I have no professional training in the security field and no law enforcement or military experience, but my decades of experience as a practitioner and instructor of concealed carry tells me that security at a recent local political event was probably lacking in a few respects. For the safety of both dignitaries and others attending, i hope security can be strengthened with an eye toward ever-changing current local laws affecting both threat and defense matrices.

This particular event was a fundraising dinner for an influential local lobbying group, featuring a nationally-known, high-level dignitary i was eager to meet. Prior to the event, i called the organizers to see what restrictions there might be on concealed carry at the event. I was told there would likely be no screening of attendees with metal detectors and such, and i confirmed that the meet and greet was to take place at a so-called “bar” located on the private ranch hosting the event. I was told the “bar” was not a commercial bar with liquor license for the sale of liquor, but from the description it seemed clearly to be a place with the primary purpose of dispensing alcohol. It turned out to be a very nicely-appointed bar operated by catering staff who poured drinks but took no money. Heaven, for bar-goers.

Based on the information i had, i decided to leave my gun in the Jeep during the meet and greet, and then retrieve it before the dinner/speech segment which was to be held in a giant outdoor pavilion (i never actually retrived it as i was running short on time before dinner). The reason i disarmed is PC §26200(a)(2), enacted recently as part of SB2’s overhaul of concealed carry rules:

(a) While carrying a firearm as authorized by a license issued pursuant to this chapter, a licensee shall not do any of the following:

….

(2) Be in a place having a primary purpose of dispensing alcoholic beverages for onsite consumption.

This particular section applies to this “bar” even though it is not licensed to sell liquor commercially. A separate prohibition applies to carry at bars and restaurants selling liquor under another section PC §26230 featuring a long list of “sensitive places” where our hallucinatory, marijuana-toking legislature dreams it has authority to restrict carry. A federal judge issued an injunction against almost all of these restrictions, but later a Ninth Circuit panel decision lifted the injunction as to about half of those places, effectively disarming Californians in much of California (relying partially, in traditional Democrat character, on an 1865 Black Code to do so). 

Security was lacking in my opinion, first of all, because there was no screening of attendees. Maybe they decided against that because it was a fundraiser and some people might not have liked that. I wouldn’t have minded that so much for this event for a dignitary, as i was told there would be several sheriff’s deputies present, though i think there is an unjustified overreliance on law enforcement for security. Remember how that went for Trump in July of 2024? That whole SNAFU might well have been handled more effectively with armed private citizens carrying openly, together with appropriate plexiglass barriers. Dozens of people saw what was happening but the cops they informed were wacky toon versions of the Keystone Cops. Nothing worked in law enforcement that day. Even after being spotted by a local cop, the shooter was able to get multiple rounds off, hitting Trump and several others.

Secondly, if you are NOT going to screen, then at least hold the event at a location where concealed carry is not prohibited. That way licensed concealed carriers may be able to help, if they are “lucky” enough to be in a position to do so. If the cops think they can handle it themselves then fine, if they screen. Absent screening, why stack the deck in favor of the suicidal criminal who doesn’t care about following the rules proscribing carry? Such attackers actually seek out “gun-free zones” for their attacks.

This event was only about a week after the assassination of anti-Ukraine bigot Charlie Kirk, and the short conversation i had with the dignitary at this event indicated high concern over death threats. I considered immediately bringing up these security concerns but decided it was probably not the best time and place to do that, especially since he was quite rattled (and i was quite embarrassed) after i accidentally dropped my glass of soda water and it loudly shattered next to him. (Might have sounded like a gunshot.) 

All such events, without screening, should be held in places where concealed carry is allowed. California is not the only state where laws are in flux due to aggressive gun grabbers taking advantage of uncertainty over the scope of permissible “sensitive places” exclusions on carry.

Conservative events without dignitaries should also try to locate where concealed carry is allowed, for obvious reasons. Too many of these events are located in places where carry is banned.

Due to the concerning recent increase in “assault tranny” mass shooters, our Attorney General Pam Bondi has apparently been considering some type of ban or restriction on gun rights enjoyed by “transgender” individuals.

This is a horrible idea for a lot of reasons. It’s a slippery slope posing a risk to all our rights, and of course it directly threatens the “transgender” person’s right to life if they lose the ability to defend it.

I’m glad to see gun orgs swiftly and clearly REJECT this ludicrous idea.

Yes, there is mental illness involved and violence is an increasing problem in this group. But that doesn’t mean all of them are violent. Red flag laws can be a solution if they are carefully tailored to prevent violation of due process rights. Regardless, we know bans do not work. Nature finds a way, and so will these people.

As always, the best solution is for the public to arm themselves for defense in these situations.

Stories here, here, here, here, here, and here.

The assassination of Charlie Kirk is so shocking, it is certainly a turning point for US culture and politics.

The horror is captured in the graphic blood-spurting video at left, included here not for shock value but to honor the man. That’s not a gun in his hand, it’s a microphone. This was truly the death of a martyr and a patriot.

America changed in that moment, and that led to an aftershock, the tsunami of fearless commentary in support of Kirk that took over the airwaves, and grew into a massive memorial service filling a stadium and attended by VIPs you would expect only at the passing of a head of state. Kirk was key to Trump’s electoral success, but for anyone concerned about the future, it is clear Turning Point is here to stay as a force for revival of the American family.

The most shocking thing to me is how little shock i felt, or feel. Rush’s passing was a gut punch, but Kirk’s was almost nothing to me.

I agreed with Kirk on almost every issue and i am well aware of his importance in getting Trump elected and to the future of our GOP, but when he started spreading putlerprop on Ukraine, i stopped listening to him and the radio and TV networks who gave him a platform for all that evil propaganda supporting Russian imperial genocide. Unfortunately for the GOP, with very few exceptions almost every conservative pundit bought into the lies spread by the likes of Kirk and Tucker Carlson.

I certainly cannot speak for every Ukrainian and i am not even Ukrainian. (No matter, since few Ukrainians know anything about Charlie Kirk.) Nor is my daughter Ukrainian, since under international law natural born citizenship passes only through the father (though she speaks both Russian and Ukrainian, fluently).

But my wife is Ukrainian, and so is her immediate family dodging various types of Russian bombs near the front in eastern Ukraine. Yes, Russian is their main language. No, they do not want to live in “Russkiy Mir”, and neither do their neighbors. We are in regular contact, so based on this admittedly small pool of Ukrainians i have a fairly good read on how Ukrainians remember Chalie Kirk, or should.

Official Ukraine has tact that i obviously lack and Zelensky expressed polite condolences without bringing up that whole support of genocide stuff, letting bygones be bygones. Of course it didn’t take long for Putler’s pal Medvedev to blame Ukraine for the assassination (see here for example).

Strong Ukraine supporters Sebastian Gorka and Mark Levin expressed deep affection for Kirk despite differences over Ukraine. But Levin was critical of Zelensky after his rude welcome at the Oval in February and to my knowledge neither Gorka nor Levin have close family dodging bombs near the front.

So what are some of the lies about Ukraine (what i call putlerprop) spread by Kirk?

He said so much in various media that i’m sure i don’t have a complete inventory (again, i stopped listening to him). For example, i don’t see any statements of his on the biolabs nonsense, but wouldn’t be surprised if he spread that too.

This Estonian observer points out a few things. Days before the full-scale invasion, Kirk labeled the conflict nothing more than a “border dispute”. Yet after the invasion, he said it was a “moral disgrace” for the US to focus more on Ukraine than its own southern border (as if we are not capable of handling both issues simultaneously; note that Kirk never supported assistance to Ukraine, not even after Trump fixed the border). In a Rodney King-like comment he publicly apologized to Russia on behalf of Americans, telling them we all just wanna get along. He also claimed Zelensky is some sort of CIA agent (the 74% of Christian Ukraine that voted for and still support this popular Jew would claim he is THEIR agent).

The Kyiv Independent points out that Kirk denounced Ukraine as corrupt, called Zelensky a “puppet of the CIA”, and claimed that occupied regions such as Crimea want to be part of Russia. They also point out that Kirk sharply criticized Zelensky after the infamous Oval Office meeting last February (my wife and i watched the entire hour-long video and saw no rudeness by Zelensky, only from hisvicedickishness Vance and then Trump when he had to jump in and defend Vance after Vance messed things up). The KI does note that Kirk called Putin a “gangster” and a “thug” and stated that Russia’s invasion of Ukraine was wrong.

The Kyiv Post has a little more detail:

Kirk was known for his vocal opposition to US military and financial aid to Ukraine, frequently advancing pro-Russian talking points. Ukrainian media reported he had called President Volodymyr Zelensky a “CIA puppet” and claimed that eastern Ukraine “historically belongs to Russia.”

After the Russian full-scale invasion of Ukraine in February 2022, Kirk characterized the War in Ukraine as a “border dispute” and spread false claims from Russian state media that Ukrainian forces were firing mortar shells at a Russian separatist enclave in Ukraine, as per the New York Times.

“I don’t love the idea of sending arms to Ukraine.” Kirk said on his show.

“I can understand that to a certain extent, but further funding a kinetic conflict against Russia and the Russian Federation is not our fight, not our conflict”

He criticized the US government for giving money and weapons to a country that “few people can find on a map.”

Kirk believed that Washington was “wrong” to view Russia as an enemy, even though he “does not like the Russian Federation or Russian dictator Vladimir Putin.”

Kirk also stated that the Ukrainian “military-industrial complex” and the oligarchs of Ukraine’s ruling class would benefit from the war.

Kirk labeled Ukraine’s brave Azov battalion as “Neo-Nazi” even though the few members who were using those symbols (which has pretty much stopped) were for the most part simply Ukrainian nationalists who hearken back to the days when nationalists allied with Nazi Germany to fight Soviet Russia. Ford vs Chevy, only two choices in those days. Plus Azov worked fine with Zelensky, who is Jewish. And Kirk doesn’t bother to point out the tens of thousands of innocent civilians buried in mass graves in Mariupol, just one of many cities to suffer Putler’s mass genocide. And it’s only fair to mention this article about use of Nazi symbols at Kirk’s rally on the day he was shot, not that i actually think he was a Nazi but it’s only fair to point this out and at a minimum it provides some basis for Antifa to claim they got a “fascist”. Finland also had an issue with Nazi symbols use in its military logos, but no one thinks Fins are Nazis. To think that shows extreme ignorance of history.

This UNN article has more:

It should be noted that the American blogger repeatedly spoke negatively about Ukraine. In particular, in 2023, the Center for Countering Disinformation reported that Kirk called for an end to the provision of American financial aid to Ukraine and criticized the activities of Ukrainian President Volodymyr Zelenskyy.

It’s simply unacceptable for ordinary people to spend $2 trillion that you don’t have on wars you can’t win, defending people who don’t belong to you, while you’re being invaded by people we don’t know. Cut spending. End the mess in Ukraine

Kirk called Zelenskyy a fraud and a “puppet of intelligence services.”

Now understand that Zelenskyy is simply being fed talking points by our own intelligence services. Zelenskyy is a puppet of the intelligence services. Zelenskyy is not just persecuting Putin… He is declaring war on the Russian people. He is not just saying that Putin is bad, listen carefully. He is saying that Russian society is bad. This is how nuclear war arises. Zelenskyy probably blames the entire population of Russia for allowing “another Hitler” to seize power. If this is another Hitler who came to power, Zelenskyy, then why are there so many Nazis in your army?

• At the very beginning of Russia’s full-scale invasion of Ukraine, Charlie Kirk simply called it a “border conflict.”
• He also stated that “Crimea should be returned to Russia as a gesture of goodwill.”
• He accused Volodymyr Zelenskyy of the absence of elections in Ukraine. (Editor’s note: opponents constantly reminded him of the Constitution of Ukraine and martial law, and also cited examples that there were no elections in Great Britain during World War II. The same applies to the USSR: elections to councils in the USSR began to resume only after the war, from 1946).
• Charlie Kirk repeatedly wrote that Zelenskyy “holds Europe hostage, demanding money in exchange for adequate treatment of refugees so that they do not start terrorizing Europe.”
• He also praised BRICS and, of course, constantly criticized the allocation of money for aid to Ukraine.

In this 10/31/23 post Kirk claims a “victory lap”:

Just a year and a half ago, 90% of Americans supported unlimited aid to Ukraine. Only a tiny handful stood in opposition. Eighteen months later, Charlie has been vindicated, as a new Time story exposes the ongoing corruption and futility of the Ukraine war. Charlie looks back on how public opinion has evolved, and what it means for the future of Ukraine, America, and the world.

Yet Trump just posted (see left column) on Truth that he thinks Ukraine can win back all territories taken by Russia “and maybe more”. Kirk was still opposing aid to Ukraine in a post on 7/8/25, even though Trump had already pivoted by then toward supporting Ukraine. 

Conservatives detest the notion (called “bothsidesism”) that both sides of the political aisle are to blame for political violence. The violence is clearly on the left in America. Why are American conservatives, who supposedly believe in the right to life and in peace through strength, so horribly blind when it comes to Russian imperial genocide? These gullible isolationists just throw up their hands and say “both sides” must be at fault. 

Neither Trump nor Kirk is stupid. Although Trump’s rhetoric at times was questionable, and the Oval Office incident was itself such an abomination as to be almost another genocide of Ukraine, the fact is that Trump’s actions have almost always been much better for Ukraine and Europe than those of the Dems. I think Trump may have held for awhile to the old Kissingerian establishment doctrine of appeasing Russia on Crimea, but Trump has clearly shed that illusion now, if in fact he still suffered from it. I think it more likely Trump’s “appeasement” was simply to buy time so that he could get American diplomacy/trade/economy/military back in shape after Biden. Trump needed isolationists like Kirk to win office, but Trump’s rhetoric as well as action must pivot toward Ukraine if he is not to lose the midterms.

As for Kirk, his “business plan” involved building support among young males afraid to fight WW3. Kirk delivered them with his isolationist putlerprop. That’s not going to work anymore.

The Kirk camp is filled with isolationists: MTG, Tucker Carlson, presidential son Donald Trump, Jr., etc. And what the hell happened to Glenn Beck?? He used to be the greatest critic of Putin and the threat Putler poses to Europe, and then like overnight he suddenly switched sides. Doesn’t anyone remember Beck’s old videos?? They have all slandered Ukraine with extremely offensive comments that our great President would never make. Don Jr is especially disappointing. I suppose it’s possible they are all cooperating in a giant head fake against Russia but that sounds like fantasy even though it would be fantastic.

One final note on Pastor Rob McCoy, who as Kirk’s friend and pastor made the first speech at Kirk’s memorial. When we were kids, Rob and i attended the same Catholic parish, were in the same Scout troop, and went to the same high school. Not exactly close friends, but we knew each other. Haven’t talked with him much since, outside of high school reunions and only several of those briefly. But i do recall he had an extremely negative view of Zelensky. My understanding is that his daughter married into a well-to-do Ukrainian family and Rob’s wife Michelle told my wife the family was from Dnipro (my wife’s hometown) but the family is now all here in the US. My mother-in-law thought she recognized the family name as the same as a bureaucratic high-up in Dnipro, from years ago. This is just speculation, but it’s plausible that the family could have been part of the old guard connected to establishment prior to Maidan in 2014 (when Yanukovych high-tailed it to Russia), and that would explain why they are all apparently here now in the US and why Rob has such disdain for Zelensky. I have Rob’s mobile and could ask him about all this to confirm, but it would be a weird conversation and unnecessary. Not at all suggesting anything inappropriate here, just making the point that Kirk’s inner circle seems to be rather anti-Ukraine, or at least anti-Zelensky. 

In January 2024, Kirk said that a “myth” had been created around Martin Luther King which had “grown totally out of control” and that King was currently “the most honored, worshiped, even deified person of the 20th century” despite “most people” supposedly disliking him during his life. There is much good in what Kirk did for the conservative movement, but that movement could be threatened if it does not temper the current “deification” of Kirk with some realism about where he erred.

A California appellate court ruled in Groebner v Super. Ct. that in a probate case a demurrer can be filed at any time at or before the initial hearing.

California’s Code of Civil Procedure (CCP) specifies that a demurrer must be filed within thirty days of a complaint. The CCP applies to probate cases, except where the Probate Code provides otherwise, which it does in §1043.

We can help you with your estate matters, whether trust admin, probate, or even a demurrer in probate.

Learn more at CentralCoastProbate.com

Not saying we need to ban all cars. But this one was an SUV. And it was BLACK. Made with GERMAN precision. Probably not even electric. 

Story here:

VANCOUVER, British Columbia (AP) — Murder charges were filed Sunday against a suspect in a weekend car ramming attack that killed 11 people between the ages of 5 and 65 at a Filipino heritage festival in the city of Vancouver, a tragedy that shook Canada on the eve of a federal election.

The British Columbia Prosecution Service charged Kai-Ji Adam Lo, 30, with eight counts of second degree murder and said more charges were possible. Investigators ruled out terrorism and said Lo had a history of mental health issues.

Lo, a Vancouver resident, appeared in court and remains in custody, prosecutors said. An attorney for Lo wasn’t listed in online court documents and The Associated Press wasn’t immediately able to reach an attorney representing him.

Dozens of people were injured, some critically, when a man driving a black Audi SUV entered the street just after 8 p.m. Saturday and struck people attending the Lapu Lapu Day festival. He was arrested at the scene. Authorities had not released victims’ names by Sunday evening.

Democrat Senator (and former VP candidate) Tim Kaine shockingly rejected the self-evident Truth, stated in our Declaration of Independence, that our rights come from God rather than government.

Is it not crystal clear that the Democrat Party is the party of godless woke fascist communards?

How about designing your estate plan to pass on values that matter?

The video below shows Kaine putting his cloven hoof in his mouth, and Senator Cruz attempting to exorcize the Republic.

Research published in the American Journal of Transplantation shows that Chinese communist physicians are actively participating in the execution of prisoners and the harvesting of their organs:

The dead donor rule is fundamental to transplant ethics. The rule states that organ procurement must not commence until the donor is both dead and formally pronounced so, and by the same token, that procurement of organs must not cause the death of the donor. In a separate area of medical practice, there has been intense controversy around the participation of physicians in the execution of capital prisoners. These two apparently disparate topics converge in a unique case: the intimate involvement of transplant surgeons in China in the execution of prisoners via the procurement of organs. We use computational text analysis to conduct a forensic review of 2838 papers drawn from a dataset of 124 770 Chinese-language transplant publications. Our algorithm searched for evidence of problematic declarations of brain death during organ procurement. We find evidence in 71 of these reports, spread nationwide, that brain death could not have properly been declared. In these cases, the removal of the heart during organ procurement must have been the proximate cause of the donor’s death. Because these organ donors could only have been prisoners, our findings strongly suggest that physicians in the People’s Republic of China have participated in executions by organ removal.

Physician clients have told me that pretty much the same thing happens here in the US, on a much smaller scale. Organs are often removed a little sooner than they should, for example.

Keep all this in mind when drafting your estate plan, particularly health care documents.

Almost every estate planning client has family protection as a major if not primary legacy goal.

The worst legacy you can leave is to leave your children fighting each other.

Looks like that’s what Tony Bennett did, because he put his trust in one child to administer his estate for the other children.

That’s fine in theory, and often it works out.

Often, it does not.

There are alternatives. You can name all the kids as co-trustees. You can name close friends or possibly other relatives. You can name a trust company or a licensed professional fiduciary. You can give various persons the right to remove and replace a trustee. You can include provisions for a trust protector, for an even higher level of protection against intra-family litigation.

Some of the worst estate planning is found among the wealthy.

A hero armed with his self-defense handgun joined with several other bystanders to actively subdue the attacker in a mass stabbing at a Michigan Walmart. (I’m placing this one on my “mass shootings” list even though it’s a mass stabbing.)

While one could quibble with the hero’s pointing in without firing (generally you train to maintain handgun at low ready and only point in once you have made the decision to fire), pointing specifically at the perp’s head (an almost certainly lethal shot if it hits, and less likely to hit and stop than thoracic center-of-mass and thus frowned upon unless there is no alternative), while using a “gangsta” style grip and stance fraught with so many negatives anyone with training would likely alternate between SMH’s and chuckles, the end result was success and you cannot argue with success. This was a former Marine, Marines are awesome, but most are not trained much in handgun unless they were MP’s. And a lot of ex-military feel like they can get away wihout additional training. Maybe that explains the “style” used here, or maybe this was pure genius. In any form of public speech, you have to know your audience, and holding a gun to a mass stabber’s face is one of the most potent forms of speech. While it’s certainly not textbook, the hero did say the perp appeared nuts and in such situations, if you really want to avoid shooting, it can actually help to seem nuttier than the perp. I think in the video you can sort of see the perp reacting in a “this guy’s nuttier than i am” way. [I did something similar in my own DGU back in 2009 — perp was advancing toward me even though my gun was at low ready, until i stopped withdrawing and actually bared my teeth.] Demeanor is everything.

Stories here, here, here, here, and here.

Assassination culture continues to spread after study shows 56% of Left (those who self-identify as being left-of-center) wants President Trump assassinated.

Of course there is nothing new about this woke fascist terrorism, and it’s not even all that new on the American Left.

Trump supporters have been injured or threatened by leftist violence since Trump’s 2016 campaign. We saw Antifa at work during Trump’s first administration. Then we were blessed with a brief respite from political assassination under Biden’s COVID fascism which some think may have assassinated over a half million Americans dumb enough to take that experimental mRNA vaccine or give it to their kids.

Now the march of the leftist brownshirts continues, with multiple attempts on Trump’s life, and now of course Charlie Kirk.

Pope Leo says we need to end the “pandemic of arms”, but the only solution to assassination culture is gun culture.

As i posted previously, the failure of Rupert Murdoch’s trust to include adequate trust protector provisions allowing, without court action, the shift of control to Lachlan Murdoch, resulted in Rupert’s unsuccessful Nevada suit to reform the trust, a bitter succession fail.

Now it appears the family has settled its differences, but only at the cost of favorite son Lachlan buying out his woke siblings.

Merry Constitution Day!

Honoring our surest guarantee of Family Power.

Here is text of the original US Constitution, without any amendments:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Article. I.
Section. 1.
All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.
Section. 2.
The House of Representatives shall be composed of Members chosen every second Year by the People of the several States, and the Electors in each State shall have the Qualifications requisite for Electors of the most numerous Branch of the State Legislature.
No Person shall be a Representative who shall not have attained to the Age of twenty five Years, and been seven Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State in which he shall be chosen.
Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons. The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct. The Number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative; and until such enumeration shall be made, the State of New Hampshire shall be entitled to chuse three, Massachusetts eight, Rhode-Island and Providence Plantations one, Connecticut five, New-York six, New Jersey four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, North Carolina five, South Carolina five, and Georgia three.
When vacancies happen in the Representation from any State, the Executive Authority thereof shall issue Writs of Election to fill such Vacancies.
The House of Representatives shall chuse their Speaker and other Officers; and shall have the sole Power of Impeachment.
Section. 3.
The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof, for six Years; and each Senator shall have one Vote.
Immediately after they shall be assembled in Consequence of the first Election, they shall be divided as equally as may be into three Classes. The Seats of the Senators of the first Class shall be vacated at the Expiration of the second Year, of the second Class at the Expiration of the fourth Year, and of the third Class at the Expiration of the sixth Year, so that one third may be chosen every second Year; and if Vacancies happen by Resignation, or otherwise, during the Recess of the Legislature of any State, the Executive thereof may make temporary Appointments until the next Meeting of the Legislature, which shall then fill such Vacancies.
No Person shall be a Senator who shall not have attained to the Age of thirty Years, and been nine Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State for which he shall be chosen.
The Vice President of the United States shall be President of the Senate, but shall have no Vote, unless they be equally divided.
The Senate shall chuse their other Officers, and also a President pro tempore, in the Absence of the Vice President, or when he shall exercise the Office of President of the United States.
The Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.
Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States: but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment and Punishment, according to Law.
Section. 4.
The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.
The Congress shall assemble at least once in every Year, and such Meeting shall be on the first Monday in December, unless they shall by Law appoint a different Day.
Section. 5.
Each House shall be the Judge of the Elections, Returns and Qualifications of its own Members, and a Majority of each shall constitute a Quorum to do Business; but a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.
Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a Member.
Each House shall keep a Journal of its Proceedings, and from time to time publish the same, excepting such Parts as may in their Judgment require Secrecy; and the Yeas and Nays of the Members of either House on any question shall, at the Desire of one fifth of those Present, be entered on the Journal.
Neither House, during the Session of Congress, shall, without the Consent of the other, adjourn for more than three days, nor to any other Place than that in which the two Houses shall be sitting.
Section. 6.
The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.
No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time; and no Person holding any Office under the United States, shall be a Member of either House during his Continuance in Office.
Section. 7.
All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.
Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the Votes of both Houses shall be determined by yeas and Nays, and the Names of the Persons voting for and against the Bill shall be entered on the Journal of each House respectively. If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by their Adjournment prevent its Return, in which Case it shall not be a Law.
Every Order, Resolution, or Vote to which the Concurrence of the Senate and House of Representatives may be necessary (except on a question of Adjournment) shall be presented to the President of the United States; and before the Same shall take Effect, shall be approved by him, or being disapproved by him, shall be repassed by two thirds of the Senate and House of Representatives, according to the Rules and Limitations prescribed in the Case of a Bill.
Section. 8.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
To establish Post Offices and post Roads;
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
To constitute Tribunals inferior to the supreme Court;
To define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations;
To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
To provide and maintain a Navy;
To make Rules for the Government and Regulation of the land and naval Forces;
To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;—And
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
Section. 9.
The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.
The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.
No Bill of Attainder or ex post facto Law shall be passed.
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
No Tax or Duty shall be laid on Articles exported from any State.
No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.
No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.
Section. 10.
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.
Article. II.
Section. 1.
The executive Power shall be vested in a President of the United States of America. He shall hold his Office during the Term of four Years, and, together with the Vice President, chosen for the same Term, be elected, as follows
Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector.
The Electors shall meet in their respective States, and vote by Ballot for two Persons, of whom one at least shall not be an Inhabitant of the same State with themselves. And they shall make a List of all the Persons voted for, and of the Number of Votes for each; which List they shall sign and certify, and transmit sealed to the Seat of the Government of the United States, directed to the President of the Senate. The President of the Senate shall, in the Presence of the Senate and House of Representatives, open all the Certificates, and the Votes shall then be counted. The Person having the greatest Number of Votes shall be the President, if such Number be a Majority of the whole Number of Electors appointed; and if there be more than one who have such Majority, and have an equal Number of Votes, then the House of Representatives shall immediately chuse by Ballot one of them for President; and if no Person have a Majority, then from the five highest on the List the said House shall in like Manner chuse the President. But in chusing the President, the Votes shall be taken by States, the Representation from each State having one Vote; A quorum for this Purpose shall consist of a Member or Members from two thirds of the States, and a Majority of all the States shall be necessary to a Choice. In every Case, after the Choice of the President, the Person having the greatest Number of Votes of the Electors shall be the Vice President. But if there should remain two or more who have equal Votes, the Senate shall chuse from them by Ballot the Vice President.
The Congress may determine the Time of chusing the Electors, and the Day on which they shall give their Votes; which Day shall be the same throughout the United States.
No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.
In Case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office, the Same shall devolve on the Vice President, and the Congress may by Law provide for the Case of Removal, Death, Resignation or Inability, both of the President and Vice President, declaring what Officer shall then act as President, and such Officer shall act accordingly, until the Disability be removed, or a President shall be elected.
The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be encreased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.
Before he enter on the Execution of his Office, he shall take the following Oath or Affirmation:—”I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”
Section. 2.
The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States; he may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices, and he shall have Power to grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment.
He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.
The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.
Section. 3.
He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.
Section. 4.
The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.
Article. III.
Section. 1.
The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.
Section. 2.
The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction;—to Controversies to which the United States shall be a Party;—to Controversies between two or more States;— between a State and Citizens of another State,—between Citizens of different States,—between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.
In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.
The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury; and such Trial shall be held in the State where the said Crimes shall have been committed; but when not committed within any State, the Trial shall be at such Place or Places as the Congress may by Law have directed.
Section. 3.
Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.
The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted.
Article. IV.
Section. 1.
Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.
Section. 2.
The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.
A Person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on Demand of the executive Authority of the State from which he fled, be delivered up, to be removed to the State having Jurisdiction of the Crime.
No Person held to Service or Labour in one State, under the Laws thereof, escaping into another, shall, in Consequence of any Law or Regulation therein, be discharged from such Service or Labour, but shall be delivered up on Claim of the Party to whom such Service or Labour may be due.
Section. 3.
New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.
The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.
Section. 4.
The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.
Article. V.
The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.
Article. VI.
All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution; but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.
Article. VII.
The Ratification of the Conventions of nine States, shall be sufficient for the Establishment of this Constitution between the States so ratifying the Same.
The Word, “the,” being interlined between the seventh and eighth Lines of the first Page, The Word “Thirty” being partly written on an Erazure in the fifteenth Line of the first Page, The Words “is tried” being interlined between the thirty second and thirty third Lines of the first Page and the Word “the” being interlined between the forty third and forty fourth Lines of the second Page.
Attest William Jackson Secretary
done in Convention by the Unanimous Consent of the States present the Seventeenth Day of September in the Year of our Lord one thousand seven hundred and Eighty seven and of the Independance of the United States of America the Twelfth In witness whereof We have hereunto subscribed our Names,
G°. Washington
Presidt and deputy from Virginia

A Family Mission Statement can play an important role in growing and maintaining Family Power in the near term and over several generations.

Dynastic trust incentives can help transmit the necessary values for Life, Fortune, and Honor, to grow Family Power, but words on paper are much more likely to lead to a successful legacy when supported by a substrate or lattice of values developed by regular and continuous family discussion during life.

Like a business plan, the Family Mission Statement is continually revised as goals and values come into focus, and failures are addressed. The parents of course have ultimate control as trustmakers and good stewards of their own wealth, but will need to achieve buy-in (assent) from descendants to assure continuation of the legacy, and that requires successful sharing of at least some of these values during life. Buy-in won’t happen without everyone participating. 

Texas recently had a chance to live up to its undeserved reputation as a palladium of gun rights, and failed.

Texas bill SB 82 was allowed to languish and die in committee. The text is very short and could have been improved, for example by narrowing “criminal act” to acts involving use or threat of violence, but the bill had a worthy goal in making business owners liable for crime occurring on their premises if they post signage to prevent concealed carry of firearms by CCW holders. I hope the bill is resurrected, improved, and passed.

Cam Edwards criticized the bill here. I’ve followed Cam for decades, since NRANews days, and met him once back in 2007 at the first Gun Blogger Rendezvous in Reno. I lost track for several years after getting banned from Facebook and LinkedIn, but now i follow him on Truth. Few if any protect 2A more fiercely and ably than Cam, but i have to disagree with almost everything in that particular article.

Cam says the bill is akin to gun control in that it makes us give up our property rights in exchange for safety. Nonsense! The business owner is already liable to business invitees (customers) for damages occurring on the premises. The question is, will an intervening tortfeasor’s unforseeable criminal act cut off liability of the business owner? Generally it would, but if the business owner forces his customers to disarm, that very act of creating a victim disarmament zone raises the foreseeability of violent crime in that zone. Maybe not, if customers are thoroughly screened for weapons and security is provided, but no business is going to do that. The reality of “gun free zones” is that they attract armed criminals. So what is really happening without the bill, is that the business owner makes ALL of his customers give up THEIR safety (ie, their right to life) so that the business owner can play not God but a delusional god who thinks criminals (or non-criminals, for that matter) will comply with his stupid sign. SB 82 restores balance by imposing stupid prizes where the business owner decides to play stupid games.

Cam next suggests broadening the bill to apply as well to government property. While that would be nice, as would simply getting rid of all gun free zones, SCOTUS has left ambiguity re sensitive places and broadening the bill would likely make it toxic to legislators at this stage, a poison pill tactic that gun controllers would celebrate.

Having followed Cam for decades, during the heady growth years of shall-issue, i know he is an indefatigable opponent of “gun free zones”. I just have to disagree with his apparent elevation here of property rights over the right to life. Although it is often true that rights to liberty/property/life can be viewed as so related as to be identical (life is property, property is life), there is in fact and in law a hierarchy of rights and right to life must always be at the top. That said, the bill simply restores balance, in response to the business owner’s elevation of his own property right above the right to life of ALL of his customers.

Allowing businesses to prohibit carry with impunity frustrates carry due to the impracticality of complying. And there are additional safety concerns attendant to forcing carriers to load and unload their weapons repeatedly in cramped automobile confines not optimal for safety and under circumstances where the carrier may be rushed due to schedule on a busy day. A stranger could approach, with bad result — it’s happened. 

Most gun owners, even if licensed CCW holders, don’t carry as often as they should and may be unaware of these impracticalities but some empathy could be obtained from teenage girls forced to change in their cars while queer dudes take over their locker rooms.

California narrowly escaped posting of businesses (“vampire rule”) but the Ninth Circuit panel left a clear roadmap (to Hawaii) for imposing it whenever Sacramento wants to take the plunge and throw those dice, politically. 

For now, we have enough on our plate dealing with California’s remaining extremely broad “sensitive place” restrictions. My successful 2A suit could be helpful to anyone seeking to punish wayward cops dumb enough to actually enforce these restrictions. 

Non-charitable purpose trusts are gaining attention as an alternative structure for business succession planning.

Traditional estate planning will often give control to family members, or maybe some of them, in varying degrees, usually through some combination of trusts and trust-owned business entities such as LLC’s. Trusts generally must have beneficiaries and quite often those beneficiaries have some degree of control over the trust and any business it owns. The control of the beneficiaries may be large or small depending how the trust is drafted. There may be a true dynasty trust lumping all descendants together, or perhaps beneficiary-controlled subtrusts, or something in between. The beneficiaries may or may not have the ability to remove and replace trustees. Regardless of the exact structure, the beneficiaries have rights as equitable owners and can sue for various reasons if they are not happy. I encourage clients to consider values transmission planning using incentives, not only in their estate plans but during life in accordance with their family mission which is hopefully consistent with their estate plan. The hope is that transmitting values important to the particular family and giving the beneficiaries some measure of control will keep the trust (including any business owned by it) viable as an instrument to build Family Power, rather than allow independent fiduciaries to ignore those values in favor of more pedestrian values inimical to Family Power, for example subordinating all decisions to a prime directive of protecting the earth from climate change. I mean, who would want that? I tell people all the time, while discussing options for leaving a legacy of firearm training, that i would be equally happy planning for a family that wanted to leave a legacy of fighting climate change — but no family has ever asked me to assist with such nonsense!

Well as it turns out, that is exactly the sort of planning involved in the most famous recent example of a commercial purpose trust. The founder of Patagonia, Yvon Chouinard, cared so much about fighting climate change and taking care of his employees, that he transferred all the voting stock of his company to an Oregon Stewardship Trust under a particularly aggressive Oregon statute allowing commercial purpose trusts with no limit on duration. The trust he created imposed strict requirements elevating his stated progressive goals to a higher priority than earning profit for the shareholders, which is perfectly fine under that statute and similar statutes in other states. The Chouinards donated the rest of the company (non-voting shares) to a 501(c)(4) involved in sympathetic social work and lobbying.

Why let the wealthy woke fascist communards have all the fun? Such a trust could just as easily promote gun culture and firearm training. You might add it as #8 on my list of Seven Types of Gun Trusts, although in my opinion gun trusts work best when they have actual beneficiaries and this purpose trust planning makes more sense holding business assets generating income that could then be used to promote some type of firearm legacy, for example by donating to aligned organizations or perhaps by setting up gun trusts to train actual beneficiaries.

As good as Oregon’s statute is, the state is too far left to be safe for any such gun planning, over the long run. Ditto California. Even with the traditional planning i do in California, i generally recommend moving trusts if feasible out of California once they become irrevocable whether or not they include gun planning. And specifically with regard to purpose trusts, although California does allow them under California Probate Code § 15211, the term is limited to only 21 years and most business owners wanting this type of planning will want to extend their business at least 50 or 100 years, typically. (Under § 15212, California provides separately for pet trusts, another type of purpose trust, which can last up to the lifetime of the pets under that section.)

While fifty or a hundred years is probably sufficient to satisfy the goals of most business owners wanting to create a social legacy for their company as in the case of the Chouinards or other communards or perhaps some great Americans wanting to more broadly transmit the militia ethic beyond merely their own descendants, and definitely sufficient for another possible use which would be to keep the commercial legacy going while bypassing incompetent/disinterested family members until some alternate succession can be arranged (if key employees are not ready to agree to buyout, for example), rest assured there are multiple states allowing purpose trusts of even longer duration, several in perpetuity.

Texas passed a statute allowing purpose trusts just a couple of years ago, which allows a very respectable duration of 300 years and broad flexibility of purpose, whether economic or not, to allow something like what Patagonia did, or maybe something a little more Texas. Couple that with Texas’ unparallelled business climate, and Texas may be your best bet. Attorney David R Duringer and his Protective Law Corporation are qualified to practice law in Texas, as well as California and Washington.

Just in time for Halloween, here is one of several videos left behind by the Satanic leftist assault tranny Minnesota Robin f/k/a Minneosta Robert who shot up a Catholic school this morning (or more precisely, a Catholic church connected with that school), killing several kids.

The video has been disappearing from the internet, no doubt because it is so damaging to the leftist narrative.

The video is extremely disturbing and strongly recommended viewing for parents who want to protect their kids, and kids whose parents won’t.

This post is a brief review of Mark Levin’s new book “On Power“, which i downloaded on Audible.

In short, the book is mercifully short, but it’s also great, like all of Mark’s books. In fact, it might be the greatest.

I say that because while there is no shortage of conservative books discussing inalienable rights, it seems very few focus on the power underlying, protecting, and threatening those rights. Mark’s book makes the simple dichotomy of “negative power” effecting more authoritarian democracy or perhaps tyranny, and “positive power” which is used to establish and preserve maximal rights under ordered liberty. The brevity of the book makes sense in focusing on this very important and very neglected issue of power. Mark treats the issue efficiently, adds sufficient modern context to motivate the reader to action, and then gracefully ends the book without repeating all the great stuff we read in his other books.

Mark writes that there are many forms of power and lists several types of political power, but i would add “Family Power” which could be the subject of another book (i’ll write it if Mark won’t). You could also add “testamentary power” and a few other related subtypes. For several years i’ve been running ads on a local station that plays Mark’s show and each ad recites the mission of my law firm which is to help families grow Family Power by transmitting Life, Fortune, and Honor, to descendants.

My ads also make the point that without Faith and Family, there is no Freedom. In keeping his book short, Mark allows us to focus and act on its critically important message on the importance of positive power. The marxists have indeed put a bullseye on the nuclear family, however we cannot rely on politics and the courts to save the family. Only comprehensive estate planning can, as the most potent form of extra-governmental positive power, effectively transmit the necessary Life, Fortune, and Honor, to descendants.

There appears to be one defect in the book. Mark routinely states, or at least implies, on air and in his books, that Montesquieu originated the idea of tripartite governance with separate executive, legislature, and judiciary, and it is certainly true that our Founders were influenced by Montesquieu’s writings. Yet it was the seminal Ukrainian constitution, the 1710 constitution of Zaporizhian Cossack hetman Pylyp Orlyk, that first provided for a tripartite government with independent judiciary, and this was well before Montesquieu. I know that Mark is a great supporter of Ukraine (where my wife’s family is now getting bombed by genocidal Russian imperialist invaders), so i hope he will mention this on his show if he hasn’t already.

My wife and i look forward to meeting Mark at his book signing at the Reagan library this weekend. Once i get the hard copy i plan on re-reading it (another advantage of short books) and may update this post after i do so.

California Probate Code §15800(b) (set forth below) was amended several years ago to place extra notice burdens upon a successor trustee who takes over a revocable trust upon settlor incapacity, unless someone competent remains with a power to revoke the trust (other spouse in a joint trust, for example). Within sixty days of determining settlor incapacity, successor trustee must now provide a copy of the current trust and all amendments (or a current restatement), plus annual accountings going forward, to all beneficiaries who would take at settlor’s death, except for any contingent beneficiaries the successor trustee deems not likely to actually take at death of the settlor. Failure to comply might well be a breach of fidiciary duty causing substantial damages.

Previously, such duties did not arise until a trust became irrevocable upon death of a settlor.

Note that it is not uncommon for incapacitated persons to regain capacity, and the law does not address this scenario. 

Whether capacity is regained or not, many settlors would abhor the notion of ALL beneficiaries getting this level of detailed information about their estate plan and finances while the settlor is still alive, though incapacitated. Aside from the severe breach of privacy, there is a very practical concern that in some families the required disclosures may spur conflict and perhaps litigation. Although it is tempting for those with a “when in doubt, disclose” mindset to look at this law as a brilliant way to head off future litigation, myriad possibilities exist for extremely adverse outcomes. Few settlors would want to pour accelerant on smoldering conflicts, or stick around for the raging inferno that erupts.

Fortunately, this law allows trusts to draft around it. Your attorney can easily draft your trust to render this §15800(b) completely inapplicable, or perhaps tweak it so that notice is not given to all beneficiaries but only a select few who can be trusted to monitor the successor trustee.

Finally, note that regardless of §15800(b) or how a trust may draft around it, remainder beneficiaries have a right to petition a court to compel accountings or disclosures of other information, including trust documents, and may succeed if they can persuade the court of the necessity.

***

For your reference, here is California Probate Code §15800(b):

(b) Except to the extent that the trust instrument otherwise provides or where the joint action of the settlor and all beneficiaries is required, if, during the time that a trust is revocable, no person holding the power to revoke the trust, in whole or in part, is competent, the following shall apply:

(1) Within 60 days of receiving information establishing the incompetency of the last person holding the power to revoke the trust, the trustee shall provide notice of the application of this subdivision and a true and complete copy of the trust instrument and any amendments to each beneficiary to whom the trustee would be required or authorized to distribute income or principal if the settlor had died as of the date of receipt of the information. If the trust has been completely restated, the trustee need not include the trust instrument or amendments superseded by the last restatement.

(2) The duties of the trustee to account at least annually or provide information requested under Section 16061 shall be owed to each beneficiary to whom the trustee would be required or authorized to distribute income or principal if the settlor had died during the account period or the period relating to the administration of the trust relevant to the report, as applicable.

(3) A beneficiary whose interest is conditional on some factor not yet in existence or not yet determinable shall not be considered a beneficiary for purposes of this section, unless the trustee, in the trustee’s discretion, believes it is likely that the condition or conditions will be satisfied at the time of the settlor’s death.

(4) If the interest of a beneficiary fails because a condition to receiving that interest has not been satisfied or the trustee does not believe that the condition will be satisfied at the time of the settlor’s death, the duties in paragraphs (1) and (2) shall be owed to the beneficiary or beneficiaries who would next succeed to that interest at the relevant time or period as determined under the trust instrument, as amended and restated.

Happy No Kings Day! Happy Independence Day! Happy Fourth of July, America!

Usually i try to get a newsletter emailed on or about the Fourth to celebrate and include some kind of wisdom from the Founders, which is pretty much what i do with all my newsletters, but that ain’t happening this year because JUST A FEW MINUTES FROM NOW our great President Trump will be signing his tremendously important “One Big Beautiful Bill Act” (aka “Make American Workers and Families Thrive Again Act”) making the tax cuts of his first term “permanent” along with many other important reforms. This new legislation will eliminate the economy-killing huge tax increases otherwise set to occur next year.

So instead of a newsletter i’ll be focused over the weekend on updating my general estate planning webinar (located here: Protect.LIFE), which i force prospective clients to slog through if they want a free initial design meeting. Actually i haven’t updated it in several years so it’s really just a good excuse to update things generally. The new act’s effect on estate planning will be minimal, other than to reduce the panic some were feeling about Trump’s tax cuts expiring. That panic caused many to rush into some advanced planning that is now unnecessary for a broad range of mid-size estates. The new act sets the estate/gift/GSTT exclusion at $15 million for 2026 with inflation adjustments thereafter, similar to what it would be under current law if allowed not to expire. Portability is retained for unified estate and gift tax, and we can still have ersatz portability of GSTT exemption via reverse QTIP election. No tampering with grantor trusts, SLATs, etc., so we still have those available for larger estates. Really no surprises here. (Hopefully, you’ll still watch the video once it’s updated.)

I will try to get a newsletter out right after updating the webinar, if i have time before tackling the Rubicon Trail in my Jeep next week.

Meanwhile, I encourage you to browse the wisdom of our Founders here.

A recent study indicates that 31% of gun owners have used a gun defensively at least once over their lives. (I am in this category, and many of my students have confirmed their own defensive gun use (DGU) experiences.)

Furthermore, the same study indicates 82% of these defensive gun uses do not require firing of the gun. In other words, merely dispalying the gun in some manner was effective in stopping the attack. This is consistent with previous studies done by John Lott and others.

Year to year, it may not be a huge risk. But over a lifetime, your risk of being subjected to violent attack is roughly of the same magnitude as your risk of being in a serious car accident (about once in a lifetime).

This should be sobering enough to get you into the free handgun training I offer here.

The recent shooting of a healthcare CEO has promoted increasing discussion of new security protocols among ultra high net worth (UHNW) families and their businesses, involving perhaps purpose-built security trusts funded with business interests, provisions in family office operating agreements, or the creation of family limited partnerships dedicated to security.

The aim of these UHNW arrangements is to expand protection to family members as a tax-free benefit while tax-deductible expense for the security (and even commuting) is covered by the business.

Planning done at the foundational level for legacy of firearm training can to some extent augment the family protection provided by these business arrangements, though obviously not in the same income tax leveraged way.

Less wealthy business-owning families that seriously adopt a family mission to foster the militia ethic of training within their families, pre-mortem as well as post-mortem, may further benefit from some of the advanced security planning now being considered by some UHNW families, and possibly with tax savings.

Attorney David R. Duringer has filed a 92-page federal complaint (Duringer v Morro Bay) in US District Court, Central District of California, against the City of Morro Bay and several other defendants, for violation of his civil rights under the US Constitution, specifically under the First Amendment, the Second Amendment, and the Fourteenth Amendment. Duringer seeks declaratory relief and various damages under 42 USC §1983, including $1,000,000 in punitive damages. No injunctive relief is sought as Duringer already has a concealed carry permit (CCW) and while he does not waive his constitutional right to open carry, he does not at this time seek damages for deprivation of the right to carry in that manner.

Five causes of action are alleged:

1. Denial of Right to Bear Arms (2A, 14A)
2. Retaliation Against Offer of Firearm Training by Political Candidate (2A, 14A)
3. Retaliation Against Political Speech by Political Candidate (1A, 14A)
4. Denial of Right to Procedural Due Process (14A)
5. Denial of Right to Equal Protection of the Laws (14A)

Punitive damages are justified due to the egregious nature of the simultaneous deprivation of several separate and distinct civil rights, contrary to clearly established legal authority, to the point of misrepresenting and obfuscating that authority and even falsifying public records.

The matter is discussed further here.

Across this nation and this state and obviously right here in Morro Bay, we had a close call with communism. It’s time to punch back.

Yesterday Trump announced he will sign full national concealed carry (CCW) reciprocity, meaning you will be allowed to carry in any state as you travel.

The bill has been pending in congress for some time, so it will likely be enacted quickly.

Just in time, as Gov. Noisome has called for a special emergency session of the legislature which potentially could amend SB2 to adopt Hawaii’s form of vampire rule which would make CCW permits all but useless in California.

National CCW reciprocity will override a lot of nonsense.

Trump also says he will defend right to carry, which i’m guessing means US attorneys will be throwing their weight around at the state level.

Here is a short video clip of the announcement:

Charitable Remainder Trust (CRT) planning can be quite complex, and the expenses involved usually are justified only with a very large gift to charity, well north of a million. Practically speaking most of this planning is tax-driven and must be to make it feasible, but the tax benefits are often not as simple and certain as they first appear (for example, capital gains tax being deferred, not eliminated) and other concerns such as replacing the wealth children lose to the charity may require complicated discussions about annual exclusion gifts to children and possibly expensive solutions such as life insurance, so while the tax planning is important, it is also almost always a practical necessity for the clients to have true charitable intent for a CRT to be worth pursuing. Which is good, because charitable intent is also a legal prerequisite for the tax planning to work.

Aside from obviously benefiting a charity you care about, and the common scenario of avoiding capital gains tax and diversifying investment by donating highly appreciated property to a CRT for sale within it, a charitable remainder trust can serve other goals such as estate size reduction and asset protection depending on how it is designed.

Given the possibility that death tax exclusions will soon be sharply reduced, there is increased interest among super high net worth (HNW) families, including several of my clients, in exploring the many options out there for estate size reduction, including the charitable remainder trust (CRT) option.

Check out this article here for a wide-ranging but plainly written discussion that goes a little more in depth on CRT planning.

If CRT planning is not for you, there are many other options for charitable planning. Obviously you can make lifetime gifts, for example either simple outright gifts or perhaps a charitable gift annuity (CGA) set up directly with the charity. With your estate plan you can make outright gifts of a specific dollar amount or perhaps a percentage gift of the remainder that would normally go to your children. You can also incentivize charitable giving by your children, within their subtrusts. Health and Education Exclusion Trust (HEET) planning (usually for very large estates) requires inclusion of a charitable beneficiary to work (apparently i invented the Gun HEET, which has recently attracted some interest and discussion, six years after i posted on it). There also may be options for using charitable trust planning together with your retirement plan. These are just a few examples scratching the surface, and if you have interest in charitable giving, we can help you look at all the options.

There seems to be a misconception among some California estate planning attorneys that BDOT planning (BDOT stands for Beneficiary Deemed Owner Trust; also called a 678 trust, named after IRC §678) is inconsistent with, and should never be used with, a trust designed for asset protection. On the contrary, BDOT planning can play an important, even necessary, role in growing asset protection over time.

Note first that the phrase “asset protection” is used here to refer to planning for protection of an inheritance from a beneficiary’s (usually a child’s) potential future creditors and predators. However, supercreditors such as the government entail consideration of other issues outside the scope of this article. Nor does this article apply to self-settled asset protection planning (to protect your own assets from your own creditors), which is generally ineffective in California.

As explained in my article on BDOT planning, the object of such planning is to avoid high trust income tax by making the income taxable at the beneficiary’s marginal tax rate, which is almost always much lower. This is accomplished by giving the beneficiary an annual right to withdraw taxable income for that year, which under the tax code results in the beneficiary being deemed the owner of the trust for income tax purposes (but not other purposes).

Such BDOT planning can be included in trusts with only an independent trustee, for the best protection; or where there is a desire to give more control to the beneficiary, perhaps at a cost of some asset protection (certainly against squandering), clients may opt for a Beneficiary-Controlled Trust (BCT), which may also include BDOT provisions. (A BCT in California should allow for appointment of an independent “distribution trustee” to approve distributions.) With both of these approaches, there are many choices in drafting which can impact the level of potential asset protection. That discussion is also outside the scope of this article. The point here is that BDOT can be used with both approaches.

The reason many attorneys worry about including BDOT provisions is that under recent cases (see here and here) it is clear that even a general creditor (again, more issues with supercreditors) can reach sums due and payable, plus up to 25% of specified future payments, with limited exceptions. Obviously, it would be bad for a creditor to reach these amounts, so for some cases where beneficiary is likely to continue having serious creditor problems perhaps it is wise to steer clear of BDOT planning.

However in most cases there are no extant problems and the planning is to protect against merely potential problems which in all likelihood will not be persistent or chronic.

Therefore in the vast majority of cases it should suffice to include a provision allowing a trust protector to alternately revoke and restore the annual income withdrawal right for subsequent years. This leaves the current withdrawal right exposed — nothing can be done to avoid that — but revocation of the right for future years should be effective to avoid creditor reaching 25% of specified future payments. After settling for pennies on the dollar, the right can be restored.

The huge advantage that BDOT planning can provide to actually yield greater asset protection is two-fold: in addition to the significant tax savings on trust income retained in trust, the retention of this income every year that a creditor is not there to take it allows the protected trust corpus to build over time and earn even more income as it builds. When the income withdrawal right lapses each year, that income becomes principal which under California law cannot be reached by the general creditor. The protection after lapse is actually greater in California than in many other states. 

[Central Coast residents: You can safely ignore this article because we are here to help you with comprehensive planning.]

Most of our local clients prefer to have the first meeting in person at our office in Morro Bay. After that initial meeting, many of these local clients (unless extremely local) prefer to have subsequent planning meetings online in order to avoid the drive to and from our office, especially after they find out how many meetings are involved with our comprehensive planning.

We also have clients located in remote parts of California, and even more remotely in the states of Washington and Texas, where I am also admitted to practice law. It can sometimes be difficult to engage remote clients because of that preference we all have for meeting in person wherever possible, especially with something as important and personal as estate planning for one’s family. We actually offered remote conferencing over the web way back in 2000 (hence, our “LawNews.TV” domain) using Webex, which back then was very expensive, but no one wanted to use it — again, because of that preference for meeting in person. But one good thing that came out of the horror of covid fascism is that we are all more comfortable with web conferencing. Plus, the technology has improved.

So the technology is there and we can actually, very easily, do all of the planning online. We can even help you sign all of the documents in those online meetings and then send you to a local notary before whom you will acknowledge your signatures. (You can also sign docs in our office and if you do so, we’ll cover your hotel room.)

Some folks will insist on using a local estate planning attorney despite all this new technology enabling remote meetings. The purpose of this article is to point out the downside of insisting on a local law firm (unless of course we are that local firm!), which is that truly comprehensive estate planning may be difficult to find locally without a lot of searching, may be expensive to hire once found, and might not even be available in some areas.

Most trust attorneys operate to some degree as trust mills, cranking out estate plans with software quickly, without much customization. Often an attorney will charge thousands of dollars for a “cookie cutter” trust that is quite similar in structure to a trust prepared by a non-attorney for mere hundreds of dollars.

If you are paying thousands of dollars for an estate plan, you are probably serious about protecting your family. The question is: how serious is your attorney about protecting your family? You are wasting your money if you do not demand a truly comprehensive estate plan designed for asset protection and family protection.

Maybe you will find comprehensive planning locally, maybe not. You WILL with us!

What is a comprehensive estate plan? This is by no means a complete list, but here are a few of the issues we commonly address:

• Special planning for gun transfers in California, for example to make sure guns can even pass under CA law from the decedent to the successor trustee
• Retention of guns in trust to leave a legacy of firearm training
  • lending of firearms for training of beneficiaries and successor trustees
• Incapacity planning generally, and with regard to guns; determination of incapacity; regaining capacity
  • health care decisions
  • financial decisions
  • retention of guns in trust; lending of guns for training
• Nomination of guardians: are they trained in defensive handgun, like you are?
• Planning for digital assets (leaving a list of passwords is not only ineffective, but actually pretty stupid)
• Pure dynastic planning vs subtrusts for individual children
  • how long to maintain common trust?
• Continuing trust for entire life of your child, for maximum protection of your child’s inheritance from potential threats, such as:
  • your child himself (biggest threat) — squandering, prodigality
  • divorce, lawsuits, predators, undue influence, illness, taxes
  • disinheritance by surviving spouse (blended family planning)
  • BDOT income tax planning to grow trust efficiently and increase size of protected amount
• Beneficiary-Controlled Trust — where you are not concerned about squandering, and your child can be trusted to administer trust properly
• Protection of inherited retirement funds
• Growing Family Power by transmitting Life, Fortune, Honor, to descendants
  • Incentives for values transmission (faith, financial mentorship, charity, family maintenance, education, etc.)
  • #DisinheritWoke
  • Role of Life Mission for more successful dynastic planning
• Transfer tax planning (estate, gift, GST)
  • Marital deduction planning
  • Portability and reverse QTIP planning
  • Planning for state-level death tax — even if your state has none
  • Dynastic planning for generations below children, in a GST tax-efficient manner
  • Estate Reduction Surgery — advanced planning to reduce size of taxable estate (IDGT, SLATs, GRATs, other gifting, etc.)
  • Gun HEET — tax-efficient firearm training for grandchildren where estate is so large all GST exemption is expected to be allocated and further sums can be spent on health and education expenses
• Income tax planning to avoid capital gains tax
• Property tax planning
• Pet planning
• Conflict avoidance
• Business operations planning
• Business succession planning
• Trust governance — family control? beneficiary control? avoid trustee shopping?
• Trust Protector planning to keep everything working
• Client Maintenance plan to keep everything working
• Self-Settled Asset Protection Planning (in CA, other states, offshore)

This highly condensed list merely illustrates a few examples.

To see more issues, watch our webinar here: www.Protect.LIFE

Even better — follow the instructions on that page to schedule your FREE initial design meeting (over the web, if not local).

This would appear to be illegal:

Sen. Sherrod Brown (D-OH) accepted campaign donations from a woman who died several months prior, records that the New York Post obtained revealed Friday. 

Carol Ann Baker of Elmore died at the age of 77 on December 10, 2023, at a Toledo medical center, according to her obituary. 

Despite passing away, she somehow is on record making at least two donations to the longtime senator’s campaign committee about five months later, in May, the Postreported. 

You can prevent this sort of thing with our Anti-Post-Mortem Suffrage Trust, which can also keep you and your pet from voting after your death.

Estate reduction surgery may be more urgent than you think.

Understandably, a lot of folks are sitting on the sidelines, waiting to see what happens in November — not only in the presidential race, but in the congressional races that will determine the balance of power. Will one party control Congress, which party will control, and will the margin of control be great enough to allow one party to push through significant change in tax laws?

As it stands now, the current sky high death tax exemption amounts will roughly speaking be cut in half on January 1, 2026. Will the current high exemption level be extended? Will some other regime replace it, perhaps with far lower exemptions, perhaps with more radical changes such as restricting use of grantor trusts in planning, or eliminating basis step?

We don’t have answers now, and we probably won’t have all the answers in November, or December, or January…

Here’s what we do know: If you have a large estate and make a large gift now, before 2026 (assuming the law remains the same until then), and exemptions do subsequently fall, IRS will not be able to “claw back” any gift amount exceeding the new exemption amount.

So it’s use it, or lose it. And this is a very big coupon to use, or lose.

There are reasons to avoid haste. Maybe the current exclusions will be extended. Also, you need to look at any adverse effects such as income tax consequences, possibly loss of basis step-up, etc., depending what kind of solutions are used for estate reduction.

But there are also reasons to get moving on the planning. Some options are already gone. Some options will be gone soon. For example, a very popular solution these days is for a married couple to each create a Spousal Lifetime Access Trust (SLAT) to benefit the other spouse. Although SLATs are becoming common, they are still fairly new and there are uncertainties regarding their use. Most planners agree SLATs are often still a good idea, but to minimize the risk of an adverse result, there are a number of special requirements that any good planner will strongly recommend. One of those requirements is that each spouse’s SLAT be created at least a year apart, preferably longer. Compounding the urgency is that good appraisals are needed, and good appraisers are already backed up for a good amount of time. 

All of which is very bad for those high net worth (HNW) couples waiting, especially if they are new clients. I always start new clients off with a restatement of their foundational revocable trust plan, and that usually takes several months.

There are other options besides SLATs, but the point is: options are disappearing as deadlines approach.

When starting a business, entrepreneurs typically have two options: they can either build a new business or purchase an existing business. Buying an existing business can offer the advantages of name recognition and a proven business model. The advantages can be even greater if the business is a franchise with hundreds or even thousands of locations. Purchasing an existing business, and one that is a franchise in particular, can come with some disadvantages, however. Read on to learn more about owning a franchise and whether it could be the right fit for you.

Reasons to Buy a Franchise

Going into business for yourself involves a lot of uncertainties. You must develop a business plan and then work hard to make the plan come to fruition.

Whether or not your plan succeeds depends on factors such as site selection, the ability to obtain financing, using marketing and advertising to build brand recognition, hiring and training employees, and taking advantage of economies of scale to lower costs as the business grows.

Franchises can be attractive because they offer a business blueprint that has been proven to work. That does not mean it will work in every situation. But franchises offer support with many of the business challenges listed above. By giving franchisees a ready-made business formula to follow, much of the guesswork—and risk—is removed from their business ownership.

Reasons Not to Buy a Franchise

The biggest downside to owning a franchise can be summarized in a single word: control.

Business owners give up significant control when they buy a franchise. The franchising agreement imposes terms that restrict a franchisee’s ability to make independent business decisions. Franchisors may retain the right to control where the business can operate, impose design or appearance standards that increase costs, and restrict the goods and services sold, methods of operation, and sales territory.

Franchising is a double-edged sword. A franchise’s proven track record and methods remove some of the unknowns from business ownership. But sticking to this tried-and-true formula has costs, not only in the form of franchise fees and royalties, but also in terms of limiting a franchisee’s creativity. Business owners who like to call all the shots may find the franchise structure frustrating.

Before You Buy: Franchise Legal Considerations

Standardization defines the franchise business model. The terms that franchisees are expected to follow are laid out in the franchise disclosure document (FDD), which is a document required by the Federal Trade Commission’s (FTC’s) Franchise Rule.^[1] Before a franchisee signs a contract or pays a franchise fee, the franchise must furnish them with the FDD, which explains how their business model works.

The FDD contains twenty-three items, such as the franchisor’s background, fee structure, restrictions, advertising and training practices, and the processes for renewal, termination, transfer, and dispute resolution. The FDD can help a prospective buyer identify warning signs for franchise ownership and should be carefully reviewed with the help of an attorney.

• One of the most valuable resources can be found in FDD Item 20—contact information of current and former franchisees. Talking to people who have direct experience with the franchise under consideration can paint a more accurate picture of what is required to thrive under the franchise’s business model. The best information may come from franchisees who left the business; however, if they signed a confidentiality agreement, they will not be permitted to speak with new prospects.

• Another crucial issue is addressed in FDD Item 13, which discloses a franchise’s trademarks. Having a right to use the franchisor’s legally protected trademarks, such as a business name, logo, or marketing slogan, can be a key factor in a franchisee’s purchasing decision. Not having any registered trademarks can be a red flag. Also within Item 13, the franchisor must disclose whether it will provide legal protection to the franchisee in any legal disputes involving its trademarks.

The FDD is the foundation of any negotiations that take place between the franchisor and the franchisee. It provides the standard terms of the franchise agreement, but a potential franchisee may negotiate to obtain more favorable terms on territorial restrictions, development schedules, transfer rights, and other points.

In addition to the FDD and franchise agreement, franchise ownership usually entails a commercial lease for the business site. The franchisor could be the lessee and sublease to the franchisee, or the lessee could be the franchisee, under a separate franchise business entity. The terms of a commercial lease agreement should be closely scrutinized and carefully negotiated to reduce risks to the franchisee.

Due Diligence for Prospective Franchise Owners

Purchasing a franchise can be a safer bet than building a business from the ground up, but there is still plenty to think about before taking the franchising plunge.

Legal guidance during the due diligence process can help to uncover potential risks to the franchisee and clarify their obligations to the franchisor. Armed with this knowledge, a fair and mutually beneficial franchise agreement can be negotiated.

We work with buyers to review legal documents, including the FDD, franchise agreement, and commercial lease, to help them obtain the most beneficial terms. We can also help buyers choose and incorporate the legal entities needed to operate a franchise and other legal issues related to business ownership.

[1] Lesley Fair, Franchise Fundamentals: Taking a deep dive into the Franchise Disclosure Document, Fed. Trade Comm’n (May 24, 2023), https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-taking-deep-dive-franchise-disclosure-document.

Buying a business and purchasing real estate are two very different investments. Business ownership typically requires some management skills and knowledge about market conditions, consumer trends, staffing, and finances. Ownership of real estate, on the other hand, requires considerable due diligence up front but generally offers passive growth with fewer management responsibilities.

The skill sets needed to succeed as a business owner and a real estate investor may not overlap much. But when the business you are considering buying includes real property, it is worth considering whether it is prudent to buy both. If the seller is offering them as a package and purchasing the business alone is not an option, it is important for the buyer to understand what they are getting into to avoid becoming overextended.

Potential Benefits and Drawbacks of Purchasing a Business That Includes Real Property

When selling their business, some owners may also wish to sell the building(s) and land where the business operates. From a buyer’s standpoint, commercial space may be an attractive add-on to their business investment. The average return for commercial real estate is around 10 percent.^[1] In addition to return on investment, owning commercial property can provide tax breaks, control over the space, protection from rent increases, and revenue streams.

Buying a business can alleviate much of the stress, uncertainty, and risk of launching a start-up. But acquiring an existing business typically has higher up-front costs than starting a company, particularly if the price of commercial real estate is included.

The main question to ask when considering a business deal that includes real property is how it will affect the business’s cash flow. Although an existing business often has the benefit of built-in cash flow, most new owners want to expand the business beyond its current state. However, expansion requires capital. Every dollar that is tied up in real estate is unavailable to invest in the business. In addition, at a time of higher interest rates, a real estate loan—on top of a business loan—could leave the buyer’s post-transaction cash flow precariously tight.

Commercial real estate costs include more than the loan payments. There are also taxes, property insurance, and repair and upkeep expenses. Renting out extra space to tenants can offset some of these costs, but leasing commercial space can impose additional financial responsibilities and risks on the landlord.

How to Approach a Business Transaction That Includes Real Estate

For business owners, offering the buyer an option to purchase the real estate may create a larger buyer pool. It is common for a business purchase contract to include a 12- to 24-month lease with an option for the purchaser to buy the real estate attached to the business at the end of the term at a predetermined price or price formula (or to include a right of first refusal). This allows the buyer to retain more capital in the short term while providing them the long-term option to purchase the real estate.

Creativity can help nudge a deal across the finish line. Before beginning negotiations, however, buyers should evaluate the following factors.

Business Value versus Real Estate Value

If the business and real estate are offered at a single price, it is important to get separate appraisals of their fair market prices to obtain more meaningful information about their value. This process can also generate data that is useful during negotiations.

A commercial real estate agent can assess the value of real property based on comparable sales. Valuation of a business, which should be performed by a qualified professional appraiser, is more subjective: different methods may be used, and the quality of a company’s books and records has a significant impact.

Cash Flow

To evaluate if buying a business with real estate makes financial sense, calculate the short-term and long-term costs of both purchasing and leasing the property. A purchase is usually cheaper than a lease over the long term, but that is not the case in all markets and economies. In the short term, leasing may be more attractive than buying from a cash flow perspective. A professional inspection and due diligence are necessary to accurately calculate costs (and, by extension, cash flow) because the costs of property ownership involve more than just the purchase price: they may also include taxes, improvements, insurance, and remediation of environmental hazards.

Financing

The inclusion of real estate in the purchase of a business may increase a buyer’s ability to receive third-party financing because the property may be used as collateral to secure a loan. Lenders may be willing to blend real estate and business loans, which could result in a longer repayment term. Seller financing for part of the deal is another option.

Business Acquisition Legal Advice and Guidance

Almost everything is negotiable in a business acquisition. If there are two parties willing to make a deal, there is room to get creative and complete a transaction favorable to both sides.

Deciding whether buying a business that includes real estate is favorable to you in the long run is complicated. We can offer guidance and advice on all aspects of business acquisition from due diligence to negotiations to document creation and review. Set up an appointment to learn how we can be of service. 

[1] 10 Commercial Real Estate Statistics, First Nat’l Realty Partners (Jan. 10, 2022), https://fnrpusa.com/blog/commercial-investing-statistics/.

Over the last few decades, marijuana (aka cannabis) laws across the United States have become increasingly more permissive. In 1996, California was the first state to allow medicinal cannabis.^[1] In 2012, Colorado and Washington approved legal recreational cannabis.^[2] Thirty-eight states and the District of Columbia permit medical-use marijuana, and 24 states have legalized recreational marijuana.^[3]

Changing marijuana laws also include state and local measures to protect employees who legally use cannabis products away from the workplace and during off-work hours. However, marijuana remains a highly controlled Schedule I substance at the federal level. (For example, users of marijuana are prohibited under federal law from possessing or transferring firearms or ammunition.)

This hodgepodge of sometimes-conflicting marijuana laws can make it challenging for employers to craft drug policies and procedures that support workplace safety while avoiding legal liability.

How Marijuana Can Affect Job Performance

Marijuana is the most commonly used federally illicit drug in the United States and the drug most often detected in workplace drug tests.

A report from the Congressional Research Service indicates that in 2021, over 36 million Americans aged 12 or older had used marijuana in the past month. This number more than doubled from 2008 to 2021—a period during which a majority of states legalized medical or recreational cannabis.^[4]

According to the Centers for Disease Control, marijuana can affect health in many ways.^[5] The compound tetrahydrocannabinol (THC) is mind-altering and associated with the high the drug produces. THC in marijuana affects motor skills, including depth perception, reaction time, and coordination, and creates sensory distortion. These effects can be dangerous or even deadly in the workplace.

The National Safety Council, citing a study from the National Institute on Drug Abuse, reports that employees who test positive for marijuana had 55 percent more industrial accidents, 85 percent more injuries, and 75 percent greater absenteeism compared to employees who tested negative.^[6]

Marijuana may also affect an employer’s bottom line due to decreased productivity, a greater number of worker compensation and unemployment compensation claims, higher turnover, and lawsuits.^[7]

State Marijuana Laws

When crafting a workplace policy that addresses marijuana use, a crucial distinction must be drawn between on-duty use and off-duty use. Some states that have legalized marijuana have enacted laws expressly prohibiting employers from disciplining employees for off-duty cannabis use. These laws can subject an employer to liability, including fines and lawsuits, for punishing an employee for cannabis use that occurs outside of work hours and the work premises.

Even in states where it is now legal to use cannabis, employers are within their rights to prohibit workers from being high at work and to enforce a drug-free workplace. Employees who use cannabis on the company premises or who come to work under the influence of cannabis may be disciplined. But state laws on these matters are not uniform. They vary on a number of important points:

• What constitutes cannabis impairment at work
• Drug testing requirements (including whether employers may legally test job applicants for marijuana)
• Exemptions for certain jobs (such as law enforcement, construction trades, and heavy equipment operators)

New marijuana laws in some states may make it more difficult to find drug-free workers. But in most states, employers are still generally within their rights to enforce policies prohibiting off-duty cannabis use when it may reasonably impact the workplace.

Most states also do not require special workplace accommodations for medical cannabis patients, leaving company policies about medicinal cannabis use and disciplinary actions up to the employer. A few states are working on legislation that addresses medical cannabis and employer liability.^[8]

Federal Marijuana Laws

The federal treatment of marijuana as a Schedule I controlled substance introduces another wrinkle in the establishment of workplace cannabis rules. Although the federal response to state-level marijuana legalization has largely been to allow states to create and enforce their own laws, federal law nonetheless prohibits marijuana use.

The following employers must comply with federal regulations about drug use, drug testing, and marijuana prohibitions:

• Federal contractors
• Federal grantees
• Employers in federally regulated industries (e.g., commercial pilots and truckers subject to Federal Aviation Administration or Department of Transportation regulations and positions requiring a federal background check or security clearance)

The federal Americans with Disabilities Act (ADA) could have implications for medical marijuana as well. Many individuals’ certification to use medical marijuana is based on suffering from a disability. The ADA protects “qualified individuals with a disability” from discrimination and entitles them to “reasonable accommodation.” While courts have, to date, ruled that since cannabis is federally illegal, medical marijuana patients do not enjoy ADA antidiscrimination protections, these patients may have legal recourse under state law.

Employers should factor in the possibility that federal marijuana policy could change amid shifting perceptions and attitudes about cannabis. The Biden administration, for example, issued a presidential proclamation pardoning many federal offenses for simple marijuana possessions. It has also signaled that it may reschedule marijuana to a less restrictive status (Schedule III), which could reshape federal marijuana policy.^[9]

Marijuana Policy Checklist for Employers

With medical or recreational marijuana use now legal in many states, and with tens of millions of regular users across the country, marijuana use, for better or worse (the shit REEKS, man), is now widely accepted in American culture.

Rapid and widespread marijuana legalization—and the adoption of laws protecting employees who use marijuana—have created a need for employers to update their marijuana policies. Continuous changes and developments in marijuana laws make it even harder for employers to remain compliant. Businesses should consider the following when they create and implement a drug policy:

• State-specific laws governing marijuana-related conduct in states with legal cannabis markets
• Conflicts between applicable state and federal laws
• Preemployment THC screening for prospective employees
• Expectations regarding marijuana use in the workplace and discipline, including using cannabis before work or coming to work intoxicated
• How to define reasonable suspicion of marijuana intoxication
• Expectations around off-duty marijuana use (i.e., a zero-tolerance, medical-use-only, or recreational-use policy)
• Legal authority to administer a drug test for employees suspected of marijuana use
• Repercussions for violating an employer’s marijuana use policy
• Exceptions to the company’s marijuana policy

Employers, especially those in industries in which marijuana use could create safety concerns such as construction and transportation, or those subject to federal marijuana regulations, will be inclined to have zero-tolerance marijuana policies. Other employers may not want to exclude a large segment of the working population over marijuana amid an ongoing labor shortage, making them amenable to a less-stringent contextual approach.

To avoid running afoul of state and federal marijuana laws, employers should seek legal advice before creating and implementing a workplace marijuana policy or before taking action against a prospect or employee, especially for off-duty and off-site marijuana use.

[1] California’s Cannabis Laws, Dep’t of Cannabis Control, https://cannabis.ca.gov/cannabis-laws/laws-and-regulations (last visited Mar. 18, 2024).

[2] Denise D. Payán, County‐Level Recreational Marijuana Policies and Local Policy Changes in Colorado and Washington State (2012‐2019), 99 Milbank Q. 1132 (2021), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8718590.

[3] State Medical Cannabis Laws, Nat’l Conf. of State Legislatures (June 22, 2023), https://www.ncsl.org/health/state-medical-cannabis-laws.

[4] Lisa N. Sacco et al., Cong. Rsch. Serv., IF12270, The Federal Status of Marijuana and the Expanding Policy Gap with States(2023), https://crsreports.congress.gov/product/pdf/IF/IF12270.

[5] Health Effects of Marijuana, Ctrs. for Disease Control and Prevention (June 2, 2021), https://www.cdc.gov/marijuana/health-effects/index.html.

[6] Marijuana at Work: What Employers Need to Know, Nat’l Safety Couns., https://www.nsc.org/nsc-membership/marijuana-at-work (last visited Mar. 19, 2024).

[7] Id.

[8] Cannabis and Employment, Nat’l Conf. of State Legislatures (Jan. 22, 2024), https://www.ncsl.org/health/cannabis-and-employment-medical-and-recreational-policies-in-the-states.

[9] Stefan Sykes, U.S. Health Officials Want to Loosen Marijuana Restrictions. Here’s What It Means, CNBC (Aug. 31, 2023),  https://www.cnbc.com/2023/08/31/hhs-wants-to-reclassify-marijuana-what-it-means.html.

The decision to hire family members for your business is a delicate balancing act that involves both personal and professional considerations.

Working with loved ones can create a sense of trust and unity within the workplace and has been shown to increase business resiliency. However, mixing family and business may create challenges as familial dynamics overlap with professional responsibilities and undermine the morale of nonfamily staff members.

Outside of some legal and tax implications, family members should be treated no differently than regular employees. This is easier said than done, but if you can pull it off, your business could prove to be a lasting family legacy.

Family-Owned Businesses Dominate the US Economy

A 2021 study on the contribution of family businesses to the United States economy found that family-owned enterprises constitute 87 percent of all US businesses. The study also found that the number of family businesses increased from 24.2 million in 2003 to 32.4 million in 2021. They employ 59 percent of the private sector workforce, account for more than 83 million jobs, and generate 54 percent of private sector GDP ($7.7 trillion).^[1]

Pros and Cons of Working with Family

Compared to other businesses, family businesses experience sustained success, which could be a result of their prioritization of longevity over short-term gains,  positioning them to survive tough times. Research from the Harvard Business Review suggests that family businesses emerged in better economic shape than their competitors after the pandemic.^[2]

Trust and loyalty, shared vision and values, and a personal investment in the company that extends beyond one’s own lifetime can contribute to family businesses being more resilient and long-lasting. On the other hand, interpersonal conflicts, a lack of professional boundaries, and nepotism could create a dysfunctional workplace.

Leveling the Playing Field in Family Businesses

Whether the dynamics of a family business prove to be a competitive advantage or disadvantage depends largely on how the company is run. Since many family-owned businesses hire a mix of family and nonfamily employees, avoiding double standards that can foster nepotism concerns is essential.

The following practices can help keep things professional in a family-owned business:

• Hire only qualified family members. Maintain consistent hiring standards that do not favor family members. Focus on job qualifications first. Do not hire someone just because they are family.
• Treat everyone the same. Giving preference to family members can foster resentment among other employees and harm company culture.
• Use an employment contract and handbook. Establish universal standards for workers that are stipulated in an employment contract and employee handbook. Ensure that all employees, whether family members or not, receive pay, benefits, and treatment according to one set of rules.
• Discipline or fire an underperforming family member. Do not be afraid to promote a family member for good performance—but also be prepared to crack the whip if they do not
• Keep work at work. Talking about work at home can be problematic even when family members do not work together. Creating clear boundaries between work life and home life is arguably even more important when family members do work together.

Tax and Legal Implications for Hiring Family Members

From a business standpoint, treating family and nonfamily employees differently can be disastrous. But from a tax and legal standpoint, not all employees—and not all relatives—are entitled to equal treatment.

Child Labor Laws

The Fair Labor Standards Act (FLSA) sets the minimum age for employment and generally limits the number of hours that youth under the age of 16 can work.

FLSA child labor rules, though, do not apply to children younger than 16 working in nonagricultural employment in a business owned solely by their parents. In such cases, those children can work any time of day for an unlimited number of hours if they are not employed in manufacturing, mining, or an occupation the Secretary of Labor deems hazardous.^[3] Children of any age may be employed at any time and in any occupation in agriculture on their parents’ farm. There are only a few exemptions from the rules prohibiting children from working in hazardous occupations.

Tax Laws: Children, Spouses, and Other Family Members

When parents employ their children, not only do some child labor laws not apply, but the parents may also be eligible for tax breaks.

Children hired to perform legitimate work for their parents’ business can be paid up to $14,600 (the standard deduction for single filers in 2024) without owing income tax. In addition, parents can deduct the salary they pay their children as a business expense, thereby lowering their business’s overall taxable income. And as long as a child relies on their parents for financial support and meets certain Internal Revenue Service dependency requirements, the parents can still claim the child as a dependent.

Here is how tax withholdings for children employed in the family business work:

• Children younger than 18 are not subject to Social Security, Medicare, or Federal Unemployment Tax Act (FUTA) taxes if their parents’ business is a sole proprietorship or a partnership and each partner is a parent of the child.
• Children ages 18 to 20 are exempt from federal unemployment taxes but must pay Social Security and Medicare taxes (i.e., FICA taxes).
• When they reach age 21, a child employee is treated the same as every other employee and is fully subject to FICA and FUTA taxes.
• Child wages could be subject to payroll taxes if the family business is a corporation or the child’s parent is in a business partnership with a nonspouse.

Spouses who operate a business together as a partnership for tax purposes are subject to income tax withholding, Social Security, and Medicare taxes, but not FUTA taxes. The same taxes apply to a spouse who is classified as an employee of the other spouse.

For a parent employed by their child, the parent’s wages are subject to income tax, Social Security taxes, and Medicare taxes, but not federal unemployment taxes.^[4] Other family members, including aunts and uncles, nieces and nephews, and grandchildren, must pay FICA and FUTA taxes like any other employee.^[5]

Setting Your Family Business Up for Success

Successfully integrating family members into your business requires a proactive approach to communication, the establishment of unbiased standards, and a commitment to fostering a healthy work environment for all employees. To achieve this, you may benefit from an unbiased, professional perspective about workplace policies, as well as ways to maximize the tax and legal benefits of hiring family members. Schedule a meeting with us to learn more.

[1] Daniel Van Der Vliet, Measuring the Financial Impact of Family Businesses on the US Economy, FamilyBusiness.org (June 2, 2021), https://familybusiness.org/content/measuring-the-financial-impact-of-family-businesses-on-the-US-ec.

[2] Josh Baron & Rob Lachenauer, Do Most Family Businesses Really Fail by the Third Generation?, Harv. Bus. Rev. (July 19, 2021), https://hbr.org/2021/07/do-most-family-businesses-really-fail-by-the-third-generation.

[3] U.S. Dep’t of Labor, FLSA – Child Labor Rules Advisor, eLaws Advisor, https://webapps.dol.gov/elaws/whd/flsa/cl/exemptions.asp (last visited Feb. 23, 2024).

[4] Joshua Wiesenfeld, Hiring Family Members in a Small Business, J. Acct. (June 2, 2022), https://www.journalofaccountancy.com/news/2022/jun/hiring-family-members-small-business.html.

[5] Kaytlyn Smith, What to Know about Taxes When You’re Running a Family Business, CO (Oct. 23, 2023), https://www.uschamber.com/co/run/finance/taxes-for-family-business.

Starting a business requires a great deal of planning and execution. Exiting from your small business should entail a similar level of forethought and preparation. Nevertheless, some surveys indicate that nearly half of business owners have no exit strategy.^[1]

After years of expanding your business, you may be at the point where the finish line is getting close. Whether you intend to sell the business, liquidate its assets to fund your retirement, or leave the business to family members, you need a plan to achieve your objective.

You cannot run your business without a good team. Help from a team of legal advisors and other professionals is also needed when exiting your business.

The Importance of a Long-Term Exit Strategy

It can be easy to fall into the trap of showing up to work every day and taking care of the tasks at hand while never thinking seriously about the future. Self-employed individuals such as small business owners often have no pension plan that guarantees retirement income. For many entrepreneurs, their only retirement plan is the proceeds from a sale of their business. This is a risky bet that becomes even riskier if there is no exit strategy.

Entrepreneurs often have a mindset of betting on themselves, but self-confidence alone is not enough for entrepreneurial success. Strategic thinking is equally important at all phases, from launch to growth to exit.

A business exit strategy creates a timeline that informs strategic decision-making, enhances business value, and provides a flexible template. Exit planning provides many benefits, including the following:

• Business owners can be better prepared for unforeseen circumstances (e.g., illness, a sudden death, divorce, burnout, or financial failure) that can arise by establishing a backup plan
• An exit strategy provides benchmarks that make progress toward the goal more measurable and day-to-day decisions more strategic.
• In preparing for their exit, business owners are more likely to maximize their market position and asset values to obtain top dollar when they finally step away.

Business owners know that not everything goes according to plan. Fortunately, voluntary and involuntary exit strategies are not very different in practice. To plan for both, owners should take progressive steps to ensure that the business is less dependent on them and more centered on culture, policies, and processes. These strategies can ensure not only that business as usual can continue in the owner’s absence, but also add value to a potential buyer. An owner-centric business has less value to a buyer than a company that can continue operating smoothly after the owner steps away.

Different Exit Scenarios and Strategies

There is no one way to run a business—or exit a business—but both require strategic planning.

Among owners who are planning to exit their businesses, 52 percent said they intended to sell the business, 20 percent planned to leave it to family, and 18 percent planned to close the business. Here are some of the strategies involved with each of these exit scenarios:

• Selling. A business can be sold on the open market in its entirety, including with all of its assets and with or without its existing employees. An owner can also sell their company stake to a partner, co-owner, manager, employee, friend, family member, or associate. In every sale scenario, the business should be appraised so that a fair purchase price can be reached. Another necessity is a formal sales agreement that lists all inventory in the sale. Multi-owner businesses can benefit from buy-sell agreements that enable an orderly transition.^[2]
• Passing to family. Family members may be part of an exit strategy that is designed to pass the business on to the next generation. Transferring ownership can be done through gifting or a sale. There will be different tax implications depending on the strategy used.
• Liquidating. Business liquidation entails selling assets for cash value. Although it is often part of an involuntary exit due to financial trouble, liquidation can also be a planned exit strategy. Assets up for liquidation should be inventoried, appraised, and promoted. Typically, business owners work with an auctioneer, dealer, or broker to facilitate liquidation. The Small Business Association notes that sales can take place through negotiations, consignment, a sealed bid, or internet or retail sale.^[3]

Are Professional Advisors Part of Your Exit Strategy?

Business owners accept that running a business will take much of their time, but even the most dedicated owner should have an exit strategy. Whether you plan to sell your business, close and liquidate it, or transfer ownership, there will be legal and tax impacts that require an attorney’s assistance. If you are not sure which exit strategy is best for you, we can help you identify your goals, formulate the appropriate strategy, and assemble the right team to successfully execute it. To start planning your exit today, call or contact us to schedule a consultation.

^[1] UBS Investor Watch, Who’s the Boss? (Feb. 8, 2018), https://www.ubs.com/us/en/investor-watch/who-is-the-boss.html.

^[2]   Hugh H. Lambert & Briana K. Wright, Considerations for Using Buy-Sell Agreements, The CPA Journal (Oct. 2018), https://www.cpajournal.com/2018/10/03/considerations-for-using-buy-sell-agreements/.

^[3] US Small Bus. Admin., Close or sell your business, (May 23, 2023),  https://www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business#section-header-10.

Remote work has become the new norm for many employees, creating  opportunities as well as challenges for employers. One of those challenges is verifying the identity and eligibility of remote workers for employment in the United States.

Form I-9,^[1] a document all employers must complete and retain to verify the identity and employment authorization of individuals hired for employment in the United States, has been updated to adapt to the changing landscape of remote work. In addition to a new Form I-9 that employers were required to use beginning November 1, 2023, employers that meet certain requirements may complete employee verification using remote procedures.

Employers eligible to use the new I-9 remote verification policy should understand how it works to avoid costly penalties. The U.S. Immigration and Customs Enforcement Agency can impose penalties for I-9 violations. These penalties range from $272 to $2,701 for first-time paperwork violations and $676 to $5,404 for first offenses related to hiring unauthorized workers. Repeat offenses can result in penalties of $5,404 to $27,108 per violation. Cases with aggravating circumstances can lead to even higher fines and even criminal penalties.

I-9 Changes Reflect New Remote Work Reality

Under the Immigration Reform and Control Act of 1986, employers must verify employment eligibility using Form I-9 for all employees, including citizens, noncitizens, part-time workers, and full-time workers.

Prior to the COVID-19 pandemic, employers were required to do a physical examination of a new employee’s documentation. During the pandemic, the Department of Homeland Security (DHS) relaxed its standards for in-person I-9 verification to accommodate employers whose workers were suddenly forced to work remotely.

Originally meant to be temporary, the new measures allowed employers to remotely inspect Form I-9 documents and obtain a copy of them within three business days of an employee’s start date. These measures have since evolved into more permanent solutions to accommodate the changing nature of post-pandemic work.

Approximately one out of eight full-time employees works from home in 2023, while more than one out of four are hybrid workers. By 2025, an estimated 36.2 million Americans will be working remotely—an 87 percent increase compared to pre-pandemic levels.^[2]

In July 2023, the DHS announced that it would publish an updated Form I-9. That same month, DHS published a final rule authorizing remote verification procedures for Form I-9.^[3] Both changes became effective August 1, 2023, although the previous Form I-9 was allowed to be used through October 31, 2023.^[4]

Who Can Participate in Remote I-9 Verification?

To qualify for remote verification, employers must participate in good standing in E-Verify,^[5] which means meeting the following requirements^[6]:

• be enrolled in E-Verify for all US hiring sites that use the optional remote I-9 verification process
• comply with all E-Verify requirements, including verifying the employment eligibility of new hires in a timely manner at the company’s E-Verify locations
• continue to be an E-Verify participant in good standing for as long as the employer uses remote verification

New E-Verify employers must complete an E-Verify tutorial that includes fraudulent document awareness training. Employers currently enrolled in E-Verify should already have completed this training and do not have to go through it again, although new human resources (HR) employees could benefit from the tutorial.

Here are additional key points to keep in mind about remote I-9 verification:

• The I-9 remote verification process is optional. Companies may choose to continue using the standard, in-person I-9 verification procedure. They may also opt to use remote verification for remote workers and in-person document review for in-office or hybrid employees.
• An I-9 review policy should not discriminate. Although employers can use the alternative procedure for remote employees only but continue to apply physical examination procedures to all on-site or hybrid employees, they may not adopt such a practice for a discriminatory purposes.

How to Remotely Verify an Employee’s ID

According to DHS,^[7] remote examination of documents procedures should include the following steps:

• Examine the front and back of digital copies of employee documents from the I-9 Lists of Acceptable Documents to determine that the documentation relates to the individual.
• Conduct a live video call with the employee to further review and confirm that their employment eligibility and identity documents appear to be genuine.
• Mark the corresponding box on Form I-9 indicating that the employer used remote verification.
• Retain a clear and legible copy of the front and back of the employee’s digital documentation.

Best Practices for Implementing a Remote I-9 Policy

Employers have generally responded positively to the new rules allowing remote employee verification, but navigating the updated I-9 requirements for remote workers demands a strategic approach. Here are some best practices for employers to ensure compliance:

• Establish clear policies. Develop and communicate clear policies and procedures for remote I-9 verification. Provide guidance on the use of technology for virtual document inspection and ensure that HR employees are aware of the process.
• Use compliant technology. Employers should leverage secure and compliant technology for remote document verification. Make sure that the chosen tools meet the legal requirements for I-9 completion and adhere to data privacy regulations.
• Train and educate. Train HR personnel and relevant staff on the updated I-9 requirements for remote workers. Understanding the nuances of remote verification and compliance is crucial for avoiding potential mistakes and penalties.
• Maintain consistency in verification. Whether in-person or remote, maintain consistency in the verification process. Establish clear criteria for accepting documents and make certain that all employees undergo the same level of scrutiny, regardless of their work location or citizenship status.
• Implement regular audits and updates. Conduct regular audits of remote I-9s to identify any discrepancies or errors. Regularly update your processes to align with any changes in US employment laws and guidelines.

We Can Help

The recent updates to Form I-9 reflect the evolving nature of work and provide employers with the tools they need to ensure compliance in a remote environment. As remote work continues to reshape the employment landscape, staying abreast of the latest I-9 requirements is imperative for employers. Regardless of whether you have remote employees, for help ensuring that your business is legally compliant with I-9 requirements, reach out to us to schedule an appointment.

[1] Dep’t of Homeland Sec., Employment Eligibility Verification, Form I-9 (Aug. 1, 2023), https://www.uscis.gov/sites/default/files/document/forms/i-9.pdf.

[2] Katherine Haan, Remote Work Statistics and Trends in 2024, Forbes (June 12, 2023), https://www.forbes.com/advisor/business/remote-work-statistics/.

[3] Dep’t of Homeland Sec., Optional Alternative 1 to the Physical Document Examination Associated with Employment Eligibility Verification (Form I–9), 8 C.F.R. pt. 274a (2023), https://public-inspection.federalregister.gov/2023-15532.pdf.

[4] Ryan Golden, USCIS Announces New Form I-9, Will Allow Permanent Remote Review for E-Verify Users, HRDive (July 24, 2023), https://www.hrdive.com/news/new-form-i-9-permanent-remote-review-e-verify-ice-dhs/688652.

[5] What Is E-Verify, E-Verify, https://www.e-verify.gov/about-e-verify/what-is-e-verify (June 2, 2023).

[6] 8 C.F.R. pt. 274a.

[7] U.S. Citizenship & Immigr. Servs., Remote Examination of Documents (Optional Alternative Procedure to Physical Document Examination), https://www.uscis.gov/i-9-central/remote-examination-of-documents (Aug. 9, 2023).

The limited liability company (LLC) has only been around since the first LLC statute was enacted in 1977. Within a few decades, it has become the most popular legal entity formed by new US businesses due to its ease of formation, flexibility, low start-up costs, and limited liability for members.

Each state has its own LLC statute. These laws set forth default rules, which may not provide strong protections for minority members facing oppression—such as a squeeze-out or freeze-out—at the hands of other members.

A minority member’s best protection against oppressive conduct lies in negotiating favorable contractual provisions in an LLC operating agreement. While litigation may be an option to enforce a minority member’s rights, it should be the last resort—and is often the result of a failure to plan ahead.

Minority Members in an LLC

The owners of an LLC are known as members. Like the shareholders in a corporation, LLC members can be majority or minority members. A minority member of an LLC is a member who owns less than 50 percent of the company’s capital interest.

Under state LLC statutes, all LLC members, including minority members, usually have the right to vote on company actions, as well as the right to share in the LLC’s profits and distributions, inspect books and records, and sue another member for a breach of fiduciary duty if they engage in misconduct. A majority vote is typically needed to decide most matters related to the day-to-day business operations, so the ability of a minority member to influence decisions is limited. However, many LLC statutes require unanimous approval for some actions that are outside the ordinary scope of business. The scope of a member’s voting rights may also be limited if the LLC is managed by a manager rather than by the members.

State LLC Laws and the Operating Agreement

Every state has laws addressing LLC governance. These laws become the default rules applicable to an LLC if the company does not create an operating agreement that alters those rules.

LLCs are not required to create an operating agreement in order to form and operate. Those that fail to do so, however, are bound by default state LLC laws regarding the following important matters:

• how the LLC is managed (by members or managers)
• which company actions require a vote and the voting percentage needed for approval
• member duties and responsibilities
• criteria for dissociating a member
• how profits, losses, and distributions are allocated among members
• a member’s rights to sell their membership interest and leave the company and whether the LLC must buy them out

Without an operating agreement that describes each member’s rights and responsibilities and how to govern internal affairs, one-size-fits-all state LLC statutes control when questions and conflicts arise.

Minority LLC Member Oppression

In the absence of protections in their LLC operating agreement, minority members run the risk that the majority members will take actions harmful to them, such as reducing their involvement in the LLC or their ability to receive distributions. This is known as minority member oppression.

Majority members could take various actions that harm a minority member’s interests. These actions may take the form of squeeze-outs and freeze-outs.^[1]

• A squeeze-out occurs when majority members deprive a minority member of managerial control over the company and any distribution of the business’s earnings.
• A freeze-out is when the majority forces a minority to unwillingly sell their interest in the company.

Many LLCs are small businesses, and many are family businesses. When they decide to form an LLC, members frequently know one other and approach the new venture with a sense of mutual trust. They may think they have nothing to worry about and that there is no need for contractual protection. But this trust may prove to have been a mistake if they later become the victim of minority member oppression.

Remedies for Minority Member Oppression

The legal recourse available to an oppressed minority member depends on state laws and whether there is an LLC operating agreement.

In the absence of an operating agreement, a minority member who is facing a squeeze-out or freeze-out may bring an action for breach of fiduciary duty.

Note: The existence of fiduciary duties—including the duty of loyalty and the duty of care—vary in member-managed and manager-managed LLCs. Typically, in a member-managed LLC, the members who run the business owe fiduciary duties to the nonmanaging members. And in a manager-managed LLC, a manager usually has a fiduciary duty to the members.

Another option for an oppressed minority member is to petition the court for an involuntary dissolution of the LLC. Following a judge’s order to dissolve the company, assets may be liquidated and distributed among the members. Alternatively, the judge may order majority members to buy out the interest of the minority.

But even if these options are allowable under state LLC laws, they may not be desirable or end in a way that is satisfactory for an oppressed minority member. Ultimately, the court will have the final say about what happens.

Call Us Today

The best way to prevent minority member oppression is to include protections in the LLC operating agreement. Although an operating agreement cannot prevent all disputes, it can provide a roadmap for how to deal with them in a way that protects a minority member’s interest better than the default rules provided by state law.

Our small business legal team can help LLC members review and negotiate the terms of an operating agreement to ensure that their rights are adequately protected. In addition to protections for minority members, the operating agreement can address capital contributions, distributions, voting and control, member and manager duties, indemnification, exit rights, and membership interest transfers. Contact us today to schedule a consultation.

[1] Franklin A. Gevurtz, Squeeze-Outs and Freeze-Outs in Limited Liability Companies, 73 Wash. U. L. Q. 497 (1995), https://journals.library.wustl.edu/lawreview/article/4032/galley/20865/view.

Limited liability is an important advantage provided by corporations and limited liability companies (LLCs). The personal asset protection that corporations and LLCs provide for their owners, however, is not absolute. To maintain the liability shield, owners must comply with certain corporate formalities required by state law or recommended as a best practice. In addition, observing these formalities is a means of providing the accurate documentation and records needed for a business to operate successfully.

Limiting Personal Liability

Under some circumstances, the owners of a corporation or the members of an LLC can lose their limited liability protection and be held personally responsible for the obligations or debts of their business. This is known as “piercing the corporate veil.”

Without the liability shield that establishes corporations and LLCs as legal entities separate and distinct from their owners, many individuals would not engage in business due to fears of being held personally responsible for a business’s actions, debts, and obligations.

LLCs are generally subject to fewer legal formalities than corporations. However, for both types of entities, following basic operating procedures such as holding meetings, keeping records, and establishing separate bank accounts for the business helps to maintain the liability shield. These formalities also help establish that a business is a distinct legal entity separate from its owners, which precludes creditors from pursuing the owners to satisfy the business’s debts or obligations.

Maintaining Accurate Business Records

While maintaining a corporation’s or LLC’s separate entity status is arguably the most important reason to observe corporate formalities, it is not the only reason. Corporate formalities also help create and maintain the body of information, data, knowledge, and experience that a company accumulates and needs to maintain for its future operations.

These records are a valuable business asset with numerous applications, including the following:

• Innovation and problem-solving: Corporate records can help organizations identify patterns and trends that could lead to the development of new products, services, and business models. 
• Informed decision-making: Business documentation can be used to make informed decisions based on data and records.
• Improved collaboration: Good recordkeeping enables workers to share information and learn from each other. 
• Tracking progress and forecasting: Careful documentation is useful for tracking the long-term progress of prior plans and proposals and making more reliable predictions and forecasts. 
• Business continuity: Corporate records document insider knowledge, promoting continuity of operations when there is employee and leadership turnover.
• Legal disputes: If a legal dispute arises between the business and an outside party or among owners, corporate records can provide key evidence (e.g., what was said in a meeting or the specifics of a financial transaction).
• Tax matters: Detailed business records are indispensable for tax planning and payment.
• Proof of compliance: A business may need to demonstrate its compliance with legal obligations to various governmental bodies, including local licensing agencies, the state attorney general’s office, and the Internal Revenue Service.

How to Maintain Corporate Formalities

Corporations and LLCs are created by state law and must adhere to the rules established at the state level. The formalities required for corporations and LLCs are different, however.

Corporations

It is the responsibility of a corporation to observe the formalities required by the state(s) in which they operate. The following are some formalities that corporations typically must comply with:

• Establish and follow bylaws, which are a set of internal rules that govern how the corporation is run 
• Hold annual shareholder meetings at least once a year to elect directors 
• Hold board of director meetings—usually on a quarterly basis
• Keep meeting minutes, that is, an official record of who was at a corporate meeting, the topics discussed, and the decisions made
• Maintain stock ledger and stock certificates listing each individual shareholder’s name, address, and contact information to account for the total equity in the company
• Open a corporate bank account that is separate from the business owners’ bank accounts
• Register a business name, that is, a trade name or “doing business as” (DBA) name, that the business uses in addition to its corporate name 
• Maintain business records documenting all corporate activities, including notes from shareholding meetings, corporate tax filings, and corporate documents 

LLCs

Many corporate formalities are not required for LLCs but are considered best practices and are highly recommended.

For example, most states’ LLC statutes do not require LLCs to hold formal meetings or record minutes when meetings are held. LLCs are also not obligated to have a board of directors or, except for a handful of states, to create an operating agreement—the equivalent of corporate bylaws for an LLC.

If an LLC does not have an operating agreement, it is subject to the default rules set forth in the state’s LLC laws, which may not reflect the LLC members’ preferences about how to run the business. Failure to observe the following LLC best practices could threaten the liability shield and result in inadequate business records:

• Conducting business in the LLC’s name and not in the name of the individual members
• Maintaining a company bank account and not commingling personal and business funds
• Establishing a capital account for each LLC member that documents their initial investment in the company, their subsequent contributions, the distributions they receive, and their membership interest percentage
• Keeping accurate and detailed records of all financial transactions dating back at least three years, including paid bills, invoices, bank deposits, credit card statements, business contracts, income tax returns, and employee records
• Creating an operating agreement that establishes how the company should be run and outlines the duties and responsibilities of the members to each other and the business
• Holding regular meetings and taking minutes to document attendance, matters voted on and voting results, and topics of discussion

Call Us Today

A business attorney who understands the law and the risks that businesses face, internally and externally, can provide businesses with a professional, objective, top-level view of corporate formalities. We can help business owners to ensure they are observing the formalities necessary to protect themselves against personal liability for the business’s obligations and debts and maintain essential records needed for the business’s operations—whether legally required or recommended best practices. Call us today to set up an appointment.

A shareholder agreement is a contract between the shareholders of a corporation that outlines the rights and responsibilities of each shareholder as well as the obligations of the shareholders to one another and the corporation.

Shareholder agreements, also known as stockholder agreements, are optional but are often used by closely held corporations, which have a limited number of shareholders and concentrated ownership. In these companies, shareholders are often not only investors but are also involved with day-to-day business operations, which may create complex and conflicting relationships.

When properly drafted by an attorney, shareholder agreements can help mitigate the risk of future conflicts and promote the long-term stability and success of the business.

The Potential for Conflicts in Closely Held Corporations

The term corporation may bring to mind a large company that has publicly traded shares, widely dispersed ownership, and professionally administered management. However, most corporations are closely held firms controlled by a small group of shareholders. In closely held corporations, the shareholders may also be directors, officers, and employees of the company. That is, ownership and control are not always clearly separated. And often, the shareholders are family members or have other personal relationships to one another in addition to their business relationship. These overlapping relationships and the profit motive resulting from being an investor in the company may create tensions between shareholders.

Within close corporations, shareholder disputes are one of the most difficult and potentially destructive problems that can occur. These disputes may arise if majority shareholders attempt to squeeze out minority shareholders or otherwise take actions that benefit the majority at the expense of the minority. Minority shareholders may also have interests that diverge from the majority and the overall good of the company.

The corporate charter and bylaws may not adequately address the complex—and conflicting—relationships that may exist in the context of shareholder relationships in a closely held corporation. A shareholder agreement can be used to fill this void and prevent conflicts.

How Shareholder Agreements Work

A well-drafted shareholder agreement provides clear guidelines for the operation and management of a closely held corporation and can help prevent conflicts and uncertainties among shareholders. It can also protect the interests of shareholders and ensure the stability and continuity of the business.

Some of the key provisions in a shareholder agreement address the following issues:

• Clarifying rights and obligations. Shareholder agreements clearly delineate the rights, responsibilities, and obligations of each shareholder, ensuring that everyone understands their role within the corporation. This can prevent misunderstandings and disputes regarding management, decision-making, and profit distribution.
• Protecting shareholder interests. The agreement may include provisions designed to protect the interests of minority shareholders, including rights of first refusal, tag-along rights, or antidilution protections. These provisions assure minority shareholders that the majority will not treat them unfairly.
• Making decisions. By establishing procedures for decision-making and voting rights, shareholder agreements provide a framework for resolving disputes and making key corporate decisions (e.g., an acquisition or a change in strategy). Such a framework promotes stability and efficiency within the corporation, especially in situations in which shareholders have differing opinions or priorities.
• Managing transitions and exits. Shareholder agreements often include provisions for handling changes in ownership, such as buy-sell agreements, that outline the process for buying out a shareholder who wants to sell their shares or who becomes incapacitated. Without a plan to manage transitions and exits, a company may experience costly business disruptions during ownership changes.
• Preserving confidentiality and preventing competition. Shareholder agreements can include confidentiality provisions designed to prevent disclosure of sensitive corporate information to third parties. They may also include restrictive covenants designed to prevent shareholders from engaging in competitive activities that could undermine the corporation’s interests.
• Resolving disputes. A shareholder agreement can provide mechanisms for resolving disputes between shareholders (for example, mediation, arbitration, or buyout).

Shareholder agreements can provide a blueprint for navigating many different—and difficult—scenarios a corporation could face.

Properly Executed Shareholder Agreements Are Valuable Planning Tools

Shareholder agreements, like other types of business contracts, are not one-size-fits-all tools. While well-thought-out shareholder agreements can prevent or provide a means for resolving problems, poorly drafted agreements can create new, unintended problems that could lead to expensive litigation. Their preparation must be undertaken with an eye toward the specific goals your company wants to achieve. For legal assistance drafting a shareholder agreement that aligns with your company’s goals, shareholder personalities, and dynamics, please contact us to schedule a meeting.

There is no law that limits the number of LLCs an entrepreneur can own. Forming multiple LLCs may make sense under certain circumstances: for example, companies that have several rental properties, separate businesses with common ownership, or when one business makes more money or has more assets than the others. Separate business entities may also be beneficial when it is time to launch a new product or sell a single company from a business portfolio. However, establishing separate LLCs will increase administrative burdens.

Benefits of Forming Multiple LLCs

If you have multiple business ventures, forming more than one LLC may provide the following benefits:

• Enhanced liability protection. LLCs provide limited liability to their members because they are a separate legal entity from their owners: as a result, creditors of the business cannot satisfy the business’s debts by pursuing the owners’ This liability shield ensures that LLC owners cannot be held personally responsible for the business’s actions and debts (except in very limited circumstances). Similarly, forming multiple LLCs to hold separate business assets or for separate business ventures also provides protection for each of the businesses because each LLC is only liable for its own debts and obligations, not those of the others.
• Cleaner segmentation. If an owner has multiple businesses and each is organized as a distinct LLC, when it is time to sell one of them, it is much simpler to transfer the assets and ownership interests held by a separate LLC than it is to attempt to separate the assets and paperwork of one of several businesses operated under one LLC. A business held by a separate LLC is already neatly segmented, which may make it more attractive to purchasers than a business that must first be untangled from interconnected businesses held under one LLC.
• Flexibility regarding tax An LLC may be taxed as a corporation, a partnership, or as a disregarded entity (i.e., a single-member LLC and its sole owner are not taxed separately unless another tax election is made). Establishing multiple separate LLCs means that each LLC may be treated separately for tax purposes: for example, one LLC with multiple members could opt for the default tax classification as a partnership, whereas another LLC with the same members could elect to be taxed as a C corporation depending on which tax status is most advantageous.
• Management and government structures. Each individual LLC may adopt different management and governance structures, which may be set forth in their separate LLC operating agreements.

Disadvantages of Forming Multiple LLCs

Although forming multiple LLCs could provide benefits that might appeal to a business owner, there are downsides to consider as well. Keeping each LLC legally distinct from the others requires separate bank accounts, annual reports, tax forms, filing fees, operating agreements, registered agents, financial records, employee ID numbers, and business licenses and permits. Any commingling could provide creditors with grounds to argue that the businesses are not in fact distinct legal entities, which could weaken the liability shield between them.

In addition to higher compliance burdens and costs, multiple LLCs could create conflicts of interest, especially if the companies engage in transactions with each other. When multiple LLCs with common owners contract with each other, the owners should be careful to avoid promoting the interests of one of them over the others. Doing so, especially without disclosing the potential conflict and obtaining consent from the other owners, could violate duties, such as the duty of loyalty, that LLC owners may owe to the LLC or to other owners under state law. It is important for LLC owners to be familiar with the duties they owe and the extent to which those duties may be modified or waived by explicit provisions in their operating agreements.

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Forming multiple LLCs could be advantageous for business owners who want to expand their business or investment portfolios while minimizing their risks. You should discuss with a business attorney whether to create one or multiple LLCs to hold your businesses or assets. Call us today to schedule a consultation so we can help you make the best decision for your unique situation.

Written contracts are the backbone of business relationships. They outline the rights, obligations, and expectations between parties and provide a legal framework that ensures parties keep their promises. Absent written contracts, business relationships are less clear, trust is tenuous, and deals may be unenforceable.

Using an artificial intelligence (AI) tool to generate business contracts may seem like a good way to save money and time, but it may cost a business owner more than they save from not hiring a lawyer. The parties to a contract sometimes disagree over the terms of a contract and what they mean, especially if it was not carefully drafted by a lawyer. If a lawyer has not reviewed the contract to ensure it is accurate, complete, enforceable, and suited to the transaction, the business is left open to potential disputes and problems. These problems cannot be avoided—and may be exacerbated—by using AI tools incapable of understanding and addressing the specific goals and needs of your business to draft your business’s contracts.

Can AI Draft a Contract?

Business owners might have experimented with AI programs such as ChatGPT and related technologies and marveled at their ability to save them time—and money—on a range of tasks, including generating contracts. However, relying on AI to draft your contracts involves many risks, including the following:

• Terms and conditions that are unclear, contradictory, or vague
• Terms and conditions that should be included but are excluded because AI does not understand the law or regulatory environment, industry, transaction, business involved, or other contextual nuances
• Contracts that are unenforceable because they do not meet all the necessary legal requirements of contract law in general or the law of the relevant jurisdiction
• Cookie-cutter terms that are not applicable to the specific needs and goals of the business
• Inclusion of illegal bias or discriminatory language
• Exposure to liability and litigation resulting from the AI tool’s failure to include contractual provisions that adequately protect the business
• Data security concerns arising from failure to comply with data protection regulations

AI Is Not a Substitute for a Business Lawyer

Artificial intelligence can help businesses perform certain tasks faster and more efficiently, but a poorly drafted contract can be as problematic as having no contract at all. You might think you are saving time and money using AI to draft a business contract, only to find out later that important provisions are missing or do not comply with state law.

Contract creation involves much more than just entering terms into an AI tool. Preparing well-drafted contracts requires a legal professional who gets to know you and your unique concerns and has the real-world legal experience to address them in a way that protects your business and facilitates its success. Talk to a lawyer about your business contracts: contact us to schedule an appointment.

A distribution from a limited liability company (LLC) is a payment of cash or property made by an LLC to the LLC’s owners, also known as members. Although state law sets forth certain default rules, LLC members can specify in the LLC’s operating agreement when and how profits are allocated, distributed, and taxed.

Distribution Method and Timing

Under the default rules provided by most state LLC statutes, an LLC is not required to make any distributions to members before they withdraw from the LLC or it is dissolved. It is prudent for LLC members to create an operating agreement that specifies the method and schedule of distributions. Distributions can be made on a regular basis, such as monthly, quarterly, or at the end of the fiscal year; or based on specific events, such as the sale of assets or the liquidation of a member’s interests.

When determining the timing and size of distributions, the compensation needs of members must be considered alongside the needs of the business to grow earnings, cover expenses, and retain sufficient cash reserves. Often, distributions are made to enable members to pay taxes they owe on the LLC’s profits: because LLCs are generally pass-through entities, their members must pay taxes on LLC profits regardless of whether they receive a distribution of those profits.

Proportionate versus Disproportionate Distributions

Distributions can be made in direct proportion to how much of the LLC each member owns—an amount that is typically based on an owner’s capital contribution to the business. This is not required, however. Although state LLC laws may provide a default rule that members must share income distributions equally regardless of how much each member invested, the owners can override this in the operating agreement.

Profit Allocations versus Profit Distributions

Profit allocation and profit distribution are not the same thing in an LLC.

• Profit allocation is how the profits and losses are divided among LLC members, regardless of how much the LLC pays the members.
• Profit distribution is the payment to each LLC member in cash or property by the LLC out of its profits.

As mentioned, LLC members may need to receive regular LLC profit distributions to cover the tax liabilities on their profit allocations.

Note: Members should talk with their professional advisors about the LLC tax election that is most advantageous for their business model.

Recordkeeping

It is very important for the LLC and its members to maintain accurate records of distributions, such as a copy of the payment check or a printout of the bank transfer. This information should be kept with other business accounting records such as financial reports, cash flow statements, accounts receivable, payroll, and tax documents.

Further, to keep track of each member’s interest in the LLC, LLCs should keep records called capital accounts to track their members’ initial investments in the LLC, subsequent contributions to the company, distributions they receive from the LLC, and the percentage of profit attributable to each member according to their membership interest percentage.

A capital account is not an actual, physical bank account. It is a recordkeeping account that exists only on paper, such as a spreadsheet, and effectively serves as a ledger. As with all recordkeeping, details matter. Detailed recordkeeping is important not only at tax time but also when a member leaves or the LLC is dissolved.

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From initial investments and fundraising to profit allocations and distributions, tax election status, and recordkeeping, LLCs have a lot of moving financial parts. Professional help can keep your business machine running more smoothly. Please reach out and schedule a meeting.

When you are first starting a business, operating it as a sole proprietorship may make a lot of sense. Sole proprietorships are simple and inexpensive to set up and maintain: they are operated by a single taxpayer and are the most common form of business organization.

From a tax and legal perspective, businesses that are owned and operated by one person and have not been formed as a separate legal entity such as a limited liability company (LLC) are automatically considered to be sole proprietorships.

Keeping things simple has its advantages in business. But as your business grows, matures, and becomes more complex, it may be beneficial to structure it as a separate legal entity, such as an LLC.

Sole Proprietorship versus LLC: The Basics

Successful entrepreneurs need more than luck—or a good idea—to succeed in business. You also need a plan. Part of that plan involves choosing a structure for your business. The following is some basic but important information you should know about sole proprietorships:

• For legal and tax purposes, there is no distinction between a sole proprietorship and the person who owns it.
• Business profits and losses are passed through to the owner, making a sole proprietorship a pass-through entity.
• Business assets and liabilities are not separate from the owner’s personal assets and liabilities. That means creditors can pursue the owner’s personal assets to satisfy the business’s debts, judgments obtained in a lawsuit against the business, or other financial obligations of the business.
• The owner’s personal credit is also not separate from the business’s credit. This may make it more difficult to build business credit and obtain funding for the business.
• The owner is not responsible for paying any separate business taxes, although they are responsible for self-employment
• A sole proprietorship requires no state filing or annual paperwork.

A sole proprietorship may be sufficient for a newly formed business with a single owner if there is no plan to add other owners and if the business does not need significant capital, has a low risk of being sued, and is not yet experiencing significant growth. It may also work for a new business when an owner wants to test the entrepreneurial waters prior to creating a separate legal business entity.

One of the more formal business structures available to entrepreneurs is an LLC. An LLC can have a single owner (called a member) or multiple members. The former is known as a single-member LLC: it is an alternative to the sole proprietorship that should be considered. The following is some basic information about LLCs:

• LLCs are created and governed by state law and have state-specific filing requirements. States require the owner to file a certificate of formation (g., a certificate of organization or articles of organization) that meets the criteria established by state law. Typically, this includes providing the business name, purpose, address, owners, and other information about the business as well as paying a filing fee.
• Some states require LLC owners to file an annual or biennial report and pay an associated fee.
• Although most states do not require it, business attorneys recommend that LLCs, including single-member LLCs, have an operating agreement that governs company ownership, management, and financial matters. Without an operating agreement, the default LLC rules set forth in state law apply.
• An LLC’s members are typically not personally liable for the company’s debts or obligations. This is what is meant by a liability shield. Only in rare cases can a court pierce the veil of an LLC and disregard it as a separate legal entity. However, depending on state law, creditors of single-member LLCs may not be limited to a charging order entitling them only to distributions made to the member from the LLC. In some states, creditors may be entitled to foreclose the member’s interest or get a court to order its dissolution.
• The owners of a single-member LLC can be treated as a self-employed individual and taxed the same as a sole proprietorship. Unless an election is made to be taxed as a C corporation, profits and losses pass through to the owner’s personal income with no separate corporate taxes owed.
• Because they are legal entities separate from their owner, LLCs have their own credit score and may be able to obtain funding more easily than a sole proprietorship.
• LLC ownership interests can be owned by a trust. Transferring a single-member LLC to a trust may provide estate planning benefits because the trustee may choose whether to continue or wind down the business. In contrast, sole proprietorships generally cease operations at the death of the owner.

Is It Time to Change from a Sole Proprietorship to an LLC?

As your business changes, it may be prudent to take steps to convert your sole proprietorship to an LLC. Here are some signs that it may be time to make the switch:

• Your business is growing
• You are earning (or expect to earn) more profits
• You are considering hiring employees or bringing in other owners
• Your business needs a loan or investors
• You require greater personal asset protection
• You want more tax flexibility
• You would like to pursue bigger clients and deals
• You are getting closer to retirement

If you started a business that is currently organized as a sole proprietorship and you want to change the business structure to an LLC, you must choose a registered agent, file articles of organization with the appropriate state agency,  pay any required fees, and comply with any other requirements under state law. As mentioned, it is prudent to create an operating agreement. You may also need to apply for an employer identification number (EIN), update any existing licenses and permits to reflect the new business structure, and open a business bank account to separate company and personal finances.

Embrace Change with Help from Our Business Attorneys

Change in business is inevitable. Markets change, customers change, and your business must change to keep up. We can assist with all legal aspects of starting a business, changing a business structure, and preparing a business for sale, acquisition, or succession. To speak with a business attorney, please reach out.