Home
Firm Overview
Practice Areas
Attorneys
Newsletter
Newsletter Archive
Directions
Resource Links
Inquiry Form
Privacy Policy
Articles

RICHARDSON AND TYLER, LLP
Newsletter
Vol. 2, Number 2 – Spring 2005

• Bankruptcy Update 
• Sales & Mergers 
• Planning For a Rainy Day
• Joint Employment
• Trust & Estate Administration
• R&T in the Community

WELCOME!

Richardson and Tyler, LLP is pleased to bring you the second edition of our quarterly newsletter for 2005.

This newsletter is to share new matters of general interest with our clients.  It is not intended to provide legal advice.  Please speak to an attorney before applying this information to your specific situation.

If you would prefer to be taken off our mailing list, please e-mail richardsonandtyler@rtlegal.com and let us know.

Bankruptcy Update – Breaking News

The newly enacted "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" will do little to protect consumers – it favors creditors.  Most provisions are effective October 17, 2005.

Some changes include:

• Debtors with income over the state median will find it harder to discharge debts.  If "disposable income" exceeds post bankruptcy expenses by $100 or more, a "chapter 13 reorganization plan" to repay debts will be required.

• "Second time filers" previously had to wait 6 years ... that is now extended to 8 years.

• Another new twist – debtors must seek credit counseling and attend a debtor education course, adding more costs for debtors who are already financially strapped.

Some changes are effective now.  Depending on the year you purchased a residence, the "homestead exemption" that may permit you to retain your residence has been limited.  Business debtors filing chapter 11 petitions and creditors' rights are also affected.

Our advice?  Whether you are a creditor or a debtor, speak to an experienced bankruptcy attorney as soon as financial clouds begin to gather, and certainly well before the October 17th effective date of this new law.

Sales & Mergers

The popular press has noticed that the pace of business deals has picked up.  The top 20 law firms recorded a deal volume of $2.02 trillion in 2004, second only to 2000's $2.96 trillion.  Activity for small businesses has also picked up.

If you are contemplating such a move, what should you consider first?  A confidentiality agreement!

A good "business deal" should be preceded by full disclosure to both parties of confidential, proprietary and financial information.  However, many such transactions occur between competitors, and you do not want them knowing your finances, stealing your confidential information (customer lists, pricing, etc.), or hiring away your key employees.

A well-drafted agreement will permit the free flow of information while minimizing risk by:

• Defining protected information;
• Defining permitted and prohibited uses of information;
• Requiring the return or destruction of key information;
• Protecting key employees;
• Fortifying legal remedies if one party breaches the agreement.

Practice Tip: Spend half an hour with qualified counsel before you open discussions on a sensitive business venture.  This is an area where an ounce of prevention is worth at least two pounds of cure!

Planning For a Rainy Day

We live in an increasingly competitive world economy.  Are you well positioned for an economic downturn and financial pressure?  When creditors "come calling", you may have few options left to protect your assets and your family.  It is far easier to "plan for a rainy day" when the sun is still shining.

Some "do's" and "don't's":

Don't:

• "Put all your eggs in one basket".  Ownership may be structured carefully by placing asset ownership with family members, limited liability companies, spendthrift trusts, or corporations.  Ask counsel which combination is best for you.

• Personally guarantee company obligations or co-sign obligations for friends or relatives, if you can avoid it.

• Transfer assets at the last minute – a diligent creditor can reach them – plan well ahead.

• Use credit cards to excess – almost all bankruptcy cases involve large amounts of credit card debt.  If you find you need to do so as a "stopgap", consider a planning meeting with counsel.

Do:

• Take advantage of the "homestead law".  For a $35 filing fee, you can protect most or all of the equity in your home.

• Maximize use of your retirement plan.  IRA's, 401k's, and other popular retirement plans enjoy protection from creditors.  Don't yield to the temptation to liquidate them early.  Not only are the tax penalties heavy, assets removed from the plan are exposed to creditors!

• Consider the use of corporations or limited liability companies if you are engaged in a business or own investment real estate, to keep business risks away from personal wealth.

• Every five years or so, review your affairs with qualified counsel if you have any doubts or concerns.

Joint Employment

Who is the "employer" when one business utilizes another as an independent contractor?  It matters for many reasons, including age, sex, race or other discrimination, workers' compensation, and sexual harassment and whistle-blowing laws.

The use of temp agencies, placement agencies, subcontractors, outsourcing, independent contractors and similar arrangements is burgeoning in today's fluid economy.  The courts continue to wrestle with just who is liable when something goes wrong in the workplace.

A joint employer is jointly liable.  The Supreme Court has said that a joint employer is a "company with sufficient control over the work, terms and conditions of employment", regardless of who actually issues the paycheck.

How to protect yourself?

• The first step is a good, clear contract – it will clearly allocate responsibility and control, and contain indemnification language if something "goes wrong".

• The second step?  The law says your "action under the contract is often the strongest evidence of its meaning".  (Actions speak louder than words.)

Qualified counsel will suggest that you and counsel review:

• Contract documents.

• Business practices for hiring, firing, disciplining and otherwise dealing with your workers.

• Rules, regulations, licensing requirements and laws governing your specific type of business, as they may impose additional burdens on your business regarding all workers, employees or not.

Trust & Estate Administration

An up-to-date, well drafted will and trust provides comfort that your assets will benefit your loved ones ... but don't forget to think beyond the documents.

A skilled attorney will assist your executor and trustee in avoiding pitfalls while properly carrying out your instructions.  For instance:

• In 2005, trustees and other fiduciaries must withhold Massachusetts tax from income distributed to beneficiaries.  This is a new requirement and, if it is not followed, more tax will go to the Department of Revenue, leaving less for your family.

• Once appointed, an executor has broad powers over your assets.  What if they fail or delay in accounting to your beneficiaries?  Knowledgeable counsel can compel an accounting and, if necessary, proceed against a bond to recover assets.

An executor is free to choose his/her own counsel.  However, you may express a preference in your will and/or trust for an attorney of your own choosing – your "trusted advisor" who helped draft the documents and best understands estate administration and your personal wishes.

R&T in the Community

On June 26th at the Lakeville Country Club, Richardson and Tyler will once again co-sponsor the Parents of Performing Students Golf Tournament to benefit Stoughton Public Schools' music students.  About 70% of the students in this school system participate – practicing long hours and sharpening their minds, as they perform all year in:

• The number one jazz band in Massachusetts.
• One of the best marching bands in New England.
• Award winning concert bands, choruses and jazz choir.

Proceeds pay for instruments, lessons, transportation and a host of other needs that are not covered by the modest school system music budget.

For a day of fun in the sun, prizes, contests, and a shot at a new car for a "hole in one", or to gain publicity for your business by sponsoring a hole, contact jklements@rtlegal.com.

These materials are offered for information purposes only. Do not act or rely upon any of the resources and information available in or from this site without seeking professional legal advice. This material may be considered advertising under the rules of the Supreme Judicial Court of Massachusetts.

If you wish to receive our quarterly newsletter via e-mail, please click here, type "e-mail newsletter" in the message area, and click on the "submit comment" tab.