional needs and will for decades to come.

The Best Real Estate Is Near Those You Know

In the legal business, location has little to do with securing the priciest real estate to impress people you have yet to meet. It has more to do with being in close proximity to those who already know you best. Before you can even make a decision about location, however, you have to fully digest and totally internalize three very important concepts:

You are the product. Clients are buying you, your personality, integrity, enthusiasm, compassion and commitment to advocacy. Everything else is overhead, changeable, portable, expandable, but most importantly, expendable. Your product and business are an integral part of your persona and therefore travel with you; they aren’t tied to a physical location. 62% percent of your business will be referrals from friends, relatives and coworkers.

Whether you realize it or not, all your life you have been conducting a marketing campaign, marketing yourself 24/7. The people who know you best want you to succeed. They are proud to say they know a really great lawyer. The qualities which have attracted your friends, spouses, business partners to you and helped foster familial relationships are the very qualities which will encourage them to refer their friends, relatives and coworkers to you when a lawyer is needed.

Successfully locating your practice has everything to do with achieving balance in both your professional and personal lives. You need to select a location where you want to build a personal life or where you already have an established lifestyle for you and your family. If you are like most people, you will ultimately choose to live close to those you have grown up with, whether relatives or friends. Starting your practice close to your support system offers emotional comfort and the opportunity to attain true life/work balance.

Virtual And Home Offices Offer Inviting Possibilities

Today, a lawyer who wants to put down roots in her sleepy home town isn’t limited by her physical location. Thanks to technology, it’s possible to create a virtual law office (VLO). With access to a computer, lawyers can maintain and broaden their practice areas while maintaining their desired lifestyles.

Operating in cyberspace is very freeing for both lawyers and clients. Untethered to specific locations and restrictive schedules, solos can work non-traditional hours while saving on commuting costs. In this era of climbing gas prices, working from a virtual office can benefit your clients as well. Think how grateful they will be to not have to drive to consult with you. In this way, you’ll be addressing not only their legal needs but their unspoken needs as well.

At the same time, home offices are on the rise for a myriad of reasons. For instance, a lawyer who works from home can more easily achieve greater work/life balance, has low overhead, and can raise and enjoy his or her family.

Investigating these various options can further enhance your practice but you have to find what works for you. Not everyone has the freedom to work from home, or to open a hometown practice. Commitments, financial or familial, may force you to open your practice in a less than ideal location. But one of the rewards of being your own boss is the flexibility you enjoy to create a workable solution for yourself, just as Amy did. There’s never just one ideal location; with a little bit of creative thinking and the right computer technology you can make many different locations work for you.

This article was written by Susan Cartier Liebel, the founder & CEO of Solo Practice University which is the #1 online educational and professional networking community for solo lawyers and law students.

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Categories: Solo Practice - Tags: law firm office, law practice location, law practice office, location, office for law firms, offices for attorneys, offices for law firms

Reconsider the ways in which you treat clients with mental disabilities

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Before becoming a professor, I spent 13 years as a practitioner, mostly representing criminal defendants with mental disabilities and persons subjected to involuntary civil commitment or committed to psychiatric hospitals. I have taught mental disability law for 24 years, and in the past 17 of those years, my research and scholarship have focused mostly on the ways that prejudice towards persons with mental disabilities leads to stigma and stereotyping, and the ways that these factors malignantly distort both the legislative and judicial processes.

I believe that these factors are constant whether the topic is commitment, the right to refuse treatment, sexual autonomy, deinstitutionalization, any aspect of the criminal trial process, from the determination of competency to stand trial to the ultimate death penalty decision, or the relationship between international human rights law and mental disability law. I am the only law professor in the nation (and most likely, the world) who has created nine different courses in this subject matter; I’ve also written twenty books and nearly 200 articles in this area.

Learn About The Intersection Of Mental Disability And International Human Rights Law

For the past several years, I have refocused my professional career and have turned my attention to the intersection of mental disability law with international human rights law.

• Under the aegis of Mental Disability Rights International (MDRI), a Washington, DC-based human rights advocacy NGO, I have done site visits and conducted mental disability law training workshops in Hungary, Estonia, Latvia, Uruguay, and Bulgaria.

• Through New York Law School’s (NYLS) Online Distance Learning Mental Disability Law program, I have taught mental disability law courses in Japan and Nicaragua, and have worked extensively in Nicaragua with local advocates and activists in an effort to build a mental disability advocacy network in that nation: one that could optimally be expanded to other nations in Central and South America. We are currently working with colleagues in China, Japan and East Africa to teach new courses in those nations and forge new partnerships with other law schools and universities.

• Through the International Mental Disability Law Reform Project of the NYLS Justice Action Center, I have done work in Taiwan, Japan, Poland, the Czech Republic, China, and Uganda.

This work has clarified for me the extent of our societal blindness to the ongoing violations of international human rights law in the context of the institutional commitment and treatment of persons with mental disabilities. Notwithstanding a robust set of international law principles, standards and doctrines—many based on American constitutional law decisions and statutory reforms of the past three decades—people with mental disabilities live in some of the harshest conditions that exist in any society. These conditions are the product of neglect, lack of legal protection against improper and abusive treatment, and, primarily, again, the social attitudes that perpetuate stigma, prejudice and stereotyping.

Ever since I began practicing law as a rookie Public Defender in Trenton, NJ, in 1971, I have been aware that we think about and treat persons with mental disabilities in the legal system differently than we do others. Nearly ten years ago, I wrote,“I had grown accustomed to asides, snickers, and comments from judges, to ‘eye rolling’ from my adversaries, to running monologue commentaries by bailiffs and court clerks (all about my clients’ ‘oddness’).” This is still true today.

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Categories: Law school - Tags: criminal trial process, law school, lawyer, mental disability rights international, mntal disability, new york law school

Elder Law Attorneys Can Help Humanize The Future Of Health Care

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As an elder law attorney I guide clients through the maze of the senior chronic care system to help marshal all possible resources to provide the best care possible and at the same time preserve some of their life savings. In addition, many elder law attorneys provide planning advice for persons of all ages with disabilities.

What will the elder law practice look like in 2020? I believe it will be very different because our health care system will be very different. Clearly, the system will get worse rather than better.

Three Crises Loom On The Horizon

The confluence of three crises illustrates the scope of challenges facing seniors and the disabled. First is the continued growth of Alzheimer’s disease in an aging population. The Alzheimer’s Association predicts that Alzheimer’s disease alone will break the public benefits system unless a cure or effective treatment is found within the next ten years.

Second is the terrifying rise and cost of autism and related disorders. Autism prevalence has gone from 4 in 10,000 a few years ago to 1 in 166 (according to some accounts, the rate is 1 in 150). The number of those diagnosed continues to rise. Lifetime direct and indirect costs to treat and care for an autistic child exceed 3.2 million dollars. If the rate of growth in autism continues to rise or even remains constant, it is enough to break our public benefits system.

Third is the aging of the baby boomers. If this age wave needs, wants and expects the level of care currently provided by Medicare and Medicaid, we will have costs rising at a rate most citizens and politicians are likely to find unacceptable. Federal Reserve Chairman Ben S. Bernanke has cautioned that “…the coming demographic transition will have a major impact on the federal budget…continuing for many decades” (Oct. 4, 2006). Bernanke predicts that Social Security and Medicare will change from the current 7% of domestic product to 13% by 2030. Bernanke also says the country will have to choose among higher taxes, reduction in payments for entitlement programs, a sharply higher budget deficit, or some combination of these; and goes on to suggest that taxes would have to be increased by at least one-third over the next 25 years.

We May Be Moving Toward The Rationing Of Healthcare

As the 2008 presidential election moves into full swing, candidates are proposing new health care systems for the United States that may be more affordable, comprehensive, and include the more than 47,000,000 Americans with no health care coverage at all. Will universal health care solve the senior and special needs population health crisis? Will we move to a health care rationing system that will effectively make care less available rather than more? How will the new health care system treat chronic illness and disability?

Medicaid has already surpassed education in Florida’s budget at a time when casualty insurance and real estate taxes are perceived to be beyond the taxpayer’s ability and willingness to pay. Where will the cuts be made as the state’s crisis deepens? Long-accepted planning techniques for disabled persons will eventually come under the government microscope. Special Needs Trusts that provide for supplemental needs and allow the individual to collect government benefits are likely to be in bipartisan trouble.

William Mitchell School of Law Professor Kim Dayton believes that rationing will inevitably accompany universal health care. In her paper “The Future of Elder Law: End of Life Issues,” prepared for the National Academy of Elder Law Attorneys Institute November, 2006, Professor Dayton suggests that the new system consider the following rationing choices:

• You get a certain number of years, but that’s all (how many?)
• You get a certain quality of life, but that’s all (what is quality, anyway?)
• You get what you can pay for yourself, but that’s all (it’s the American way)
• You get basic treatment, that’s all
• You get what you need, but not if your diseases or disabilities are self-induced (no liver transplants for alcoholics or triple bypass surgery for smokers)
• You get what you need if you are someone of past, current, or future importance
• The closer you are to dying (due to age or disease), the less health care you get

Three Ways Elder Law Attorneys Can Help

How can elder law attorneys deal with these extremely negative possibilities for the future?

1. Take Personal Financial Responsibility. Each of us must advise our clients to take personal financial responsibility for the care of our special needs loved ones. Elder law attorneys and estate planners must budget long-term care into client estate and financial plans. Once a person makes age 60, she or he has a 60% likelihood of needing long-term care. Instead of planning for death, as we traditionally have, we need to plan for life, taking into account the strong probability that each client will have chronic illness. It is foolish to believe that government benefits will adequately provide for seniors and the disabled by the year 2020.

2. Become Politically Involved and Politically Active. As elder law and estate planning attorneys, we see and hear many wrenching stories from a generation Tom Brokaw named “The greatest.” We are positioned to advocate for their fair treatment. Their stories touch us; their plight trumps the economic concerns expressed by elected officials at the municipal, state, and national levels. We can make public officials who are in a position to help aware of the challenges facing seniors. We must find cures for these terrible chronic illnesses and disabling afflictions.

3. Be Visible. The public needs to experience the ways in which seniors have a positive impact on all of us. Aging is not just about illness. Elder lawyers can help laypeople understand that aging is not synonymous with inevitable decline but can be as a stage in which we share the wisdom we’ve accumulated.

Elder Law attorneys deal with the legal, health and social issues connected with aging. Medicare does a good job for seniors with cancer, heart disease, and other acute illness. The Medicare patient who needs open heart surgery is likely to run up medical and hospital bills in the hundreds of thousands of dollars with out-of-pocket share of cost being a few thousand dollars at most. However, seniors afflicted with chronic illness such as stroke, Alzheimer’s, Parkinson’s, MS, and Lou Gehrig’s are very limited in Medicare coverage. Medicare may provide up to 100 days of skilled or rehabilitative care if preceded by at least a three-day hospital stay. The patient must be making progress with rehab and most do not receive anywhere close to 100 days of coverage. When Medicare benefits terminate, the payment sources for the $6-7,000 per month cost of nursing home care are limited to long term care insurance (hard to get and expensive). I am a founding member of the Special Needs Alliance, a national invitation-only organization of lawyers specializing in assisting people with special needs. Special Needs Trusts allow disabled people the opportunity to live more comfortable lives with the combined benefit of public benefits and protected private resources. Other trusts protect seniors whose income exceeds Medicaid limits but is well below the monthly cost of care.

Elder law and estate planning attorneys must take on these challenges now, not only for the current generation but for future generations. We must choose whether we want to drive our own vehicles and end up where we want to be or be mere passengers dropped off wherever others decide. There is little likelihood that our health care system will become any easier to navigate in the future. As we advise senior and disabled clients of all ages to be proactive and creative, we can do no less.

[This article was published in 2007]

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Categories: Estate Planning - Tags: elder attorneys, elder lawyers, financial matters, health care, health care system, law, medicare

Succession Planning For Solo Practitioners

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As a sole practitioner, and a 64-year-old one at that, I am often asked, “What happens to our estate plan and file if you’re no longer around?” I am proud to tell them that I have a documented succession plan in the event of my death or incapacity. (What I haven’t yet told them is that having a succession plan also makes it easier for me to sell my practice should I choose to do so.) I have shared my plan with my trustees, my accountant and my personal attorney, each of whom would play a role in transitioning my practice and clients. Two years ago I began to study the subject, leading to co-presenting a program at the Rhode Island Bar 2008 annual meeting on “Succession Planning for Solos: Death, Disability or (You Should Live so Long) Retirement 1.”

Under my plan, as required by the Code of Professional Responsibility, each client would be given the opportunity to transfer his/her file to an attorney of choice. However, my representatives would contemporaneously attempt to sell my practice to one or more estate planning practitioners. My plan sets forth a specific, extensive list of potential purchasers. Leading the list are attorneys or firms who most nearly share my ideals and resources. If a purchaser was found, all clients would be encouraged though not required to transfer their files to the purchasing firm. In the event that a sale of the entire practice could not be arranged, then transfer of client files to a successor firm or firms would nonetheless be arranged, subject to the contrary expressed wishes of any particular client.

Establish Trustees

Also, in the section titled “Professional Practice under the Trustee Powers Article of my Living Trust,” I have designated my personal attorney, and a first and second alternate attorney, as Special Trustee for purpose of managing this practice transition, working under the supervision of my Trustees.

My plan provides clients with a succession process as effective and satisfying as they could experience with any larger firm. And my plan will literally be of great value to my spouse and descendants. Furthermore, by teaching others what I have learned in the process, not only do I have the satisfaction of giving back to my brothers and sisters in the bar, but I have also created new marketing opportunities and heightened awareness among my solo lawyer colleagues as to my skills as an estate planner and a succession planner. Moreover, I see potential for applying and marketing this knowledge to solos in other professions including CPAs and Financial Advisors.

Familiarize Yourself With Regulations And Resources

Some specific issues to be aware of in undertaking succession planning include the following:

• ABA Formal Opinion 92-369 says, “The sole practitioner should have a [succession] plan in place.”
• Only since 1990 has the ABA had a Model Rule (Rule 1.17) permitting solos to sell their practice. The Rule as amended allows sale of all or a specific portion of the practice. As of 2005, all but six states had adopted some version of the Rule.
• Estate planning practices are often saleable at a premium compared with other types of solo practices. Oversimplifying, buyout might be over 5 years using 1-2 times revenues as a base price, adjustable in each installment year based on “purchased client” revenues.

• Early efforts—such as organization of files, disposing of closed and dormant files, writing a procedural manual, and affording ready access to key financial and password data—will enhance value and simplify the disposition process for your heirs and representatives. And don’t overlook your state’s ethics rule on required bookkeeping procedures.

RESOURCES

Butler, Sarina A., Paszkiet, Richard G., The Lawyer’s Guide to Buying, Selling, Merging and Closing a Law Practice, ABA Senior Lawyers Division, December, 2007.

Poll, Edward, Selling Your Law Practice—The Profitable Exit Strategy, Law Biz Management, 2005.

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Categories: Solo Practice - Tags: code of professional responsibility, individual lawyer, lawyer, solo practitioners, trustee

Asset Protection Considerations For Business Owners

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Many business owners devote much time and energy “working in” their business to improve operations and profitability; however, they often neglect to “work on” their business by not addressing certain asset protection issues. Business owners, particularly those owning their business in corporate form, should consider the following: 1) how to own C corporation or S corporation stock to minimize exposure to creditors, an “outside” asset protection issue; and, 2) whether to implement several basic business agreements designed to protect and even enhance business value from the “inside” of the corporation.

Consider Stock Ownership

Generally, a creditor of a corporate shareholder may seize the shareholder’s stock and thus have the same management and liquidation rights as the debtor shareholder. Charging order protection (described below), normally applicable to limited liability entities, does not apply to S corporations or C corporations. S corporation owners may have additional concerns if a creditor is an ineligible S corporation shareholder thereby causing the corporation to lose its S election. As a result the corporation will be treated as a C corporation and exposed to double taxation.

A business owner who owns S corporation or C corporation stock should consider the asset protection benefits of converting or merging the corporation to a new Limited Liability Company (“LLC”). There are several limited liability organizations that can protect business assets from the personal liabilities of the owner. However, entities such as limited partnerships, or limited liability limited partnerships, are treated as partnerships for federal tax purposes and therefore cannot own S corporation stock; whereas, an LLC electing to be taxed as a corporation may.

Generally, the asset protection benefit of an LLC is a judicial remedy known as a “charging order” which protects the owner’s interest in the LLC from his or her personal liabilities. If a creditor obtains a charging order, the creditor is limited to the rights of an assignee of a membership interest in the LLC. If a distribution is made from the LLC, the creditor is entitled to receive a proportionate distribution. However, the creditor has no voting rights and thus cannot force a distribution, liquidate the LLC, or otherwise manage the business.

With proper planning, both C corporation and S corporation owners may be able to avail themselves of the LLC asset protection benefits by converting the corporation to an LLC taxed as a corporation. Generally, such conversions are treated as nontaxable “F” reorganizations under IRC Section 368(a)(1)(F). However, potential income tax consequences and individual state law considerations should be carefully evaluated. For instance, C corporations considering conversion should analyze potential exposure to the “built-in-gains tax” under IRC Section 1374. Also, the strength of the charging order protection provided by an LLC varies depending upon state law.

Business Agreements Protect Value “Inside” The Business

To protect business value, owners should consider basic agreements or legal documents such as a Non-Compete and Confidentiality Agreement, Buy-Sell Agreement, and perhaps even a Deferred Compensation or Bonus Plan for key employees.

Few events can sap the value of a small business as a key employee or associate leaving to start a similar enterprise, especially if the employee departs with trade secrets, confidential information or even customer lists. Business owners should require their employees to sign Non-Compete and Confidentiality Agreements to prevent this from occurring. If the terms of such an agreement are considered reasonable under state law, the agreement should be enforceable.

A Buy-Sell Agreement is another key document that if properly structured, funded, and updated will protect the value of both the exiting and remaining business owner’s interest in the business. Accompanied by proper planning, the Buy-Sell Agreement should provide the exiting owner a fair value for his or her ownership interest and provide the remaining owner a means to purchase the exiting owner’s interest without depleting the business of cash flow and its value. A Buy-Sell Agreement is designed to establish a predetermined and agreed-upon business value (or method of arriving at the value) at the occurrence of certain trigger events such as the death, disability, voluntary or involuntary termination, or retirement of a shareholder or partner.

Planning needs to be done to ensure there are sufficient funds available to implement the buy-sell provisions when triggered. Funding at an owner’s death with life insurance may be the easy part. More problematic may be how to buy-out a departing owner’s interest in the event of disability, retirement or voluntary termination, especially if a portion of the business’ cash flow must be devoted to that purpose. Further, once in place, a Buy-Sell Agreement should periodically be updated to reflect changes in the business value and the owners’ objectives.

Consider Deferred Compensation And Bonus Plans

Finally, business owners should consider putting into place a deferred compensation or bonus plan designed to reward key employees who meet certain performance targets. A properly planned deferred compensation or bonus arrangement can serve two purposes which will work toward protecting the value of the business. First, the plan should be designed so that employees are rewarded for achieving benchmarks that not only protect but increase the business value. Second, such agreements, through gradual vesting schedules, should place “golden handcuffs” on valuable employees by making it difficult for them to leave the business and forfeit certain benefits.

When considering asset protection strategies for business owners, protecting the internal value of the business through a few important but often overlooked documents can be just as important as the legal wrapper placed on the ownership of the business. Implementing such agreements not only protects the value of the business but also enhances its value and makes the business a more attractive target to a potential buyer when the owner eventually exits.

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Categories: Financial Matters - Tags: asset protection, assets, business assets, buy-sell agreement, deferred compensation, funding, funds

Why Risk Management Is Important For Lawyers: Nuances of Disability, Liability, And Life Insurance

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When people hear someone mention disability, liability, or life insurance their eyes often glaze over. “Enough about Insurance!” is usually the exasperated exclamation.

As professionals and individuals we each assume significant financial risks. Whether or not we recognize or are aware of them, they are significant. If we choose not to defer the risk, the effect can be “catastrophic” to us individually and to our families. The proper use of risk analysis and implementation of a Risk Management Plan is crucial to our livelihoods and the well being of our families.

First the definition of risk: Risk represents the possibility and probability of loss. Risk Analysis reviews the risks in an individual’s specific set of facts. Risk Management balances the risk of loss against the amount of a loss and the effect of that loss on you individually.

The Seven Questions Of Risk Analysis (SM)

-What could happen to affect me given my individual set of facts?
-What is the possibility that this will happen?
-What is the probability that this will happen?
-What is the cost/effect if it does happen?
-Based on the cost/effect, should I assume the risk and self-insure or should I defer the risk and purchase some type of insurance?
-If I choose to assume the risk, do I have cash reserves set aside to mitigate intermittent losses?
-If I choose to defer the risk, what is the most cost effective and yet thorough way to do this?

The Rules Of Risk Management (SM)

1) Assess all possible risks that have financial and non-financial consequences. For example, do you speed while driving, have a pool, a large dog, or have a practice with very litigious clients. Do you have a family history of death before 75 or health challenges? Do you work more than 65 hours per week? Do you often drive home late at night? Do you have a high stress or low stress position?

2) Quantify the possible and then the probable frequency of loss and balance it against the amount of the loss. How much is the cost of: a speeding ticket, a dog bite, a drowned person, or a malpractice claim. While you must excuse the seemingly offhand inclusion of a person drowning, proper risk analysis is all about the cold facts and possibilities, not about our rose colored view of our daily lives. People do become disabled, people get cancer, die and crash into other people in vehicle accidents every day.

3) Assume all risks for losses that however improbable or less possible are small financially. This is called self-insuring. This is why you have a homeowners and auto policy deductible and why there is a waiting period before a disability policy starts to pay.

4) Defer all risks deemed “catastrophic” in their individual financial situation to someone or something else. This is why banks require fire insurance on all homes they lend against.

What Are The Most Significant Risks For Me As A Lawyer?

The three most significant risk factors for lawyers of which they may be uninsured or underinsured are: Disability, death and personal litigation risk-liability. In this article we will focus on disability. In part two we will focus on life insurance and personal liability insurance.

Because each type of insurance to be discussed has its own nuances-let’s start with an often misunderstood type of insurance disability policy.

Disability Insurance: Age Factors And Causes

Disability insurance is purchased by an individual to insure her earning ability in the event that she is unable to work due to sickness or injury. The cash benefit paid to the policyholder ranges from 50-70% of income. In order to maintain an incentive to work, insurance companies will not pay more than 70% of earned pre-benefit income. From a personal cash flow perspective, this 70% limitation is fine because benefits received from a disability policy wherein the premiums were paid with after-tax dollars are generally not taxable. A quick review of the income tax math shows that a policy paid with after tax dollars maintains a policyholder in approximately the same position financially after the disability as she was in before the disability.

Tax Rule of Thumb: If you pay the disability premium from after-tax dollars the benefits are normally received free from income tax. If the premiums are paid by an employer or with pre-tax dollars, the benefits are taxable as ordinary income.

Disability policies pay the insured a monthly amount equal to a stated benefit for a period of time ranging from two years from the date of disability, up to the life of the insured. Most of us know someone who is disabled or who has medical problems that may lead them to being unable to work at some point in their lives. Disability is a real event and often a financial disaster when it happens without proper risk management.

To put the probability of risk in perspective, let me review some information from the Insurance Commissioners Disability Tables, the Senate Finance Committee, and Moody’s Insurance Wire.

Age Factors for Disability

FACT: In any given year 12% of the adult population will suffer a long term disability, defined as a disability for a period of longer than 90 days.

FACT: Before reaching age 65, 14.25% (1 out of 7) of workers will suffer a five-year or longer disability.

FACT: At age 32, the risk of suffering a three month or longer disability is 6 times more likely than death.

FACT: At age 35, you have a 50% risk of suffering a long term (longer than 3 month) disability during your lifetime.

FACT: At age 45 you have a 44% risk of suffering a long term (longer than 3 month) disability during your lifetime.

Top Five Causes for Short Term Disability
1) Pregnancy (normal) – 20% of Cases
2) Pregnancy (complications) – 9% of Cases
3) Injuries (excluding back) – 9% of Cases
4) Back Injuries- 8% of Cases
5) Digestive/intestinal- 8% of Cases

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Categories: Risk Management - Tags: attorney, disability insurance, disability policy, lawyer, professional, risk analysis, risk management

Women Need To Be Educated About Estate Planning

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Estate planning for women requires a certain sensitivity. Women typically fail to take active roles in planning their estates and need to be educated about its importance. Estate planning workshops generally present women as “surviving spouses.” Conversely, planners are told, “The wife makes the decisions.” Techniques focus on the nuclear long-term marriage with children, but in reality that model is waning. Consequently, women are more likely to become key clients and require sensitivity to their situational needs.

While unique, a woman can be in one of three basic groups—married, single, and previously married. Estate counseling should address a relevant group’s concerns. There are also considerations affecting women regardless of group, such as those of professional women, including women business owners.

Married Women Should Participate

Married women include those who have remarried. They need active involvement in planning although many, especially first wives, rely on their husbands to plan. Sometimes a husband presents without his wife because he handles the finances. Planning should not be commenced until both participate. Today’s wife has good odds of becoming a previously married woman and should be informed about financial matters in any event. She will likely live with the results of (or lack of) financial, retirement and estate planning decisions. Planning should address children’s expenses, which often are otherwise paid for out of spousal support. Planners should always include wives in planning.

Single Women Need Thoughtful Planning

Single women include those never or not yet married, as well as previously married women and those in unmarried relationships. Many are single parents, many working, some on government assistance, and/or caring for elderly parents. Their issues include children’s guardians, parents’ caregivers, possibly pets, and continuing care of dependents at disability or death. Single women encompass a broad spectrum of women who need, at the least, wills and durable powers of attorney for financial matters and healthcare; many require extra attention as they struggle on their own.

Previously Married Women Are Rebuilding Their Lives

Previously married women include homemakers displaced after traumatic divorces, and grieving widows. These women are rebuilding their lives. Previously married women who participated in planning while married have an advantage in that they were exposed to its importance and principles.
Knowledgeable widows can continue plans. Women who did not participate need education on the planning process and implications. These women should address continuing care for children and other loved ones. For example, while the court favors the biological father as guardian, it must
consider the mother’s desires in determining the children’s best interests. Planners should watch for often raw emotions in these circumstances.

Plan For The Unique Needs Of All Women

There are matters affecting all women regardless of group. Because women live five to seven years longer than men, they need additional retirement planning. Young women should begin retirement planning early to mitigate lower employer provided benefits. Since women earn about three-fourths of what men earn for the same work, many women, especially married women, often forego retirement plan contributions to get current income. In addition, their pensions and social security benefits suffer from family-related career interruptions for children and elderly parents.

Women in professions with high litigation risks like medicine, law and real estate, need asset protection planning. Planners should be aware that professional women, while shrewd, may not understand estate planning and need guidance.

Women business owners, a rapidly growing sector, need business succession planning. In 2005, U.S. women owned almost half of United States businesses, employed 12 to 20 million people and had two to three trillion in sales. (See http://www.score.org/women_stats.html.)

However, women are less likely than men to appreciate estate tax effects on their businesses and many are underinsured. (See Life and Health Financial Services Edition (08/26/03).

Because women often harbor charitable passions, consider philanthropy when planning for women. Marilyn Monroe neglected planning for her charitable desires; as a result, a stranger, her widower’s new wife, inherited Marilyn’s estate.

Weave Women’s Intricate Facets Into Planning

Women’s unique situations necessitate thoughtful estate planning for retirement, long-term healthcare, children’s care and education, and parental dependence, as well as asset protection, philanthropy, and other relevant issues. Such planning should be sensitively approached through the lens of women’s challenging circumstances.

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Categories: Legal Articles - Tags: business for women, career advice for women, career for women, estate planning, help for women, women business owners