Quick Facts – Quick Law Facts – Best Songs Lyrics of Modern America

Posted by Mack W. Borgen July 25th, 2022

Blog No 151 
July 26, 2022
By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason (2 Vols) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

 – Quick Facts –

IRS Announces New Mileage Travel Deductions

The IRS’ mileage travel deductions can be substantial for you and your business.

Starting July 1, 2022, the IRS’ business mileage rate was increased to $0.625 cents per mile. Examples: 5,000 miles per year = $3,125 tax deduction; 20,000 miles per year = $12,500 tax deduction.

In addition, both the medical and moving mileage rates were increased to $0.22 per mile.

IMPORTANT:

                1 –           Keep good and contemporaneous records.

                2 –           Keep track of both mileage and actual expenses.

             3 –           Have your tax advisor evaluate the possible use of the vehicle depreciation deduction as well.

Source: Bryars Tolleson Spires and Whitton LLP – One of Southern California’s excellent accounting firms.

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 Quick Law Facts

California’s Complicated Landlord-Tenant Law 

California landlord-tenant law has been become far more complicated over the last several years. In large part, this is due to legislation enacted in response to the covid pandemic. Most of the state law changes (such as the Tenant Protection Act (AB 1482) (the “TPA”) (Note 1)) and the local law changes (i) have enhanced tenant rights and (ii) have complicated both the eviction and past-rent collection practices and even the bases for which a landlord may evict a non-paying residential tenant.

For example, there have been multiple rental increase and eviction moratoriums, and there are now statewide caps on annual rental increases (5% plus the inflation rate with a maximum increase of 10%). Some local laws are even more restrictive.

Nevertheless, in most cases, eviction moratoriums have expired.

They are more complicated, but residential evictions may again proceed. There are basically two kinds of evictions – “at fault” evictions and “no fault” evictions. “At fault” evictions include evictions for (1) nonpayment of rent, (2) breach of material lease term, (3) nuisance, waste, or using the unit for unlawful purposes, (4) refusal to allow lawful entry, or (5) refusal to execute a new lease on materially similar terms. “No fault” evictions, another set of bases allowing for a permissible eviction, include instances such as when an owner (1) wants to move in to the unit or (2) desires to initiate a substantial rehabilitation or remodel of the unit (so long as such rehabilitation would take more than 30 days to complete).

Before initiating an eviction action or a suit for back rent, it is prudent to closely example the lease and review of possible tenant defenses based upon the TPA or other pandemic-based laws. Also, as a business matter, it is sometimes prudent to carefully consider the advisability of using some form of “cash-for-keys” resolution with the tenant.

Note 1 – Applicability of Tenant Protection Act. The TPA applies to all rental units in California except (1) single-family homes (unless they are owned or controlled by a corporation), (2) units covered by a local rent control ordinance which is more protective than the TPA, (3) units constructed in the past 15 years (i.e. “newer units”), (4) mobile homes, (4) duplexes where the owner is living in one of the units, and (6) affordable housing subject to deed restrictions, a regulatory agreement, or some other form of governmental agency agreements).

Best Song Lyrics of Modern America – Part 22

Song lyrics are the real poetry of Modern America. The lyrics of our favorite songs roll around in our heads for decades. Almost unconsciously, every day we honor the words of America’s songwriters who said something in that perfect, poetic, or clever way.

Here is Part 22 of my assembled list — done over the last eleven years in conjunction with my research for my last series of books, Dead Serious and Lighthearted – The Memorable Words of Modern America. To order copies of my books, just go to http://mackwborgen.com/shop/  or, as always, order on Amazon. Thank you.

But now, … The Best Lyrics of Modern America

– From 1957 through 2015 – Enjoy.

 Tennessee River (1980) (Alabama) (Years Active: 1969-2004, 2006-2007, 2010-{Present).            

 “I was born across the river in the mountains where I call home,

 Lord, times were good then, don’t know why I ever roamed?” 

 

On Broadway (1978) (George Benson) (B: 1943, Pittsburgh, PA). 

“They say the neon lights are bright on Broadway

They say there’s always magic in the air

But when you’re walkin’ down the street

And you ain’t had enough to eat

The glitter rubs right off

And you’re nowhere.”

 

We Are the Champions (1978) (Queen) (Years Active: 1970 – Present 9 (Original Lead Singer – Freddie Mercury (B: 1946: Tanzania – D:1991 (U.K.).

I’ve paid my dues

Time after time,

I’ve done my sentence,

But committed no crime,

And bad mistakes              

I’ve made a few

I’ve had my share of sand

Kicked in my face

But I’ve come through.

– 

We are the champions – my friends

And we’ll keep fighting

Till the end.”  

 Best Movie Lines

“Sometimes I don’t know where the bullshit ends, and the truth begins.

But if I die, I’m sorry for all the bad things I did to you.

And if I live, I’m sorry for all the bad things I’m gonna do to you.”

Roy Scheider in his role as Joe Gideon in All That Jazz (1979) (American musical drama film directed by Bob Fosse and starring Roy Scheider, Jessica Lange, and Ben Vereen).

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Quick Facts – Shrinkflation – Major Business/Contract Law Cases – Fancypants Word of Day

Posted by Mack W. Borgen July 11th, 2022

Blog No 150

July 12, 2022

By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Vols) (2013). New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

New Word of the Month

“Shrinkflation”

Definition: A technique used by companies to downsize a product or its ingredients in order to lower costs. The retail price may not change, but the amount or quality of the product in the package will be decreased. Examples:

Gatorade – Its “32-ounce bottles” are now 28 ounces.

Cadbury Chocolates: Size of its chocolate bars have been decreased by 10%.

Kimberly-Clark Paper: Toilet paper rolls reduced from 340 sheets to 312 sheets.

Source: Newsletter of Bryars Tolleson Spires and Whitton LLP. (July 2022)

Quick Facts

A Strange Contradiction: Increasing Size of Average U.S. House

But Decreasing Number of People in Average U.S. Household

In 1973, the Census Bureau began tracking the average square footage of American homes.

In the 1970s, the average U.S. house was 1,660 square feet. As of 2021 – about four decades later – the average house size had grown to 2,687 sq.ft. This is approximately a 1,000 sq. ft / 62% increase. As noted by one commentator, despite this increase in house sizes, the “full house’ is rarely used. In fact, “90% of the time, we live in about 30% of our homes – the bedroom, family area, and kitchen.” (Note 1).

It is tempting to conclude that this may say something about Americans’ inflated sense of entitlement, the extent of our self-indulgences, or the perceived importance of displayed wealth. But maybe, it is merely the result of 72” TV screens and our growing need for more computer spaces.

But, assuredly, the increase in house sizes is not the result of larger families. In fact, the average U.S. household has both decreased in size and changed in nature over the course of our nation’s history.

In 1789, the average U.S. household was about 5.79 persons per household. By 2018, that number had been cut in half to 2.63 people per household.

There are many reasons for this, including, for example, the number of elderly members of the household. In 1850, nearly 70% of the elderly (65 and older) lived with their adult children. By 2000, only 15% of parents lived with any of their children. (Note 2).

Author’s Addendum Regarding “Average” vs “Median” Calculations. The above data uses “averages” (average square footage, average household size). Such “average-based” data can be very useful and may be the only data available. However, in many instances, “median” value data is preferable. For example, the “average” square footage of a small community can be materially distorted (i.e., misleading) if within that community all the houses were 2,000 sq. ft. except for three mansions on the edge of town each containing 14,000 square feet. The median value (50% higher / 50% lower) would present a far more accurate description of the community than the average value.

Note 1. My thanks to the wonderful article by Elizabeth Stewart, PhD. (“Talking Stuff with Elizabeth Stewart, Ph.D.”) (July 2022).
Note 2. Sources: Fry, R., Pew Research Center (October 1, 2019); Statista (2022).

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 10 Recent Business and Contract Law Cases and Developments

 It is hard to keep up. As noted in my prior article (Blog 149, June 28, 2022), at the end of California’s 2021-2022 legislative session, about 770 new laws were enacted. These new laws are in addition to the hundreds of new judicial opinions and rulings. (All the cases discussed below are California cases unless otherwise noted)

  1. Arbitration Agreement; No Unconscionability in Failing to Provide Spanish Translation. An arbitration agreement, if properly incorporated into an agreement, can be treated as a part of such agreement between the parties, and no separate signatures are required. Here, the court also held that there was no procedural unconscionability in failing to provide a Spanish translation because the person challenging the agreement understood English sufficiently to understand the contract. Author’s Comment: At least theoretically, this case may suggest that it sometimes may be appropriate for contracts to (now) include an initialed English-comprehension representation. Cisneros v. AltaMed Health Services Corp. (CA)
  1. Trigger Date for Starting Notice Period. The trigger date with respect to any claim under a contract would be when the claimant became “aware” (or should have become aware) of the potential claim. This is a matter of proof in which the court would analyze how much the claimant would have had to “know” before he became “aware” of his claim. Sterling Nat’l Bank v. Block (7th Circ).
  1. Liability of Controlling Affiliate. A controlling affiliate of a party which breaches a contract is not liable for interference with contract unless such affiliate acted in bad faith. Surf’s UP Legacy Partners, LLC v. Virgin Fest, LLC. (Del.). 
  1. Breach of Fiduciary Duty; Arbitration Provisions. In a potentially very significant case, a breach of fiduciary duty claim is not within the scope of a standard arbitration provision which relates to “all legal claims arising out of or relating to employment.” Cooper v. Ruane Cunniff & Goldfarb Inc. (2d Circ).
  1. Adhesion Contracts. Such contracts are deserving of “greater scrutiny” including determinations by the court as to “procedural unconscionability” (e.g., considerations such as the sophistication of a party or the presence of hidden or unduly complex contract terms) and “substantive unconscionability” (e.g., the imposition by the contract of “terms beyond the reasonable expectation of an ordinary person”). May v. DirecTV, LLC. (N.D.W.Va.). 
  1. Reckless vs Deliberate Fraud. A simple reference to “fraud” may or may not include claims based upon a party’s recklessness. However, if an indemnification provision references “deliberate” fraud, then such reference should not be deemed to include reckless conduction because “deliberate” means “intentional.” Express Scripts, Inc. v. Bracket Holdings Corp. (Del). 
  1. U.S. Supreme Court Limits California Labor Law That Allows Private Suits Against Employers. In this heavily pro-employer ruling, the USSC “sharply limited” California’s law which had authorized private lawsuits on behalf of groups of workers even if the parties had agreed to resolves all claims through individual arbitration. The 8-1 decision was based upon the holding that the Federal Arbitration Act preempts state law. Interestingly, at the time of the ruling California was the only state which allowed such private suits as a means of enforcing labor laws. The USSC found that by allowing such private suits the state had de facto allowed employees to bypass binding arbitration agreements. Viking River Cruises, Inc. v. Moriana (2022). Savage, D, Los Angeles Times (June 15, 2022). See also, Press Release of Rob Bonta, CA Attorney General about how this case may impact cases (e.g., overtime pay and unsafe working condition cases) which could otherwise be brought under California’s PAGA (Private Attorney Generals Act).  
  1. Limits upon Breaching Party’s Right to Protection under a Contract’s Exculpation Provision. In a case that seems obvious to this author, the court held that a contract-breaching party could not enforce an exculpation clause (basically a contract provision which relieves one party from liability under the contract) if at the time the party seeking exculpation (i.e., relief of liability) were himself or itself in “material” default under the contract. Horne v. Elec. Eel Mfg. Co. (7th Circ).
  1. Application of Choice of Law Provisions. Under a fundamental choice-of-law policy exception, California securities law would apply to the parties to cover issues which are addressed by such laws – even though there were sufficient contacts with the chosen-law state, which in this instance was Delaware. Author’s Note: This is a good reminder case that despite a choice-of-law provision in a contract, there are times when “local” law will continue to apply. Swipe Acquisition Corp. v. Krauss (Del). 
  1. Covid-Related Contract Cancellations Covered by Contract’s Force Majeure Clause. Unsurprisingly, there are a number of cases which have addressed this issue. Also unsurprisingly, the courts, as in this case, have normally found that if the pandemic “directly and proximately” caused the cancellation, then such cancellation may be appropriately justified since the pandemic was obviously “not reasonably foreseen, anticipated, or predicted.” Rudolph v. United Airlines Holdings, Inc. (N.D.Ill.).
Source: Business Law News (CA Lawyers Association) (Issue 1, 2022), pp. 12-15.

 Fancypants Word of the Day

Edacious (Adj) (Latin):  1) Relating to or given to eating, 2) Having an insatiable appetite.

Serious Example: “Her priority was planning the edacious elements of the party.”

Humorous Example: “It is calorically disappointing, but understandable, why Hometown All-You-Can-Eat Buffets target all of their 3-D, wide-screen, scratch-n-sniff food ads to the edacious members of our society.”

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10 Major New Business/Contract Law Cases – The Company We Keep – Guns in the U.S.

Posted by Mack W. Borgen June 27th, 2022

Blog No 149
 June 28, 2022
By Mack W. Borgen
Author (7 Books): The White Binder (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As Advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

Quick Facts about Guns

Introductory Comment: You will find below some facts and ideas regarding guns in the Unites States and our Constitution.
There are 35 sides and 144 perspectives relating to the debate about guns in our country. Some of these perspectives relate to politics (Democrat vs Republican). Some relate to where you live (Montecito, California vs Uvalde, Texas). Some relate to race, … and on and on. Thus, I am NOT here seeking to “take sides” on this issue. However, maybe some gun facts would be helpful. Maybe when the entire rest of the world does things differently, there is a chance that maybe we should think again. We should try to think together. But we must try to think again. Almost in passing, maybe it is also time for a wild idea about our Constitution. 

Average Annual U.S. Gun Sales (Years 2000-2009):             8,284,000 guns per year

                                  Years 2010-2015                                                13,342,000 guns per year

                                  Years 2016 – 2019                                             14,402,000 guns per year

                                  Years 2020 – 2021                                            20,227,000 guns per year

Estimated Number of Privately-Owned Guns in US:       393,000,000 guns 

Number of Privately-Owned Guns Per US Adult:          1.52 guns per US adult 

The Company We Keep – Countries with Most Civilian Firearms:

  Country                   Guns Per 100 People

United States                          120.7

Saudi Arabia                             53.7

Yemen                                        52.8

Serbia                                         39.1

Montenegro                              39.1

Summary: The U.S. has more than twice the number of guns as the next nation in the world (i.e., Saudi Arabia), and – for better or worse – we are in the dubiously distinguished company of Saudi Arabia, Yemen, Serbia, Montenegro. 

Compare – Privately-Owned Guns PER 100 CITIZENS:

Country                      Guns Per 100 Citizens

United States                         120.7

Scandinavia (Note 1)             23.6

France                                       19.6

Germany                                   19.6

Mexico                                      12.9

Russia                                        12.3

Israel                                           6.7

United Kingdom                       5.1

China                                           3.6

Japan                                           0.3

 Summary: The U.S. has more than 5-6 times (!) the number of privately-owned guns per 100 citizens as the next closest nations (Scandinavia and France).

Note 1. Average of Denmark (9.9), Finland (32.4), Norway (28.8, and Sweden (23.1)  Source: Small Arms Survey (Internationally recognized data source based in Geneva, Switzerland).

“JUST AN IDEA” ABOUT OUR CONSTITUTION 

The U.S. Constitution is a document of both brilliance and inspiration. It is the core of our nation’s existence. My uncle died in Italy in World War II defending this country. My father was a Vet. I am a Vet. Many of my friends are vets. But despite the Constitution’s brilliance, it has been amended 27 times. It was amended ten times (the Bill of Rights) before the ink of its first printing was dry. It has been amended another 17 times since then. Even ignoring the Bill of Rights Amendments, our U.S. Constitution has been amended about once every 13.7 years.

Some of the amendments have been especially huge in importance – the 13th Amendment (Abolition of Slavery (1865)), the 14th Amendment (due process and equal protection (1868)), the 19th Amendment (Women’s Right to Vote (1920)), the 21st Amendment (Two-Term Limitation on President (1951)), and the 26th Amendment (Right to Vote at Age 18 (1971)). The most recent amendment was in 1992 (27th Amendment relating to Congressional Compensation).

As terribly difficult is to imagine amidst our highly polarized society, it may be time to start (slowly) working towards some new amendments; to start thinking about another constitutional convention. Read on – this may not be as crazy as it sounds.

Background and Personal Note

Larry Sabato is a brilliant American political scientist. He writes extensively, and he teaches at the University of Virginia. In 2007, he wrote a book entitled A More Perfect Constitution. In that book – nearly 15 years ago now – he outlined the need for another constitutional convention. I still recommend this book highly to all who may be interested. In the course of my writing my first books, The Relevance of Reason series, I communicated with Professor Sabato several times. I remember him telling me how difficult it had been for him to write about “a more perfect constitution” because he could not foresee any mechanism of organizing a second Constitutional Convention.

And, today, it remains hard to disagree with his conclusion – especially so in the context of issues relating to the 2nd Amendment, Roe v. Wade, the separation of church and state, and other culture war issues. Nevertheless, it may be time to start down the long road of organizing another constitutional convention. We could start by focusing upon the need to address more unifying themes — such as America’s desperate need for term limits and our need to diminish the power of money as the de facto tool (weapon?) which controls our political elections.

Just an idea.

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 10 Major Recent Business and Contract Law Developments

 It is hard to keep up. At the end of California’s 2021-2022 legislative session, about 770 new laws were enacted. These new laws are in addition to the hundreds of new judicial opinions and rulings. 

Sampling of Major New Business and Contract Laws or Judicial Rulings

(All California legislation and cases unless otherwise noted)

1. Corporate Governance. Corporations are now authorized to conduct virtual shareholder meetings or hybrid meetings. (Covid-based new law) (No unanimous shareholder or member consent required).

2. Property Law. Since a trust is not a natural person, only trustees – and not trusts – can hold title to property. Boshernitsan v. Bach.

3. Filing of Financing Statements. The perfection of a security interest is governed by the “location” of the debtor (as determined under UCC Secs. 9-301, et. seq.). Thus, a choice-of-law contract does not bind third-parties. The fact that a security interest was created under the law of another state does not change the result. Deutsche Bank Tr. Co. Ams v. U.S. Energy Dev. Corp.

4. “Real-Time” Viewing May Be Basis for Emotional Distress Claims. The viewing of an event in real-time via camera IS sufficient for a bystander to a tort to bring a claim for intentional infliction of emotional distress. Ko v. Maxim Healthcare Servs, Inc.

5. Limits of Liability upon “Controlling Affiliate” of Entity. A controlling affiliate (such as a parent company) of an entity that breaches a contract is NOT liable for interference with contract unless the affiliate acts in bad faith. Surf’s UP Legacy Partners, LLC v. Virgin Fest, LLC.

6. Partnership Law. A partner has a direct claim for damages for breach of a partnership agreement where the breach damages the value of the partner’s partnership interest. Cooke v. Karlseng.

7. Corporate Management. Courts reserve the right to provide equitable relief to invalidate “otherwise lawful board actions tainted by inequitable conduct.” In this case, a board member was “tricked” in order to achieve a quorum without notifying him of the important board action to be taken by the board. Backer v. Palisades Growth Cap. (Delaware).

8. Corporate Liability for Punitive Damages. A corporation may be held liable for punitive damages even if the act of a “particular” corporate officer cannot be shown as acting with malice. Instead, the injured party can show that the structure of the management decision-making “permits an inference that the information in question moved upward to a point where corporate policy was made.” Morgan v. J-M Mfg.

9. Corporate Director Liability. Directors may have personal liability (in this case to a shareholder) for “participating in directing or authorizing” tortious conduct. Holistic Supplements, LLC v. Start.

10. Electronic Contracts. In another online contract formation case, the court held that the process must provide “reasonable notice” of the (contract’s) terms and conditions, and when the  contract is formed online, then the court may review the “clarity and simplicity” of the interface including, for example, (a) how many clicks or taps it takes to see the contract’s terms, (b) the placement of the link to the terms, and ( c) the title of the screen. Kauders v. Uber (Mass).

Source: Business Law News (CA Lawyers Association) (Issue 1, 2022), pp. 4-13.

Thought for the Day

 “The one thing that doesn’t abide by majority rule is a person’s conscience.”

Gregory Peck in his portrayal of Atticus Finch in the 1962 movie To Kill a Mockingbird based upon Harper Lee’s classic book of the same name which had been released just

two years earlier (1960).

 

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“Pass-Through Entities” In a Nutshell – The “Triple Peak” Day – Financial Literacy

Posted by Mack W. Borgen June 6th, 2022

Blog No 148

June 7, 2022

By Mack W. Borgen
Author (7 Books): The White Binder (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As Advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

“Pass-Through Entities” in a Nutshell

When people begin a business, they should not be required to expose all of their personal and familial assets to potential business liability claims. This is one of the primary reasons for forming and then conducting business through the use of entities.

For small and moderate-sized businesses which do not need to raise large capital through the use of, for example, public offerings, the use of “pass-through” entities is one way to more safely conduct one’s business. Pass-through entities are so named because they also provide income tax advantages to the business owners because no taxes are paid at the entity level. Full separate business tax returns do not need to be prepared. Instead, the businesses’ taxable income is reported only on and via the owner’s (or owners’) individual tax returns.

A sole proprietor reports his or her income on a Schedule C to their individual tax return. Other entities such as partnerships and S corporations send their owners annual K-1 tax reporting forms ratably based upon such owner’s share in the profits and losses of the business.

These types of entities are referred to as “pass-through” entities because the owners of such “pass-through” partnership or S corporations (as opposed to, for example, standard C corporations) use them to avoid the imposition of double-taxation – first, at the corporate level, and then again at their personal 1040 tax reporting level.

The popularity of pass-through entities is evidenced by their numbers. Based upon the IRS data (2017), there are roughly three times as many S Corporations (roughly 4.72MM) as there are C corporations. However, since their introduction in the early 1990s, limited liability corporations (“LLCs) are becoming even more popular, and today there are more than 11.0MM such LLC entities.

In California, the annual $800 minimum franchise fee cannot be avoided excepting for (at least through 2023) part or all of the entities’ year of formation. However, this is a small amount to pay in order to minimize one’s personal liability for taxes at both the business level and again at the personal level.

CLOSING NOTE AND ADVISORY CAUTION: It is beyond the scope of this article, but this author normally advises individuals to meet with their insurance advisors during their business formation stage and to seriously consider purchasing some form(s) of general liability policies. Such policies can be surprisingly inexpensive, and (especially in today’s litigious world) the “duty to defend” features of such insurance can sometimes be as valuable as their liability protections.

Part of the above brief article is based upon Bryars Tolleson Spires Whitton, LLP brief article entitled “Understanding Tax Terms: Pass-through Entities (June 2022).

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New Term – The Rise of the “Triple Peak Day”

Historically, the workday has been oftentimes defined as the 9-to-5 workday. However, in an age of remote and hybrid work and with the growing acceptance of work-hours flexibility, the periods of actual and even expected work productivity have changed.

Data has long suggested highest productivity before lunch and after lunch. Now, however, “a third peak (has) emerged for some in the hours before bedtime.” This phenomenon has created what is being frequently referred to as a “triple peak day.” Source: “The Rise of the Triple Peak Day” by Microsoft / Worklab.

The Critical Teaching of Financial Literacy

Money is one of the most-discussed topics between parents and teens. While it is reported that 93% of teens believe financial knowledge is crucial to their achieving their life goals, most 15-to-18-year-old fail basic financial literacy tests.

Arguably, the best — and most thorough — teaching will come from parents and grandparents, but our schools have an important role as well. Finally, some progress is being made.

In 2021, one-half of US states proposed bills requiring personal finance courses to be made a part of high school curricula, and in March, Florida became the largest state to mandate the taking of such class in order to graduate. This year, a record 25% of US high school students are expected to take a personal finance course before graduation – up from 20% last year. And that is good.

April was Financial Literacy Month. Yea, there’s a month for that too. But financial literacy is critically important. You will find below the dozen financial concepts which each of us — and our schools — should assure that children and students and young adults understand.

  1. Bank Accounts. How bank accounts work (basics of tracking and reconciling bank activity).
  2. Credit cards. How credit cards work (exorbitant interest rates and how credit cards create de facto loans).
  3. Tax Basics including the “reading” of one’s pay stub, the basic understanding of Social Security and Medicare taxes, and the automatic deductions and federal and state tax withholdings.
  4. Retirement Accounts including the advantages of long-term savings tools such as IRAs.
  5. Credit Scores. The use, importance and factors affecting credit scores.
  6. Spending within Means. Importance of saving before spending and the mere importance of tracking one’s savings habits.
  7. The Art and Tools of Saving including savings habits and mechanisms such as separate savings accounts or even the use of automatic paycheck transfers.
  8. The Strength of the Less Obvious Forms of Investment such as in oneself in manners such as by dedication, education, or sheer hard work.
  9. Stocks and Mutual Funds. The basic short-term risks and possible long-term advantages of investing in stocks, bonds, and mutual funds and the tracking of stocks via, for example, Dow Jones, S&P, and NASDEQ.
  10. Budgeting. Methodologies of creating a budget and tracking income, spending, and savings.
  11. The Importance and Meaning of Cash Flow including the differences between asset/wealth growth and timing effects of cash flow.
  12. Calculation of Net Worth. The basic presentation and calculation of one’s net worth including assets and liabilities (including contingent liabilities).

Sources: (1) Bryars Tolleson Spires Whitton, LLP., and (2) Robinhood Snacks – Digestive Financial News (April 4, 2022). My special thanks to and recognition of my friend, Mr. Robert Badal of Santa Barbara, California for his long-time efforts in furtherance of encouraging California public school to teach financial literacy.

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Quick Facts RE Women in U.S. – New CA Real Estate Legislation

Posted by Mack W. Borgen May 16th, 2022

 Blog No 147
 May 17, 2022
By Mack W. Borgen
Author (7 Books): The White Binder (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As Advertised in The New York Review of Books. Recipient of Eight National Book Awards
For a “cleaner,” non-email presentation of this and my other blogs, go to  https://www.mackwborgen.com/  and click the “Blogs” tab.

Quick Facts

About Women in the United States 

U.S. Population (2022):                                                                                    332,404,000

Women – Education and Employment

Percentage of all college students who are women                                               60.0%

Percentage of all physicians who are women                                                         36.3% (Up from 27.3% in 2007!)

Percentage of students in medical school who are women (2019-2020 Data – Most Recent Data)      53.5%

Percentage of women who are attorneys in U.S.                                                   37.4%

Percentage of US Congress who are women                                                          27.0%

Percentage of S&P 500 corporate board seats held by women             30.0% (Up 12% in just the last five years)

Percentage of all U.S. businesses owned by women                                           40.0%

More significant data: Percentage of all businesses that employed third-parties:                                              19.9%

Labor Force Participation Rate (Footnote 1) of women with children under 18 years of age:                          56.6%

Women – Households and Motherhood 

Estimated number of mothers in U.S.                                                                   85,000,000 (25.6% of U.S. population)

Percentage of U.S. households with mothers who are either the sole or primary source of family income:     40.0%

Median Age at which women become mothers in the U.S.                            26.7 years

Percentage of Single Parents in the U.S. who are mothers:                          79.5%

Footnote 1. Definition of Labor Participation Rate: The percentage of the civilian noninstitutional population 16 years and older that is working or actively seeking work. The importance of this percentage as a labor force measure is because it tracks the amount of labor resources available for the production of goods and services in the economy. Sources include Census Bureau American Business Survey, paygovernance.com., and Pew Research Center.

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For General Business Planning 

or Corporate, Business or Real Property Law Matters

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Important California Legislation

Affecting the Acquisition, Leasing, and Management of Real Estate

Author’s Note: In my prior blogs, I have focused upon California’s many law changes such as those expanding the rights of homeowners to construct assessor dwelling units (ADUs) on their property. The following are some of the other more important and relatively recent California real property law changes.

Tenant Rights of Lease Termination in Event of Crimes. A residential tenant may now terminate a tenancy without penalty if the tenant, a household member, or an immediate family member of the tenant was a victim of a crime that caused bodily injury or death, an act of domestic violence, sexual assault, stalking, human trafficking, or elder abuse. If a tenant exercises their rights under this right of termination, the landlord may not keep the tenant’s security deposit or any advance rent. 

Homeowner Association Rights to Restrict Short-Term Leasing. While a homeowner is oftentimes not subject to any provision barring the leasing of the owner’s property, the association can prohibit short-term rental of 30 days or less or may adopt restrictions that limit the total number of rentals to 25% of the interests in the subject development.  

Transfer of Tax Assessments. Proposition 19, which was passed in November 2020, allows eligible homeowners (persons 55 years or older, with severe disabilities, or victims of wildfires etc.) to transfer tax assessments anywhere within the state. These tax assessments can be transferred to more expensive homes with an upward adjustment within two (2) years of the sale of the original home.

 Other Subject Areas of Considerable Recent Legislation (Not Detailed in this article):

Moderate-Income Housing. Multiple requirements that city and county General Plans designate sites to meet regional housing needs for moderate-income housing.

Rights of Homeowners’ Association to elect officers by acclamation in certain circumstances. (Effective January 1, 2022).

Reporting of Lead Hazard or Substandard Living Conditions. Requirement of city or county to inspect property if it receives a complaint about lead hazards or substandard living conditions.

Removal of Bias Factors in Real Estate Appraisals and Similar Items. Mandate that all property sales contracts include a notice stating that the property appraisal must be unbiased and not influenced by a multitude of specific factors (e.g., race, color, religion, sexual orientation, etc.). (AB 948) (Effective July 1, 2022). DRE licensees will also be required to deliver parallel notices with respect to refinancing of residential real estate property of up to four (4) units. Multitude of similar types of notice and assistance legislation.

Possibly Advisability of Get CASp (Certified Access Inspections) Prior to Acquiring Commercial Property. While it is far beyond the scope of this article, the article “Equal Access – Including Persons with Disabilities Under the ADA (Authored by Marty J. Nicholson and Janis Kent) (CA Real Property Journal (Vol 39, No. 4, (Nov. 2021)) is highly recommend for persons or entities acquiring real property — especially commercial property. The article provides a wide overview of the 1990 Americans with Disabilities Act, as amended (the “ADA”) and related California laws) and makes a number of ADA-related recommendations such as the possible advisability of using CASp (Certified Access Specialist) inspections especially in the context of commercial property acquisitions.

 Thought for the Day

 “It’s easier to fool people,

Than it is to convince them that they’ve been fooled.”

Mark Twain

Fancypants Word of the Day

Obstreperous (Adj)(Latin) 1) Rowdy, rambunctious, and noisy; 2) Stubborn, uncooperative, or difficult to control.

Examples of uses in sentences:

Serious Example: School recess is full of obstreperous children running around the playground and burning off their energy. 

More Humorous Example: Our nation’s current political debate about our government’s obstreperous behavior is becoming itself more and more loud and obstreperous.

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My Last 20 Short Articles and Quick Facts – Highest/Lowest Tax Burdens – By State

Posted by Mack W. Borgen April 25th, 2022

Blog No 146 
April 26, 2022
By Mack W. Borgen
Author (7 Books): The White Binder (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As Advertised in The New York Review of Books. Recipient of Eight National Book Awards
For a “cleaner,” presentation of this and my other blogs, go to  https://www.mackwborgen.com/  and click the “Blogs” tab.

Need a Brief Pause from Tracking the Stock Market? 

Maybe Just Enjoy My Short Articles 

It has been a tough spring for all of us in the stock market – with no assured improvement yet in sight. But this will pass – just like the social and political chaos and the 132 covid variants and subvariants we’ve had to endure over the last couple of years.

Though there is much we must do. Though there are many to keep in our prayers.

It IS also important to live, laugh, and think about — and those are some of the primary objectives of my now 145 articles. 

Some of my articles are serious — recent court rulings and important real estate and business law developments.

Some articles are humorous.

Some articles focus upon America’s twisty and cantankerous social and political life.

Some articles are humble ideas about how to “Fix America.”

But the hopeful, common theme is that they be thoughtful and fun.

Quick Facts – Best Songs Lyrics and Movie Lines  

And even Fancypants Words we can toss around before closing time.

 So, enjoy. It’s another week. Tax season just passed. Spring is here. Summer is coming. And we deserve it.

Quick Facts

(The Highest and Lowest Tax Burdens – By-State)

The most meaningful way to compare the relative tax burdens in different states is to compare the aggregate amounts of individual income, property, sales and excise taxes as a percentage share of one’s total personal income. The comparative tax burdens amongst the states varies greatly  — from a high of 12.75% (New York) to a low of 5.06% (Alaska). The ten states with the highest and lowest tax burdens are as follows:

Highest Tax Burden States (Range: 9.70% – 12.75%)

  1.        New York (12.75%)
  2.        Hawaii (12.70%)
  3.        Maine (11.42%)
  4.        Vermont (11.13%)
  5.        Minnesota (10.20%
  6.        New Jersey (10.11%)
  7.        Connecticut (10.06%)
  8.        Rhode Island (9.91%)
  9.        California (9.72%)
  10.        Illinois (9.7%) income

Lowest Tax Burden States (Range:  5.06% – 7.47%)

  1.        Alaska (5.06%)
  2.        Tennessee (5.75%)
  3.        Delaware (6.22%)
  4.        Wyoming (6.32%)
  5.        New Hampshire (6.41%)
  6.        Florida (6.64%)
  7.        South Dakota (7.12%)
  8.        Montana (7.39%)
  9.       Alabama (7.41%)
  10.       Oklahoma (7.47%)
Source: CNBC citing data from a WalletHub report, April 1, 2022.

MY LAST 20 BLOG ARTICLES

(Nos. 125 – 145) (Dec 2020 – Apr 2022) 

Find these articles by going to www.mackwborgen.com . Just hit the Blogs tab, enter the month of the article, and scroll to your desired article.

Blog     Date                      Articles and Materials

125      Dec. 1, 2020     Article: Fixing America Idea No. 21 – We Attorneys Are a (Big) Part of America’s Problems (Part 1) ; Fancypants Word of the Day – Neophilia.
126      Dec. 3, 2020     Article: Fixing America Idea No. 21 – We Attorneys Are a (Big) Part of America’s Problems (Part 2); Fancypants Word of the Day – Ensurient.
127      Dec. 16, 2020   Best Song Lyrics of Modern America ; The New Words from Our Covid-19 Year.
128      Dec. 31, 2020   Article: Politics and Pandemic – More of the (Please) Go-Away Words of 2020.
—          Mar. 1,   2021   Announcement – Release of My New Book – The Writings of a Lifetime.  
—          Mar. 8,   2021   Announcement: Front Cover of My New Book and First Reviews.
129      May 17, 2021   Offer: Free Copies of My Books.
130      May 25, 2021   Quick Facts (Corporate Tax Rates); Best Song Lyrics of Modern America – Part 19; Best Movie Lines of All Time; Fancypants Word of the Day – Otiose.
131      Jun. 2, 2021     Article: Fixing America – Idea 22 – Ban Commercially-Driven, Direct-To-Consumer Pharmaceutical Drug Advertising.  
132      Jun. 29, 2021   Article: Fixing America – Idea 23 A (Much) Better Way to Vote.
133      Jul.  13, 2021    Quick Facts (More Paid Labor Hours and Less Parenting); Best Song Lyrics of Modern America – Part 20; Best Movie Lines of All Time; Fancypants Word of the Day – Spoonerism.
134     Jul. 27, 2021    Quick Facts (Wealth Distribution in U.S.); Article: Who to Believe? – The Most- and Least-Biased News Sources – Part 1.
135      Aug. 10, 2021  Article: Who to Believe? – The Worst and the Best News Sources in America – Ranked and Rated – Part 2
136      Dec. 10, 2021   Quick Facts (US Supreme Court and US Military Budget); Article: The (Mis)Use of Litigation, and the Need for the Close Review of “Boilerplate Terms.”
137      Dec. 14, 2021   Reader’s Brilliant Addendum to My Article (The (Mis)Use of Litigation).
138      Jan. 8, 2022     Article: The Please and the 10 Pleas for America’s New Year.
139      Jan. 25, 2022   Article: For All of Us – Major New Project – The White Binder –Your Personal Data Book.
140      Feb. 1, 2022     Announcement: The White Binder – Overwhelming Response.
141      Feb. 15, 2022    Quick Facts (Inflation and Wealth Distribution) – Baby Boomers; Best Song Lyrics of Modern America – Part 21; Fancypants Word of the Day – Potation.
142     Feb. 23, 2022   Article: New California Real Estate Laws – A Quick Summary (and Other New Laws of Interest).
143     Mar. 9, 2022    Announcement: Writer’s Heartbreak, March Madness, and Friends-Only Book Sale.
144     Mar. 22, 2022   Article: The Concept of Periodic Legal Checkups and the Wiser, “Preventive” Use of Counsel;Quick Facts (US Household Net Worth Percentiles); Alternative Post-Pandemic Work Policies.                   
 145     Apr. 5, 2022    Articles: Three Reasons to Read (O.K. At Least Skim) the Fine Print!; Important Employment Law Cases; Major Changes Pursuant to the CA Revised Limited Liability Company Act; Quick (Tax) Facts – US IRS Tax Audit Rate and Nine Recognized IRS Audit Triggers); Fancypants (Acadamese) Word of the Day – Asynchronous Learning.

New Fancypants Word of the Day

Mephitic (Adj)(Latin):  1) Offensive smelling, 2) Harmful or poisonous. Examples of uses in sentences:
Serious Example: “The man with dirty clothes and an overgrown, unruly beard was responsible for the mephitic air on the plane.” 
More Humorous Example: “That stack of dirty clothes in the corner of the room has already become mephitic, and if enough time passes, it could become dangerously mephitic.”

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IRS Audit Triggers – Revised CA LLC Act – Quick Facts-Fancypants Word – More Readers!

Posted by Mack W. Borgen April 4th, 2022

Blog No 145 

April 5, 2022

By Mack W. Borgen

Author (7 Books): The White Binder (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). The New York Review of Books. Eight National Book Awards

For a “cleaner,” non-email presentation of this and my other blogs, go to  https://www.mackwborgen.com/  and click the “Blogs” tab.

Quick (Tax) Facts

IRS Tax Audit Rate: Less than 1%

Removal of Age Limit on Funding IRA: Effective 2019, even a post-70-year-old person can now fund up to $7,000 in a traditional or Roth IRA (Until April 15th of the tax year).

Rarely Need for Concern about Estate Taxation: Except for the very wealthy, estate taxes are rarely a concern because of the high exemption (Federal Exemption: $12.06MM for 2022). This is similarly true for states with estate and/or inheritance taxes, although 16 states do still such taxes.

Nine Recognized IRS Audit Triggers:

1 –        Major changes in income or deductions from your prior year(s).

2 –        Suspiciously rounded numbers (e.g., all ending in a 0 or a 5).

3 –        Misreporting W-2 or 1099 Income.

4 –        Excessively large charitable gifts.

5 –        Claiming of home office expenses.

6 –        Using personal car for business (Recommendation: Keep mileage logs).

7 –        Commingling of business and personal expenses.

8 –        You claimed the first-time homebuyer credit between 2008-2011.

9 –        Non-filing of or incomplete tax returns relating to prior years.

US Taxes Compared to Other Selected Developed Countries:

Denmark                      31.1%

Germany                      30.9%

Australia                      24.1%

U.K.                               22.7%

Japan                             21.0%

Canada                          18.4

United States         16.0%

South Korea                 14.4%

Mexico                           10.8%

(Based on married couple, one income, no dependents). Sources: Ellen Stark (Money); Bruce Horovitz (USA Today and Los Angeles Times)

Thought for the Day

It is hard to imagine that Jimi Hendrix (B: 1942, Seattle, WA – D: 1970, London, England) would have been 80 years old this year. It us even harder to imagine a wide acceptance of his still-resonating line about peace and power (and, for us this year, the tragedies of Ukraine):

“When the power of love overcomes the love of power, the world will know peace.”

Three Reasons to Read (O.K.- At Least Skim) the Fine Print!

 According to a Deloitte survey, 91% of people agree to terms and conditions without reading the legal agreement. However, as tedious as it is – and as almost impossible it is in our “Click Here” / “User Agreements” world, there are at least three reasons why reading entire legal agreements makes sense.

Those three reasons are as follows:

  1. Exit Penalties or Auto-Renewals. Many agreements have an “exit penalty” which requires one to pay for a period of time after you terminate the agreement. Other agreements have trapping auto-renewal provisions.
  2. Conversion of Rights. Some agreements take rights from you such as (a) right to use your likeness and personal information for targeted advertising (Facebook), (b) right to use your presentation without your permission (without attribution) if you are using online tools, and (c) right to track your location (navigation software).
  3. Limitations of Liabilities for Data Breaches. More and more agreements are purporting to insulate companies from any liability with respect to data breaches. Thus, with this in mind, one should be cautious of providing personal information or one should consider obtaining identify theft insurance.

Seemingly boilerplate or otherwise, some clients establish parameters or triggers for close document reviews such as all real estate transactions or if more than a target amount of money is involved. In these instances, the agreement would be reviewed in detail or even by counsel. Sometimes (e.g., in real estate transactions) de facto indemnities or waivers from the other party can be readily obtained. In many other instances, negotiations are impracticable or impossible (such as trying to negotiate PayPal’s 50-page user agreement), and thus the review would be, as a practical matter, only for the purpose of deciding whether to accept or decline the proposed agreement.  Thanks to the CPA Client Letter of Bryars Tolleson Spires + Witton, LLP.

Important Employment Law Cases Pending Before the California Supreme Court

(Note: I routinely draft Employment, Independent Contractor, and similar documents, but I rarely deal with wage-and-hour and whistleblower matters. Nevertheless, as a part of my general business practice, I track such major cases.)

Whistleblower / Retaliatory Termination Claims. People ex rel Garcia-Brower v. Kolla’s Inc.  Involves retaliatory employee termination after a whistleblower claim in which the claim may have already been known by the employer or the subject governmental agency. See also, Lawson v. PPG Architectural Finishes Inc. (Possible imposition by California SC of a “clear and convincing” evidentiary standard).

 Waiting-Time Penalties. Naranjo v. Spectrum Security Services, Inc. This class-action case addresses the issue of whether waiting-time penalties are recoverable for meal and rest period violations. Depending upon the outcome of this case, the potential penalties for CA meal and rest period violations could be substantially increased.

It’s Never Too Late to Remember  – Major Changes Pursuant

to the California Revised Limited Liability Company Act (the “Revised Act”)

The Revised Act became effective fully eight (8) years ago in 2014, but some of its provisions affect LLCs and the acts and transactions of LLCs created even before its enactment. Thus, it is important to remember to review the Operating Agreements of the then- and still-existing LLCs.

Many provisions of the Revised Act are the same as or similar to those of the old LLC Act, but there were a number of important substantive changes. The substantive changes, unless addressed by the LLC’s Operating Agreement, could significantly alter the rights of the members and manager in ways which conflict or override the LLC’s Operating Agreement.

To underscore the possible need to review one’s LLC Operating Agreement – especially if the LLC existed prior to 2014, some of the key – and exemplary — changes are set forth below:

Event of Conflict between Articles of Organization (the “Articles”) and the Operating Agreement. Under the Old Act, in the event of a conflict between the LLC’s Articles and the LLC’s Operating Agreement, the Articles would control. This has now been reversed. Now, in the event of a conflict, the Operating Agreement will control.

Member-Managed vs Manager-Managed. Under the Old Act, an LLC is by default member-managed unless the Articles provide otherwise. Under the Revised Act, an LLC is member-managed unless both the Articles and the Operating Agreement so provide.

Amendment of Operating Agreement. Under the Revised Act and absent an express provision to the contrary in the Operating Agreement, any amendment to the Operating Agreement requires unanimous member approval.

Manager’s Authority. Under the default rules set forth in the Revised Act, a manager has no authority to (a) sell, lease, or exchange LLC assets or (b) take any action “outside the ordinary course of business” without the consent of all members unless such rights of the manager are expressly so provided in the Operating Agreement.

Fiduciary Duties and Duties of Loyalty and Care of Managers and Members. The Revised Act is far more specific about these types of duties. For example, the duty of loyalty cannot be eliminated but the LLC’s Operating Agreement may identify specific types or even categories of activities which would not violate the duty of loyalty so long as they are “not manifestly unreasonable.” Similarly, under the Revised Act the duty of care cannot be eliminated or “unreasonably” reduced.

“Withdrawal” vs “Dissociation.” Under the Old Act, the departure of a member was referred to as a “withdrawal.” Now, this is referred to as a “dissociation. With respect to such “withdrawals/dissociations” there are a number of changes, but possibly the most important is the Revised Act’s defining of certain events which automatically result in a member’s dissociation. Such events include (a) the death of a member, (b) the appointment of a guardian or conservator, or (c) if the member is a trust, the trust’s entire interest is distributed. Possibly most importantly, under the Old Act if a member withdraws, the withdrawing member was not entitled to payment for such member’s interest unless other terms were contained in the Operating Agreement. However, this provision is not included in the Revised Act. Thus, unless the Operating Agreement affirmatively provides otherwise, a withdrawing member may claim entitlement to payment for such withdrawn interest.

Advisability of Review of Articles and Operating Agreement in Certain Cases. The foregoing examples of differences between the Old Act and the Revised Act are highly summarized, and they do not constitute all of the many changes. Especially if the subject LLC was formed prior to 2014 and is still conducting business, (a) the Articles and the LLC Operating Agreement should be closely reviewed to identify any de facto changes triggered by the Revised Act and (b) if and as necessary the members should be apprised of statutorily-enacted changes to their Agreement.

Attribution: The foregoing summary is based upon an excellent article about the California Revised Uniform Limited Liability Act prepared by the Law Firm of Freeman, Freeman Smiley.

Fancypants (Acadamese) Word of the Day

Asynchronous Learning:  Learning and instruction that do not happen at the same place and time.

Examples of use in sentences:

Serious Example: “Until the covid pandemic, I had never really thought much about the importance of using asynchronous learning.”

More Humorous Example: “Leave it to the academics to need a stupid phrase like ‘asynchronous learning’ to discuss the pros and cons of Zoom learning.”

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“Preventive” Legal Planning – New Concept of Periodic Legal Checkups – Quick Facts

Posted by Mack W. Borgen March 21st, 2022

Blog No 144 

March 22, 2022

By Mack W. Borgen
Author, The White Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As Advertised in The New York Review of Books and Recipient of Eight National Book Awards

Quick Facts

 U.S. Household Net Worth Percentiles of Middle, Upper-Middle, and Wealthy Classes

One’s net worth is only measure – and a relatively poor measure – of one’s safety, security, and happiness, but for those who track their net worth, the following is a schedule of the approximate household net worth percentages in the U.SD.

Top 1%           $11,100,000 and above

Top 5%           $  2,585,000 and above

Top 10%         $  1,220,000 and above

Top 15%         $    795,000 and above

Top 25%         $    405,000 and above

 Mean Net Worth of Middle, Upper-Middle, and Wealthy Classes

        Wealth Class Category         Mean Net Worth

      Middle Income                        $104,700

        Upper-Middle                        $201,800

              Wealthy                              $608,900

Source: DQYDJ (Financial and investing websource); Frankenfield, J., Investopedia (10/18/2021).

Back When Zoom Wasn’t a Verb – Alternative Post-Pandemic Work Policies

Many corporations are evaluating their “post-pandemic” policies on remote work. Pre-pandemic, just 4% of employed Americans worked remotely. That percentage increased to nearly 50% by May 2020. To date, the corporate plans appear to be widely divided. Some companies (e.g., Apple, Netflix, Citi, and Goldman Sachs) have established deadlines for full office returns. Some corporations (e.g., Meta, Disney, and Lyft) are “hybrids” and are offering remote flexibility in order to retain talent. Lastly, some corporations (Shopify, Coinbase, and Slack) have deemed themselves remote-first companies. It is this author’s opinion that this sorting will continue for at least a couple of years. However, the likely outcome will be some variants (sorry to use that word) of “hybrid.” While remote work will be far more tolerated – indeed, at times, encouraged, most corporations will demand some in-office returns. A cautionary warning: if at least some regularly scheduled, in-office time becomes required by most corporations, the U.S. may have to endure another round of population and housing relocations.  Source: Robinhood.com. (March 14, 2022)

Humor for the Day

They said, “Do what you love, and the money will follow:”

So, I ate some chocolate cake and drank some tequila.

NOW I WAIT.

Source: My thanks to my friend, Marty Kauth.

The Concept of Periodic Legal Checkups and

The Wiser, “Preventive” Use of Counsel

We live in an increasingly complicated, fine-print, documentary, “Click Here” world. Many Americans will never be forced into litigation over any matter, however most Americans at some point in their life struggle with if-and-when issues as to the advisability of retaining counsel.

However, lost in the event-driven use of counsel is the possibly far wiser approach of regularly having one’s business, professional, financial, and familial affairs overview scrutinized – even if briefly for an hour or two, by a general business attorney. As will be explained below, by preventively using attorneys, clients may be able to avoid costs, achieve advantageous protections for themselves and their family and business, and – most importantly — become apprised of second or third options with respect to many matters.

Too often attorneys are retained either too late or not at all. This recommendation is based upon that costly reality.

This imprudent use of attorneys is due to three things: (1) the manner in which many attorneys themselves seem to primarily practice only “responsive” law; (2) the manner in which certain types of transactions are traditionally closed without the use of legal counsel; and (3) very bluntly, the darn cost – or expected cost – of engaging counsel.

But in some instances, this should change. Attorneys should rethink how they present themselves. They should expand the types of services which they offer. Likewise, individuals should consider regularly and routinely engaging counsel for periodic legal checkups; for even the limited services described below.

Allow me, first, to draw some parallels. We Americans do not think twice about having annual medical check-ups. Many aspects of health and well-being are approached from a preventive perspective. When we visit a doctor, sometimes all is good – the “no-news-is-good-news” visit. Maybe, additional bloodwork is ordered. Maybe, additional tests are needed. But still, we understand the necessity of preventive, responsive care. It is just something which prudent patients do. In a similar manner, we have our teeth cleaned every six months. We get our cars tuned up every 5,000 miles. And on and on.

But unwisely, we normally do not use legal counsel to even generally or lightly overlook our personal or familial finances and affairs except in certain limited contexts such as estate planning. Due especially to perceived cost, attorneys are too infrequently used in a preventive-care manner. Instead, counsel retention is event-driven – being sued, a contract dispute, starting of a new business, or the death of or divorce from a loved one.

It is here recommended that some individuals regularly having their “legal life” regularly and periodically reviewed from a legal affairs perspective. This would be particularly true in at least four instances: (1) mid-career individuals over the age of 45; (2) those with any level of substantial wealth; (3) those who own (or are considering purchasing) a business or equity position in a business as a shareholder, partner, or LLC member; and (4) those who own or have an interest in (or are considering purchasing) any real property other than maybe their personal residence. Also note that this is already done by many corporations and businesses. General Counsels sit in on many meetings, and nearly everything involves the “run-it-by-legal” step.

Admittedly, seeing the “right type” of attorney is important. Many law practices, just like medical practices, are highly specialized – antitrust, tax and estate planning, family or elder law, litigation, personal injury, and so forth. Thus, just as one normally sees a medical internist annually, one would normally want to see a general business attorney for this type of general liability and family documentation legal checkup review.

This recommendation is not made to seek additional work. Instead, it is because attorneys are too often brought in too late – after the lease is signed, after the property is sold, after the deal is done, after words are exchanged, after emails are sent, after the loan is made, after the employee is hired, after the event – whatever it is – has either happened or started to accelerate.

In the context of a periodic legal check-up of one’s affairs, an attorney will rarely be able to give specific advice without investigating the matter or reviewing any underlying documents. But that does not mean that useful advice cannot be rendered or that prudent cautions and considerations cannot be identified.

Such time-constrained, limited scope check-up counseling ideally would require only an abbreviated retention agreement, and the parties would have to make some special termination agreement in the event of a discovered conflict of interest.

Nevertheless, a brief, regular, once-every-year-or-two legal checkup can be invaluable. After even a cursory review of one’s assets, business, family structure, age and so forth, an attorney oftentimes can provide invaluable advice about things the client should consider. Even more important, the attorney sometimes can expand the horizon of options and alternative approaches to any matter a client wishes to address. Lastly, in even a two-three-hour overview, an attorney may identify risks that the client had not previously considered. The meeting could wander from the advisability of various types of life, long-term care, and general liability insurance to the preventive measures one might want to consider with respect to various business matters; and from the possible need for some tax, estate, or gift planning to cautions with respect to the leasing or sale of property.

Some firms will not want to offer this type of service. That is unfortunate, but it is probably true. In addition, any prudent attorney will only be able to render generalized advice based upon a client’s presentation of any given situation or matter. But after even an hour- or two-hour discussion, the client can sometimes quickly sense whether it may be advisable to engage the attorney further. Lest it not be obvious, all preventive actions and many prudent steps can only be taken early on – but not later or after the fact.

For many years, my practice focused in part upon real estate transactions. Thus, allow me to use the above “preventive” retention advice in the context of even a routine residential purchase or sale. Traditionally, such matters have been handled by real estate brokers and mortgage lenders. Possibly, it should be left that way. However, this author believes things have changed; risks have grown.

Today’s residential purchases are oftentimes $1.0MM or $2.0MM or more. These are substantial investments. And they have become more complicated. Especially with the passage of endless state laws, more issues can rise in many contexts.

Continuing with this example, this author recognizes that one is “just” buying a home. However, in today’s market, the amount of money involved is roughly equal to that necessary to launch a small business. The cost of buying a $1.0MM family home is now roughly equivalent to buying about 1,603 roundtrip tickets from Los Angeles to Paris (Single roundtrip ticket = $624). Color me crazy, but if a client were entering into a transaction to buy 1,603 tickets to Paris, it would seem that – even with the presence of an experienced real estate broker – counsel review may be advisable.

In even a limited two- or three-hour generalized legal review of the residential home purchase, what might be learned in this context? The list such things is lengthy – contingency dates; inspection reviews; strict, tax-driven personal usage limitations if it is a second home; leaseback liabilities and complications (especially with the covid lease termination protections available to tenants in some states); ADU impacts; renter’s insurance in the event of a leaseback; time-stamped video recording of house condition; costly propane and freon fill-ups; payment for re-keying; and on and on.

Again, this article is NOT offered as an empty encouragement for the use of attorneys. Instead, it is written because knowing when to retain and how to use attorneys can be a complicated, costly, and frustrating matter. Thus, this article is offered merely as an encouragement for the better, preventive use of attorneys. Anticipation of an issue is immensely easier and more cost-efficient than reaction to an issue. If we readily and almost without thinking, see our doctors once a year for medical checkups (whether we think we need to or not), it is recommended that we view our relationship with our family or business counsel in a similar manner — although I think that once every two years may, in many cases, be adequate. Also, a great amount of time, money, and anguish can be saved by developing a lasting and trusting relationship with an attorney or firm through the use of such periodic legal checkups.

The truth is:

I do not know which is more important – Saving money or having peace of mind –

Both are good.

And best of all,

Both are achievable.

And periodic legal “checkups” every couple of years may help.

A lot.

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