Own it Myself? Partnership? Corporation? Something Else? (Part Two)

In Part One of this article, we looked at two major forms of business organization that require the owners to put all of their assets on the line.  Now we’re going to look at two forms that allow investors to risk only what they invest – to the extent people dealing with the businesses don’t ask for additional protection.

Own it Myself? Partnership? Corporation? Something Else? (Part One)

In this two-part article, we look at the question of selecting the form to organize a business.

One question that a business owner needs to decide at some point is in what form the business entity is going to take. For ordinary for-profit businesses, the law in most states offers four major forms and a few minor forms, each of which has its own benefits and costs. There are three factors that the owner should consider before deciding how to proceed: flexibility of management, protection of personal assets, and tax effects.

In this part, we discuss two major forms that put all of the owner’s assets up for potential payment of any resulting claims against the business. On the other hand, there are tax and flexibility reasons that may benefit the owner in return.

Update: The Toyota Cases

This week, The Wall Street Journal reported on the first set of Toyota “runaway” incidents investigated by the National Highway Traffic Safety Administration. Citing unidentified sources, the Journal reports that of the 75 accidents NHTSA has reviewed, one case involved a floor mat causing the gas pedal to become stuck. All of the others appear to be “stepped on the gas” situations; the cars’ data recorders indicated that gas was fully engaged but the brake wasn’t, and there was no evidence found in those cases of the car malfunctioning.

NHTSA and the Department of Transportation dispute the Journal report, deny that NHTSA provided the information for the article, and assert that Toyota has planted it. The DOT reports that NHTSA’s investigation is not complete and that it will not issue a report until it has finished.

Defense of Marriage Act Held Unconstitutional by Federal Court in Massachusetts: Implications for Oregon and Washington

Most of the articles in this blog are designed to inform potential clients of matters that may benefit them. This article is a bit of a departure; I’m commenting on a case that was just ruled on that may have long-term implications and may be of more interest than benefit.

On July 8, a federal court in Massachusetts ruled that the federal Defense of Marriage Act, which prohibits federal recognition of same-sex marriage, was unconstitutional.

http://tinyurl.com/2en3re9

What the Supreme Court Said About Workplace Privacy

One of the hot topics in employment law in recent years is privacy of employees’ communications. The Supreme Court weighed in on June 17. Although the City of Ontario v. Quon case will not direct affect most private employers, is likely to influence how the law develops.

“I Was Only Protecting Myself!” Self-Defense, Assault and Battery, and Civil Liability

Most people are aware that self-defense is a defense to criminal charges, and the recent arrest of a Gresham man for shooting at fleeing suspects reminded most Oregonians that there are limits to what force can be used. Self-defense, or defending others, can also be a defense to a civil lawsuit for assault and battery, as, sometimes, can defense of property.

In criminal law, the concepts of assault and battery have been merged under the statutes and are generally called assault of varying degrees. For civil purposes, they are not. Basically, the idea is that if you swing and miss, you can be sued for assault, and if you swing and hit, you can be sued for battery. In both cases, the defendant actually has to intend to either hit or frighten someone. Battery also encompasses the sexual assaults that have been the basis of suits against churches, the Boy Scouts, and similar institutions in recent years; the assailants committed battery, and the institutions generally have been found negligent for failing to prevent it once they had fair warning.

Electronic Discovery and Lessons from the University of Montreal Case

Anyone involved in a lawsuit may be asked to deliver copies of documents to the other side. As more and more businesses go paperless and people rely on e-mail and other electronic communications, saving and producing electronic records has moved to the forefront of disputes. On January 10, 2010, a federal court in New York issued an unusually strong order describing what people need to do to ensure that their records are available when requested. This is likely to become a leading opinion on the subject in federal cases. I expect that Oregon and Washington state courts are likely to set similar standards.

Although most of the problems in lost document situations involve businesses with many employees, it is also possible for individuals to lose documents.  For example, in divorce cases, financial records often are important.  If these aren’t kept, it may prove necessary to get new copies.

“I Want the Kids to be Raised Jedi!” Religious Disputes in Child Custody

When an interfaith relationship ends (and sometimes intrafaith relationships, if the parties are of differing levels of commitment), children can be caught in the middle. The court system isn’t the best way to resolve these problems, but it’s not always avoidable.

Two Unexpected Issues From the Tax Changes: Why Your Plan May Need a Patch and How to Deal with Long-Held Property

When Congress left the 2001 tax changes in 2009, it left two possible traps that may catch some people in higher taxes or unexpected results. One problem is that, with the 2001 changes scheduled for automatic repeal after 2010, no one expected that there would be no changes, and nearly everyone prepared wills and trusts expecting that a permanent change would be in place by now. The other problem is that in 2001, Congress also made a little-noticed change to the capital gains tax effective this year.

New Rights in Foreclosure: Oregon Law

The Oregon legislature passed a series of bills in 2009 designed to help the homeowner and tenant in foreclosure situations and to protect against questionable practices in the mortgage industry.  There are also a few bills about foreclosure pending in the 2010 special session.  If you think your situation may involve one of these issues, you should consider consulting a lawyer.