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California Drivers Must Soon Drop The Phone

By David S. Olson, Esq.

California law presently prohibits a person from driving a motor vehicle while using an electronic wireless communications device “to write, send, or read a text-based communication,” which the Vehicle Code defined as “using an electronic wireless communications device to manually communicate with any person using a text-based communication, including, but not limited to, communications referred to as a text message, instant message, or electronic mail.” California courts, following the language of the legislation, refused to expand the prohibition on cell phone usage while driving beyond emailing, instant messaging, and texting.

California employers, who may be held liable for injuries caused by employees driving for business purposes, should be aware of an expansion of the prohibition on cell phone usage that will take effect on January 1, 2017.  The new law now generally prohibits anyone from driving “while holding and operating a handheld wireless telephone or an electronic wireless communications device unless the wireless telephone or electronic wireless communications device is specifically designed and configured to allow voice-operated and hands-free operation, and it is used in that manner while driving.” This expansion will now presumably preclude a broad range of cell phone operations while driving, including checking maps and online surfing.

While the penalties for violating the law–$20 for a first offense and $50 for each subsequent offense–are not severe, the legislative history is clear that the law is aimed at preventing and reducing deaths and injuries caused by distracted driving.  Violations of the law would be admissible in lawsuits.  As such, employers should both educate employees who may drive for business purposes on the significant change in the law and take reasonable steps to ensure compliance with the new law by employees during such trips.


Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. If you have any questions about the new expansion of the California law relating to cell phone usage while driving that will take effect on January 1, 2017, please feel free to contact David Olson by email at dolson@clarktrev.com or telephonically at (213) 629-5700.

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For Real Estate Transactions, Get It In Writing!

California Real Estate Agreement

By David S. Olson, Esq.

As a general rule, agreements need not be in writing to be enforced although proof of an agreement, and its terms, are obviously far easier when the agreement is reduced to writing. Some agreements, however, must generally be in writing to be enforced under California’s statute of frauds. Among those are agreements respecting the purchase and sale of real property, real property leases for in excess of one year, and agency agreements respecting purchases and sales of real estate and leases of real property for in excess of one year.  As a recent California case drives home, when it comes to California real estate transactions, make sure any agreement is in writing.

In Westside Estate Agency, Inc. vs. James Randall, the Court held that licensed real broker Stephen Shapiro, the principal of Westside Estate Agency, Inc., was not entitled to a $925,000 commission because the agency agreement between Shapiro and his friends, James and Eleanor Randall, was not in writing.  Shapiro had agreed to represent the Randalls in their quest to buy a home in Los Angeles but failed to obtain a written agreement to that effect.  While the Randalls ultimately purchased a $46.25 million Bel Air property Shapiro had located for them, Shapiro’s lawsuit seeking payment of his commission was dismissed by the courts because of the lack of a written agreement between Shapiro and the Randalls.

There are limited exceptions to the general rule of unenforceability of contracts that fall within the statute of frauds.  As the Westside Estate Agency case underscores, however, anyone entering into an agreement respecting the purchase, sale, or leasing of real estate in California, or respecting payment of a commission for such transactions, would be very wise to memorialize the agreement in a writing signed by the parties.  Otherwise, and as the broker in the Westside Estate Agency case learned the hard way, there is a very good chance the courts will refuse to enforce the agreement.


Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. If you have any questions about agreements respecting the purchase, sale, or leasing of real estate in California, or respecting payment of a commission for such transactions , please feel free to contact David Olson by email at dolson@clarktrev.com or telephonically at (213) 629-5700.

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What Does a Trump Presidency Mean for Estate Taxes?

By Tiffany A. Halimi, Esq.

Donald Trump was elected the 45th president of the United States of America.  What does this mean for our estate tax laws?

One of President-Elect Trump’s campaign promises was to eliminate the federal estate tax, a forty percent (40%) tax that is imposed on estate asset transfers in excess of $5.45M (indexed annually for inflation). Who would this affect from the payor’s perspective?  Who would this affect from the payee’s perspective? What impact would a reduction in the estate tax have on our federal tax revenue?  To understand the answer to these questions, we must first understand the current state of our estate and gift tax (i.e. transfer tax).

Current Estate Tax

Currently, in 2016, each individual has a $5.45M exemption from federal transfer tax that they can apply to transfers of assets made during life or upon death. Any transfer made in excess of the exemption will result in a 40% transfer tax (also known as an “estate tax” for transfers at death or “gift tax” for transfers during life).  A married couple can apply both spouses’ $5.45M exemption towards their joint estate, for a total exemption amount of $10.9M.

Current Capital Gains At Death

Under the current law, the basis of an individual’s assets will adjust to fair market value as of the date of death of that individual. Typically, this adjustment results in a step-up in basis (rather than a step-down).  For more information on basis, please see our previous blog post entitled “Think Three Times Before Gifting Real Property: The Interplay of Gift Tax, Capital Gains Tax and Property Tax.”  Receiving a step-up in basis can result in significant tax advantages for a deceased person’s heirs because they have the ability to avoid paying a capital gains tax, which can be a significant tax, particularly on a highly appreciated asset.

Proposed Repeal of Estate Tax

President-Elect Trump has proposed eliminating the estate tax. Citizens would be able to pass assets of any amount to their heirs without the obligation to pay any estate tax at the federal level.  In 2015, the federal government collected approximately $17B in estate taxes.  This source of revenue would be extinguished if the estate tax is repealed.  However, under President-Elect Donald Trump’s proposed estate tax changes, he also suggests modifications to the capital gains laws, which would affect the basis of a deceased individual’s assets, and possibly increase federal tax revenue in an area that revenue is not currently generated.

Proposed Changes to Capital Gains Tax Upon Death

The President-Elect further proposed that a deceased individual could pass up to $10M of gain to their heirs without incurring a federal capital gains tax. All assets passed to heirs that exceed a $10M gain would be subject to a federal capital gains tax as to the gain.  It is unclear what event would trigger the gain.  Would the gain be triggered automatically at death?  Or would the gain be triggered by the usual events that trigger gain (such as a sale)?  This is a point that needs further clarification.  Assessing a capital gain tax on assets that otherwise would not be subject to such taxation could be significant to the deceased’s state’s revenue as well, since most states impose a state-level capital gains tax, but not all states impose an estate tax.

The changes that President-Elect Donald Trump proposed during his campaign could have significant consequences for taxpayers and tax planners alike. To discuss tax planning strategies, please contact one of our Trusts & Estates lawyers.  Stay tuned for more information on if and how the estate tax changes!


Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. If you have any questions, please feel free to contact the author, Tiffany Halimi, by email at thalimi@clarktrev.com or telephonically at (213) 629-5700.

Circular 230 Disclaimer: To comply with IRS requirements, please be advised that, any tax advice contained in this blog is not intended or written to be used, and cannot be used, by the recipient to avoid any federal tax penalty that may be imposed on the recipient, or to promote, market or recommend to another any referenced entity, investment plan or arrangement. For more information, please go to www.Clarktrev.com.

 

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Tipping the Scales of Justice?

By David S. Olson, Esq.

The future direction of the United States Supreme Court was a campaign issue this year because decisions of the Supreme Court affect all Americans in their personal lives and many businesses. For example, in 2015 alone, the Supreme Court handed down decisions regarding same-sex marriage, free speech rights, housing, pregnancy, and employment discrimination claims, and pollution limits, to name just a few.   One of the first things President-elect Donald Trump will do upon taking office is select someone to fill the seat left vacant by the passing of conservative Justice Antonin Scalia earlier this year.  Based on a previously posted list of 21 candidates from whom the President-elect stated he would choose, Mr. Trump will be looking primarily to individuals who have already proven themselves to be conservative judges.  As such, President Trump’s first selection should not change the political composition of the Court from the time Justice Scalia was on the bench.

Any additional picks would, however, potentially alter the Court’s liberal/conservative composition and thus future decisions for potentially years to come. For example, Justice Ruth Bader Ginsburg, appointed by Bill Clinton, is solidly liberal. She is the oldest member of the Court and turns 84 in March.  Justice Anthony Kennedy, a Reagan appointee who occasionally sides with the Court’s liberal block, is, at 80, the Court’s second oldest member. Another Clinton appointee, liberal Justice Stephen Beyer, recently turned 78, making him the third oldest member of the Court.

Trump’s list, which was released initially in May of 2016 and supplemented in September 2016, is comprised entirely of sitting judges with proven track records with the sole exception of Republican Senator Mike Lee of Utah. Senator Lee previously served as an Assistant United States Attorney and clerked for conservative Supreme Court Justice Samuel Alito, Jr., a George W. Bush appointee.  The list contains two state court judges from Michigan, and state court judges from Colorado, Utah, Minnesota, Wisconsin, Texas,  Georgia, Florida, Iowa, and Kentucky.   Also included are federal court judges from the third, sixth, eighth, tenth, and eleventh circuit courts of appeal, as well a United States Court of Appeals Judge for the Armed Services.  Three of the potential nominees clerked for Supreme Court Justice Clarence Thomas, two clerked for Justice Kennedy, one clerked for Justice Scalia, and one for Justice Alito.

History shows that Presidents can live to regret their Supreme Court appointments. President Eisenhower famously called his Supreme Court nominations (which included liberal Chief Justice Earl Warren) the “biggest damn fool mistake I ever made,” Richard Nixon unwittingly appointed the justice who went to author the seminal abortion opinion, Roe v Wade (Justice Harry Blackmun), and, more recently, Justice David Souter has turned out to be far more liberal than contemplated by President George W. Bush.  It appears, based on his published list of candidates, that President-elect Trump has already put considerable time, thought, and effort into maximizing the chance that he can avoid the same fates as Presidents Eisenhower, Nixon, and George W. Bush.  History will be the judge.


Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. If you have any questions, please feel free to contact David Olson by email at dolson@clarktrev.com or telephonically at (213) 629-5700.