As you may know, unless Congress acts, as of January 1, 2013 the federal estate tax exemption amount is scheduled to drop from $5.12 million to $1 million, and the maximum tax rate will increase from 35% to 55%. In addition, New York and Connecticut each levy state estate taxes on estates over $1 million and $2 million, respectively.

[Note: This post was written while I was a practicing attorney running a solo law practice. Since April 2015, I have been working with attorney, executive and entrepreneur clients as a career coach and writer, and I am not currently available for legal engagements.]

Formula and disclaimer bypass trusts are irrevocable trusts used by married couples to minimize estate taxes on their combined estates. These credit shelter trusts work by channeling the assets into a trust for beneficiaries, such as the couple’s children or other family members.

Either type of trust may be a useful component of your estate plan, depending on your needs and goals. As with any planning, there are advantages and disadvantages to consider, as discussed below.

For the full memorandum, click on the link: Disclaimer and Bypass Trusts Explained

None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site. Any references to Law Office of Anne Marie Segal in the enclosed are references to my prior law office, now closed.

A confidentiality agreement, also known as a non-disclosure agreement or NDA, is often the first step in a business transaction or employment relationship that involves sensitive information. In its simplest form, an NDA is an agreement by one or both parties (often called the “discloser” and “recipient” as applicable) not to disclose confidential information received from the other party to the agreement. In some cases, NDAs are more broad and include, for example, language that one party will not circumvent the other party in a transaction, solicit its employees or steal its trade secrets.

[Note: This post was written while I was a practicing attorney running a solo law practice. Since April 2015, I have been working with attorney, executive and entrepreneur clients as a career coach and writer, and I am not currently available for legal engagements.]

NDAs often have highly-technical legal language like the following (translation into plain English below):

“In consideration of your involvement in a possible transaction (the “Transaction”) relating to [Name of Company] (collectively, with their respective subsidiaries, the “Company” or “we” or “us”), the Company is prepared to make available to you certain information concerning the business, financial condition, operations, assets and liabilities of the Company, including information which may be non‑public, confidential or proprietary in nature. As a condition to such information being furnished to you and your Representatives (as hereinafter defined), you agree to treat any information (whether prepared by the Company or its representatives or otherwise and irrespective of the form of communication (i.e., whether written or oral)) which has been or is furnished to you or to your Representatives already or in the future by or on behalf of the Company (collectively, the “Information”) in accordance with the provisions of this agreement (this “Agreement”), and to take or abstain from taking certain other actions as hereinafter set forth.” 

The above paragraph essentially means, with some nuances, that, “if we give you certain information, you will comply with this agreement.”

NDAs are generally short documents, from one to five pages or more depending on the size, industry and inclination of the parties, the jurisdiction governing the agreement and the nature of the information being disclosed. In most instances, negotiations are and should be judicious and prompt so that, once agreement is reached, the business deal, investment or relationship can go forward as intended. Sometimes, however, negotiations take weeks or months because the parties do not see eye-to-eye on the major points, one party has unreasonable demands or a well-meaning but incompetent attorney bungles the process. Unfortunately, legal ineptness in the field of NDAs is more common than one might imagine, since lawyers often fall in love with the negotiation process and a preferred “turn of phrase” rather than maintain the proper perspective that the NDA is simply an appetizer to the main course.

An experienced and skillful NDA attorney knows how to cut through the words on the page and drill down to the significant point for a particular client. An incompetent one simply works from a form or (worse) hampers the process by not understanding, knowing or caring about each party’s leverage and how to negotiate significant issues. Bad lawyering not only slows the NDA negotiation process but makes the business people (who retained the lawyer) appear inexperienced and unable to see the big picture. In the worst case scenario, it can lead to opportunities being missed or business relationships being strained or severed.

Finding the right attorney to negotiate NDAs for your firm can be a challenge. They are often short and straightforward agreements that do not require major legal “firepower”, yet they require close attention by a careful reader so that nothing is unnecessarily given away in the process. One example that is common in form NDAs is that a discloser attempts to make all information shared under the agreement confidential, whether or not such information is related to another company, covered by another agreement (such as one with a third party, which may have different or conflicting provisions) or already possessed by the recipient. Another common provision states that the recipient cannot share the information received with other parties to a transaction (including, for example, joint investors, lenders or advisers), which language may be buried in the small print on a back page but nonetheless binding unless revised.

While lawsuits involving NDAs are relatively rare, it is better to have the “insurance” of a proper drafted document than take the risk of costly disputes and/or threats down the road. In addition, in many cases NDAs with the larger companies are “take it or leave it” documents, so it pays to know in plain English what you are signing.

None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. 

As a business lawyer, I track not only the legal aspects of business but also how people live, breathe and think about their businesses. After Hurricane Sandy, business continuity is one issue that is, or should be, on the minds of all business owners.

[Note: This post was written while I was a practicing attorney running a solo law practice. Since April 2015, I have been working with attorney, executive and entrepreneur clients as a career coach and writer, and I am not currently available for legal engagements.]

I spoke with a restaurant owner in my hometown of Stamford, Connecticut in the days before the hurricane and asked him what where his plans for the coming storm. His answer: “Pray that it misses me, because I will lose thousands of dollars of frozen food.” He didn’t even begin to mention the potential loss of revenue if his doors were shuttered for a week or more, either unable to imagine it or unwilling to foresee the risk.

Unfortunately, all too often business continuity planning – preparing to keep a business operating and mitigate losses during a hurricane or other disaster – is seen (if considered at all) simply as an expense rather than an opportunity. If you own a business, here are some thoughts about how to ramp up your business continuity efforts.

1. Evaluate the Risks. The first question is always what risks are greatest to your individual industry and business. In the restaurant example, maintaining current inventory and access to alternate suppliers (if a main supplier is unavailable) are two major and obvious factors, but there is much more to consider. Let’s start with the workforce. How will the restaurant’s manager communicate with employees in the case of a disaster or other emergency? Have any been cross-trained in the event that staff is limited and has there been a dry run of the management pyramid as the staff fulfills their new roles? How will mundane tasks be met, such as washing dishes and taking out the trash? Is alternate staff available? Then there’s technology. How much of the business relies on technology and what will happen if the power fails? Have you secured an alternate means of processing credit cards, for example, or planned a manual backup? There’s also the site to consider. If the site of the restaurant becomes unavailable or suffers a security risk for any reason, does the business need to close or can meals be delivered to customers in another manner (e.g., takeout)? What other risks may face your business?

2. Invest in a Backup Power Source. While we can all debate whether major storms and other disasters are becoming more common, after Hurricane Irene, Hurricane Sandy and other worldwide events, it is clear that businesses need access to power when the lights go out. Decide how much backup power generation is sufficient in different scenarios that could face your business and investigate how you can secure access to the resources needed to run it, such as natural gas or gasoline. If you cannot afford a generator, can you share one with another local business? If you choose to go that route, make sure to sign a contract outlining the rights and responsibilities of each business, including how much power the generator owner and second business can pull at any given time and how this will be monitored.

3. Review Insurance. Does the business have sufficient insurance in the specific areas that cause risk? Flood insurance is a prime example. If your business could experience flooding and is not insured against that risk, it is time to review and update your policy.

4. Review Contracts. If your business contracts require delivery of goods or services at a specific date and time, include “force majeure” clauses in your form contract and any other significant agreements. These clauses vary in their language, depending on the subject matter of the contract, but generally state that if a force outside of your control (i.e., a “higher force” or “force majeure”) causes a delay in or impossibility of performance, you are excused from the contract for the duration of the event.

5. Plan How to Communicate with Employees. Mentioned in the risk-analysis above, businesses need a tested means of communicating with employees in the event of a disaster. Which employees have access to landlines, cell phones and email, and does everyone use them on a regular basis? Is there a backup emergency phone number for each individual? Who maintains the employee list, and what is the plan if that person is incapacitated? Can you outsource this function and does it make sense to do so?

6. Have Built-In Redundancy. If you are reliant on data, plan to backup that data and your central server as needed. Keep copies of important records offsite or online. If you are heavily reliant on other service providers to run your business, such as an Internet provider, find out if their own backup plans are sufficient to allow customers to continue to do business with you if the service provider’s systems fail.

7. Test. A business continuity plan has little value on paper. Make sure it actually works. Have Plans A, B and C in place about how your business can be run, and test each one quarterly or annually.

8. Disseminate. Similarly, a plan has no value if the key players do not know about it. Make sure your significant employees are clued into the business continuity plan, know their roles and can implement it if needed.

None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site.