Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

Effective August 18, 2008, N.J.A.C. 13:10-2.4 was amended to require all owners of multi-family dwellings to file the annual MDRR report online at the Division on Civil Rights’ Web site: www.NJCivilRights.org.  Previously, the regulation permitted filing either by mail or electronically.  Therefore, all property owners subject to the rule must now e-file on the DCR Web site no later than January 30, 2009.
 
Property owners who do not file their 2008 MDRR report online by February 14, 2009 will be subject to a $100.00 late filing fee.  The late filing fee increases to $250.00 for all property owners who file after March 1, 2009, and to $500.000 for all property owners who file after April 30, 2009 are subject to a penalty in an amount designated by the Director of the Division on Civil Rights.  See N.J.A.C. 13:10-2.7.
 
To file, visit the Division’s Web site, www.NJCivilRights.org, and follow the MDRR link. This year, in order to improve the accuracy of reports, your submission will be checked for missing information and mistakes in calculations.  To simplify the online filing process, a 2008 Multiple Dwelling Report Worksheet will be available for downloading.
 
This worksheet is designated to assist you in collecting the required information needed to properly complete the online form.  Submission of the worksheet by mail or fax does not satisfy regulatory requirements for online filing.  You can begin filing your online report commencing January 1, 2009. 

Fredrick P. Niemann, Esq., a NJ Trust Law Attorney

Your living trust is much more than just a will or a trust document that says which heirs get what percentage or which specific items that you leave behind should you die. A living trust details how and when heirs are to receive their inheritance, who is to take over any businesses in question, and many crucial issues of your estate. A living trust is very specific in how an estate is to be dealt with. Therefore, the choice of a trustee for your living will is a very important decision in your estate planning process.

Living Trusts: Choosing a Trusted Friend
When choosing a person to be the trustee of your living will, you need to answer on question:

• Who could step into my place and confidently act as I would in carrying out my wishes?  

It is vitally important to choose someone that you have full faith and confidence in. You should feel at ease that he or she would carry out your requests as they are written in your estate planning documents. Some typical choices include a:

• Close family friend 
• Close family member 
• Child 
• Professional trustee

While you may feel completely secure in trusting this huge responsibility for carrying out your wishes to a family member, there are several situations when that is not wise or possible. In that case, your estate planning wishes can be addressed by a trusted outsider.

Living Trusts: Choosing an Outside Trustee
If you do not have a close friend or relative that you feel comfortable leaving this job to, or if by selecting one of the heirs will cause conflict, then there are other options. You can hire an outside trustee like:

• Your bank 
• A trust company 
• Your lawyer 
• A financial advisor

These professionals are well versed in what it requires to be a trustee and can often work more expediently and effectively, which saves the heirs money and time. While there are many benefits to not having a family member involved as the trustee of your living trust; there are also some drawbacks to using a bank or trust company as your trustee.

• Higher fees 
• Minimal estate value of around $700,000

No matter whom you choose, you want to be sure that you have full confidence in them to do exactly as you want, no matter what other people say. There may be heirs who are unhappy with the terms and conditions of the living trust and will try to sway your representative to do as they want. Knowing that you have a strong, trustworthy individual protecting your wishes will provide peace of mind.

If you have any questions, contact Fredrick P. Niemann, Esq. at 732-863-9900, or fniemann@hnlawfirm.com.  He is happy to answer your inquiries.

Your estate plan is an investment in you and your family’s future. As years pass, your family may grow, your assets will change, and new laws will be passed. We recommend all of our clients review their estate planning documents once every three to six years.

This Checklist focuses on the foundation of your estate plan, including documents such as a Last Will and Testament, Revocable Trust, General Durable Power of Attorney and Living Will. (Note that references to a “Will” on this Checklist are generally interchangeable with the term “Revocable Trust”, which can also be used as the centerpiece of an estate plan.) However, irrevocable trusts - such as a Life Insurance Trust - and other estate planning vehicles should also be reviewed periodically to see if they are performing as expected.

Below are some questions YOU should ask yourself when reviewing your existing NJ estate plan documents.  This is a three-part series.

• Do you have a (i) Last Will and Testament, (ii) Revocable Trust, (iii) General Durable Power of Attorney (POA), and (iv) Health Care Power of Attorney/Health Care Proxy/Living Will? Every complete estate plan must contain at least three of these documents.
   
• Have you moved to another state since you last updated your New Jersey estate planning documents? If you moved from another state to New Jersey, there may be questions of the interpretation or validity of your existing estate planning documents.Generally, estate planning documents executed in one state will be valid in another state, but your new state of residence may have specific statutes or tax laws that are not addressed in your existing estate planning documents. You may want to contact an attorney in your new state or residence to advise you as to what might need to be updated.
   
• Do you have a separate personal property designation in your will or trust? This is a separate writing where you indicate who should receive specific items of your personal property such as photographs, jewelry, art work, etc. If you have one, you should review it and make sure that it is still an expression of your wishes. If you don’t have a personal property designation, you may want to consider creating one so that specific items will go to specific people.
   
• Is any person receiving your estate a minor (under 18)? If so, your estate plan should make provisions for that property to be held by the minor’s Guardian or trustee under a carefully written trust until he or she attains an appropriate age.
   
• Do you have any specific gifts or bequests you want to make? Any gift of a cash amount or of an asset other than personal property should be stated in your Will. If you have given away a specific asset to a person in your existing Will (i.e. your shore house), be sure that the asset still exists. Also, your Will should provide for what happens if the specific asset is sold during your lifetime.
   
• Are your total combined assets, including life insurance death benefits, greater than $675,OOO? If so, there may be a New Jersey Estate Tax imposed at your death. Both Federal and New Jersey Estate Taxes can be reduced or even eliminated with appropriate estate tax planning. If you are married, both spouses’ assets should be totaled together to see if they exceed $675,000. If you have a taxable estate your estate plan should contain trusts or other provisions to reduce taxes.

Fredrick P. Niemann is managing partner at Hanlon Niemann located at 3499 Route 9 North, Freehold, NJ.  His practice focuses primarily in the areas of Elder Law, Asset and Estate Protection Planning, Medicare, Medicaid and Veteran’s Benefit Assistance. He can be reached at fniemann@hnlawfirm.com, or by calling 732-863-9900, Ext. 101.

Businesses have been dependent on computerized information for some time now, but it has been only relatively recently that insurance companies have devised and offered insurance policies specifically tailored to the potential losses from a variety of problems that can affect a computer system.

An early impetus for cyber insurance was anticipation in the late 1990s of losses associated with the coming of “Y2K.” That concern turned out to be overblown, but the threats that have spurred cyber insurance offerings since then are real enough, including viruses, hackers, and legal injuries to others from information on a company’s website. One study has found that the average annual technology-related financial loss for United States companies more than doubled just from 2006 to 2007.

Another development that prompted more cyber insurance policies was the realization, which sometimes came as a surprise to insured businesses, that general liability policies did not cover computer problems. Cyber insurance is a good idea for all of the usual reasons associated with insuring against business losses. But it also makes sense because of the particular costs associated with responding to a computer data breach, especially now that many states have adopted data breach notification laws.

This kind of postmortem after a breach could include such measures as notifying affected customers, paying for credit monitoring for those customers, replacing compromised credit or debit cards, and undertaking forensic analyses of affected databases. All in all, there are some expensive scenarios to insure against.

Categories of Losses
The losses covered by cyber insurance generally fall into two categories: first-party losses, meaning those affecting the business itself; and third-party losses, meaning incidents mainly affecting outside parties, including the customers of a business. Of course, the same underlying problem can cause both kinds of losses, such as when unauthorized access to a computer system shuts down the computer system of a company whose customers or clients rely on that system through an extranet.

A comprehensive cyber insurance policy should encompass both kinds of risks. These are the typical categories of coverage:

• First-party business interruption, covering lost revenue experienced during downtime due to accidents or security breaches (but typically not losses due to catastrophic regional power outages);
• First-party electronic data damage, such as the compromise of data from a virus infection;
• First-party extortion, including the demands made by hackers;
• Third-party network security liability, arising from compromise and misuse of data stemming from identity theft and credit-card fraud;
• Third-party network liability in the form of court judgments obtained by persons harmed by problems originating with a business’s computer system; and
• Third-party media liability, aimed at the full range of potential liability from matter published in interactive online communications.

Employers in service industries are well advised to pay close attention to their practices and policies affecting customers’ tips for their employees.  There are a variety of ways in which missteps can run afoul of federal or state laws, including the federal Fair Labor Standards Act (FLSA).

Employees might contend, for example, that the employer is effectively reducing their tip income by imposing various fees or other charges on customers.  Or, contrary to a requirement in the FLSA, employees who are paid less than the minimum wage might not be getting enough in tip income to make up the difference between their hourly rate and the minimum wage.

Recent cases in the news involved yet another alleged violation, sometimes taking place on a very large scale, where employees are made to share tip income with fellow employees who supervise them.

In one of the tip-sharing cases, a state court ruled in favor of a class of plaintiffs consisting of baristas, or coffee counter servers, whose tips were required to be shared with their shift supervisors, in violation of state law.

Change left for tips apparently adds up, as the judgment for the tens of thousands of servers, for about an eight-year period, topped $100 million, including interest.

The case was not cut-and-dried, as the supervisors were themselves hourly workers who had customer service duties in addition to the responsibility of scheduling workers and giving directions to the baristas. It was not a case of highly paid bosses dipping into the tip jars filled by customers they never saw in person.

When a shift supervisor hands a customer his latte and muffin, and the customer responds with a tip, the customer may assume that the money, or at least part of it, goes to the supervisor.  Instead, under the ruling, the supervisors must now keep their hands off the tips, and the employers must ensure such an outcome.

In the wake of this case, similar lawsuits have been filed against the same employer, a national chain, and against other employers in other states.

Companies in the restaurant, hotel, gaming, transportation, and delivery businesses face the largest risks for mishandling the treatment of tips.  There is another pending case in which casino dealers have complained that an employer’s new policy illegally requires them to share tips with floor supervisors.

The legal issues surrounding the treatment of tips are murky enough in any one state, but further complicating the matter is the fact that there are variations among the states and between the statutes for a state and for the federal government. This makes it especially risky for national employers to assume that a one-size-fits-all policy on tips will be sufficient for all of their locations.

“Back-room” personnel, shift supervisors, hostesses, greeters, drink servers, and other similar positions could be treated differently depending on what state you are in. Employers should regularly assess their job descriptions and tip-sharing policies against applicable state and federal laws. This kind of audit is useful not only for detecting or avoiding possible violations, but for laying the groundwork for a potential “good-faith” defense under the FLSA if litigation ensues.

When a car or truck has a collision with a bicycle, the bicycle rider usually loses, no matter who legally had the right of way. Bicycle riders should take extra care to obey the following safety tips:

Remember: Bikes Are Vehicles, Too
Legally, bicycles traveling on a road are required to be treated in the same way as any other vehicle traveling on the road would be. This means that, as a bicyclist, you must obey the same laws as other drivers do. Do not run red lights, change lanes without signaling, or commit other infractions.  If you would not do it in a car, don’t do it on a bike.

Wear a Helmet
The easiest way to protect yourself is to always wear a helmet when you ride. Some jurisdictions require all riders to wear helmets, but even where it is not required, wearing an approved helmet can significantly reduce the chance of serious head injuries in the event of an accident.

Be Visible
Because bicycles are so much smaller than cars and trucks, it is important to make sure that others using the road can see you. Make sure that your bicycle has reflectors on the front and back and even on the wheels. When riding at night, wear light-colored clothing and use a light.

Be Aware
The best safety advice is to be aware of the conditions around you and be careful when riding. Always look both ways when entering a street and stay on the correct side of the street when riding. Keep a lookout for drivers who may not be looking out for you. Like other drivers, bike riders should ride defensively.

Tax time is approaching, and if you have a large number of medical expenses, you may be able to deduct many of these from your taxes. Many types of medical expenses are deductible, from long-term care to hospital stays to hearing aids. To claim the deduction, your medical expenses have to be more than 7.5 percent of your adjusted gross income. In addition, you can only deduct medical expenses you paid during the year, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.

What you can deduct

You can deduct medical expenses for yourself, your spouse, and your dependents. The following are some of the items included in the definition of medical expenses:

• The cost of drugs that require a prescription. You can deduct insulin without a prescription.
• The cost of dental treatment, including x-rays, fillings, and dentures.
• The cost of travel to medical appointments.
• Premiums paid for insurance policies that cover medical care are deductible, unless the premiums are paid with pretax dollars. Generally, the payroll tax paid for Medicare Part A is not deductible, but Medicare Part B premiums are deductible. • Payments made for nursing services. An actual nurse does not need to perform the services as long as they are the kind generally performed by a nurse.
• The cost of long-term care, including housing, food, and other personal costs, if you are chronically ill. Chronically ill means you are unable to perform (without substantial assistance) at least two activities of daily living, such as eating, toileting, transferring, bathing, and dressing for 90 days or you require substantial supervision due to a severe cognitive impairment.
• The cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person.
• Costs for medical equipment installed in a house or improvements made to the home if the equipment or improvements are needed to for medical care. If you make an improvement, the deduction must be reduced by the increase in the value of your property.
• The portion of a lump-sum or “founders fee” payment to a retirement home that is for medical care. The agreement with the retirement home must require that you pay a specific fee as a condition for the home’s promise to provide lifetime care that includes medical care.
• The cost of medical expenses for an immediate family member (including in-laws) or someone who has lived with you for a year. The family member must be a U.S. citizen or legal resident or resident of Canada or Mexico and you must provide more than half of that person’s support for the year. Even if the taxpayer is not paying more than half family member’s total support for the year, he may still be eligible for a deduction if a “multiple support agreement” is created. The taxpayer must pay more than 10 percent of an individual’s total support for the year, and, with others who also support the resident, collectively contribute to more than half of the resident’s support. All those supporting the individual must agree on and sign the applicable Multiple Support Declaration (Form 2120).

For more information on what you can and cannot deduct, see Publication 502 on the IRS Web site.

Also see our blog, “Claiming a Parent as a Dependent”.

When the government takes aim at private property to be taken for some public purpose, more often than not any resulting litigation is a contest over how much the property owner should be paid, rather than whether the exercise of the power of eminent domain was appropriate in the first place.

From the landowner’s standpoint, it is important to realize that adequate compensation is not determined simply on the basis of the current use of the property. Instead, the landowner is entitled to the value of the property based on its “ highest and best” use (whether that use already exists or is only in the eye of a developer), so long as such a potential use is not too speculative or otherwise foreclosed by applicable laws and regulations. A landowner is entitled to the value of the property based on its “highest and best” use, whether that use already exists or is only in the eye of a developer.

The importance to a property owner of negotiating compensation on the basis of a best-case, but realistic, development scenario for the property is illustrated by a recent case in which the owner of a vacant, 22,000-square-foot lot settled with a town for compensation in an amount that was about 27 times higher than the amount initially offered by the town.

The lot was zoned for residential use, although at the time of the condemnation action the owner had no building or development plans. Appraisers hired by the town offered an opinion that the vacant lot’s best use was only as open space, or as a buffer for an abutting lot. They reasoned that compliance with the town’s lot area and frontage requirements, as well as with its road standards for improving the dirt road on which the lot was located, would be so burdensome as to make any development of the property prohibitively expensive. They also indicated that extensive development costs would preclude development even if the lot was considered to have grandfathered status that would protect it from certain town requirements.

For its part, the landowner retained experts who opined that the lot was, in fact, suitable for residential purposes and should be valued as such when arriving at a compensation figure for the taking. As the town’s experts had noted, there were various requirements on the books that, in theory, could be costly to comply with. However, an examination of past rulings by the town’s zoning and conservation officials showed that the lot was likely to be exempted from some of the requirements. Moreover, improvement of the dirt road, which would have been an especially big-ticket item, was not likely to be required.

Both sides were necessarily looking into the future to some extent, but the landowner was able to depict a scenario for the lot that was optimistic enough to bring about a favorable monetary settlement with the town.

When an Internet executive held a meeting with the chairman of a tele-communications company, the agenda was a new business idea that the Internet executive had. The discussion was transformed into a recruitment when the telecommunications executive suggested that the idea should be pursued within the company he headed.

Much of the case focused on whether the handwritten agreement that started everything was a valid, binding contract.

For two men in the upper echelons of high-tech businesses, they then chose a decidedly low-tech way to memorialize their agreement. The end result, however, shows how substance can sometimes triumph over form in the law of contracts formation.

At the end of their meeting, the telecommunications executive simply wrote out the agreement by hand on two notebook pages, and both men signed it. The writing included specifics as to how the newly hired executive would be compensated, the terms on which he could quit if he became unhappy, and what would happen if intellectual property involved in the deal could not be transferred to the telecommunications firm. It also included the statement that “ [t]he parties will complete formal contracts as soon as possible but this is binding.” This would turn out to be pivotal language in the litigation that followed.

Unfortunately, the new arrangement quickly went downhill, and after about six months the new employee was fired. The relationship ended with the “formal contracts” never having been drafted and executed. When the former employee sued for breach of contract and other wrongs, more than six years of litigation ensued, with two trials and two appeals.

Much of the case focused on whether the handwritten agreement that started everything was a valid, binding contract. The telecommunications company argued that it was merely an “agreement to agree.”

However, a jury eventually ruled that the agreement was valid, and that the telecommunications firm had breached the terms of the contract represented by the two notebook pages.

Four factors are usually considered in determining whether a “preliminary agreement” is binding. In this case, the first two clearly favored the fired executive:  There was no explicit reservation of a right not to be bound (in fact, the handwritten agreement said the opposite) and the executive had partially performed the contract. The third factor is whether all of the terms of the alleged contract were agreed upon. On that point, the agreement, although it may have lacked some details, addressed all of the essentials for a binding contract.

The final factor is whether the agreement was a type of contract that is usually committed to writing in a formal manner. When millions are at stake, as was the case here, it may be unusual to seal the deal with a handwritten document, in outline form, and drafted on the spot by one of the principals without benefit of legal counsel.  The agreement was not much to look at, barely surpassing in formality the proverbial agreement scribbled on a cocktail napkin. Still, that it was unorthodox did not mean that the method was unprecedented. In the end, this factor, balanced against the other three, was not enough to discard the agreement and deprive the departed executive of the benefits of his bargain.

MEDIATION EXPANDS STATEWIDE
Foreclosure filings in New Jersey during the past 12 months are up 46 percent over the previous 12 months, and this has spurred the NJ Supreme Court to expand an experimental Middlesex mediation program statewide.  Under the program, the courts will compel mediation between homeowner and mortgage holder any time the owner contests foreclosure of the residence.  The goal is to renegotiate terms and keep owners in their house.  The courts will encourage non-contesting homeowners to change their mind, right up to the date of the sheriff’s sale.  As in Middlesex County, the mediators will be volunteers.  The program will begin in the highest foreclosure vicinages – Essex, Union, Camden, Bergen and Hudson – within the next 30 days and expand to all 21 counties 30 days later.