Most folks recognize that their estate plan should provide for the distribution of their assets upon their death.  That, of course, is an essential element of an estate plan, but there is more to consider in a well-designed plan.  Prior to meeting with your attorney for the first time you should also be thinking about such things as who you want to handle your affairs should you become incapacitated; whether you would want your doctor to keep you alive should you be near the point of death with little chance of recovery; who you want to have the authority to sign important legal papers for you if you are unavailable; and, who you would want to raise your children if you suddenly die.  There is a wide variety of personal circumstances which impact estate planning, but let me offer the following as items you should consider even before you meet with a lawyer to discuss your own estate plan.

Should I have a will or a trust?

This is typically among the first questions posed by clients during an initial meeting.  Many are aware that a trust will avoid probate, but that is true only if the trust is properly funded, meaning that all of their assets are transferred into the trust.  Not every estate plan needs a trust, however, and it may not be necessary for you to incur the additional cost of having your lawyer prepare a trust, when a will is suitable for your needs.  And, contrary to what some folks think, having a trust does not avoid estate taxes.

A trust may be the right choice for you, if it is unlikely that you will acquire more assets in the years ahead. What can often happen, however, is that folks will have a trust established and thereafter acquire new assets that they neglect to place in the trust.   Then when they die the assets outside of the trust have to go through probate which defeats the intent of establishing a trust in the first place. So, before deciding upon a trust as the main element of your own estate plan, take some time to consider your future investment plans and major acquisitions.

There are some other advantages to a trust, which might make it the right choice for you.  For example, should you become incapacitated, your trustee will be able to step in and manage your assets without having to seek a court appointed conservator.  In that sense, a trust document is more all-encompassing and flexible than an ordinary will.

What else should I consider in my estate plan?

Estate planning isn’t just about deciding who gets your wealth when you die.  It is also about making decisions as to what you want to happen should you become seriously ill or incapacitated.

Every estate plan should include an advance directive, which used to be called a living will.  This document allows you to appoint a health care representative to make health care decisions for you, including end of life decisions, when you are unable to do so.

Similarly, we recommend that you give a durable power of attorney to a family member or trusted friend in order to allow your appointed agent to manage your financial and business affairs when you are unavailable or otherwise incapacitated.   A durable power of attorney remains in effect so long as you are alive and should provide that it will be effective even in the event of your incapacity.

What about my bank accounts, life insurance and investment accounts?

Careful estate planning should include a review of all of your assets, including checking the beneficiary designations you have listed in your retirement plan and in regard to your investment and bank accounts.  With such beneficiary designations, these assets will be transferred outside of the probate process to those persons you have previously designated as beneficiaries on these accounts.  It is important that you review your beneficiary designations to ensure that your choice of beneficiaries is in accordance with your current intentions as to disposition of your estate.

A thorough review of your portfolio and consideration of the issues described above before meeting with your estate planning attorney will allow you to realize the maximum benefit from your meeting.  It will also help your attorney to focus his or her discussion with you on aspects of the process that are most relevant to your goals and needs.

© 4/21/2016 Charles A. Ford of Hunt & Associates, P.C.  All rights reserved.

The judgment debtor in Zemp belonged to four limited partnerships and was a member in a limited liability company.  The trial court had entered a charging order on the creditor’s ex parte motion which, among other things, required the limited partnerships and limited liability company to: (1) pay all distributions and amounts otherwise due from the entity to its debtor-member to the judgment creditor; (2) refrain from making any loans to members, partners or third parties; (3) refrain from any transfer between or among members, partners or the business entities of any equity interests without the approval of the creditor or the court; and, (4) give the judgment creditor certified copies of financial and tax documents concerning past and future ongoing financial affairs of each entity.

The Court of Appeals in Zemp held that the trial court had no authority to prohibit the limited partnerships and limited liability company from making loans or to forbid their members from transferring or encumbering their membership interests.  Ibid. at 669. However, the Court of Appeals held that the trial court had correctly ordered the limited partnerships to give the judgment creditor certified copies of all of the specified past and future financial information while holding that the trial court lacked the authority to order the limited liability company to give the judgment creditor any such financial information.  Ibid. 669-670.

The distinction between the permissible scope of the charging order against the limited liability partnerships and the limited liability company is odd because the governing statutory language is almost identical.  That is, in the case of both a limited liability partnership and a limited liability company, the judgment creditor of a limited partner or of a member simply holds the rights of an assignee of the debtor’s interest.  ORS 63.259; 70.295.  An assignee of a member’s limited liability company membership has “. . . the assignor’s right to receive and retain, to the extent assigned, the distributions, as and when made, and allocations of profits and losses to which the assignor would be entitled, but shall not exercise any other rights of a member, including without limitation, the right to vote or otherwise participate in the management and affairs of the limited liability company.”  ORS 63.249(3) (emphasis added)

In almost identical terms ORS 70.290 governing the assignability of limited partnership interests states that, “An assignment of a partnership interest does not dissolve a limited partnership or entitle the assignee to become or to exercise any rights of a partner.  An assignment entitles the assignee to receive, to the extent assigned, only the distribution to which the assignor would be entitled.”  Emphasis added.

Among the rights of a limited partner is the right to obtain true and full financial information concerning the partnership’s affairs.  ORS 70.145.  That the judgment creditor who obtains a charging order against a limited partnership interest, thus becoming an “assignee” of their debtor’s interest, is statutorily barred from obtaining the financial information to which the member, as a member, has a statutory right, seems obvious.

The limited liability partnership statutes do not specifically define the permissible scope of a charging order against a limited partner’s interest. The Zemp court, relying on ORS 70.615 which directs a court to apply the general partnership statute, ORS Chapter 67, to resolve any case “not provided for” in the limited liability partnership statute, therefore applied ORS 67.205, defining the permissible scope of a charging order against a general partnership interest, to also define the permissible scope of a charging order against a limited partnership interest.  Ibid. at 667.

Yet even ORS 67.205 limits the permissible scope of a charging order against a general partner’s partnership interest to the debtor’s “transferable interest”.  In a general partnership, a partner’s only “transferable interest” is: “. . . the partner’s share of the profits and losses of the partnership and the partner’s right to receive distributions.”  ORS 67.005(17).  So too, with respect to a limited partnership, the limited partner’s only transferable interest is the right to receive such distributions as their assignor would be entitled to receive.  ORS 70.290.  The limited partner’s right as a partner to gain access to the partnership’s financial records is not “transferable” and thus not properly subject to any charging order if the language of ORS 67.205 is strictly applied.

Finally, the Court in Zemp wholly ignored the importance of contract in determining the rights of both the creditor and, more importantly, the limited liability company and the limited liability partnerships.  Yet both the limited liability company’s operating agreement and the limited partnerships’ partnership agreements are the primary source defining the rights and obligations of the members in those entities.  ORS 63.057 explicitly notes the primacy of the operating agreement in defining the rights and obligations of members in an LLC.  Although the limited liability partnership statute, ORS Chapter 70, is not so concisely explicit, it is nonetheless permeated with the recognition that the statute is generally subordinate to the provisions of the partnership agreement: e.g., ORS 70.130 (voting rights); 70.175 (admission of additional general partners); 70.185 (rights, restrictions and liabilities of general partner); 70.230 (Obligation of partner); 70.235 (allocation of profits and losses); etc.

In short, the Court of Appeals in Zemp created a muddle inconsistent with the statutory language on which it based its conclusion.  It did not coherently apply the applicable statutes nor did it even acknowledge the contractual provisions governing the rights of members belonging to entities which are uniquely creatures of contract.  Hopefully a cure for this decision waits in the future.  In the meantime, it seems as though Oregon courts will be more respectful of LLCs than of limited partnerships, at least in crafting the scope of charging orders to such entities.

© 4/12/2016 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

If you’re convicted of a gun crime in Richmond, California, the City may pay you as much as $1,000.00 a month not to commit another gun crime.  Ex-convicts paid by the City, not law enforcement officials, select the participants and will monitor your compliance with the program.  As the principal sponsor said of his first meeting with ex-cons in the program, the participants “were surprised” when he handed them each a check for $1,000.00 with no strings attached as they left the meeting because, “No cop had ever handed them money without asking for something in return.”  Then again, how often does anyone get a check for $1,000.00 from a stranger with no strings attached?

To maintain your trust, the ex-cons who monitor you won’t tell the police about crimes you commit.  According to a recent story in the Washington Post, those city paid monitors, “At least twice . . . may have allowed suspected killers in the stipend program to evade responsibility for homicides.”

A travel allowance of $10,000.00 is budgeted for each convict who participates in the program so that they can travel in partnership either with someone they’ve tried to kill or with someone who tried to kill them.  Participants have traveled to London, Mexico City and South Africa.  The program’s sponsors consider it successful because, “No fellows who have traveled together have been suspected in subsequent shootings against one another.”

Richmond claims that the multi-million dollar experiment is a great success because after five years only 4.5% (4 out of 88) participants are dead; two of them killed by other participants in the program who have not been charged or arrested but remain in the program.  Only 20% of the participants have been suspected of another gun crime or suffered a bullet wound during that time.

Other cities are now lining up to consider how best to implement similar plans of their own.  Which, of course, raises the question: If it pays to pay convicted criminals to pay and supervise other convicted criminals not to hurt other convicted criminals, could we dispense with law enforcement entirely if the government just paid everyone not to hurt anyone else?  Perhaps there would even be money left over for the government to pay for everyone to travel abroad as well!

© 4/6/2016 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

The following day I met the client for the first time and accompanied him to the other end of town where we met the barge owner and his lawyer. I did my best to look confident despite my lack of experience or preparation for this exercise. As I recall, my client was also new to the experience of negotiating such an agreement, and he indicated that he was inclined to rely on my ‘experience’ in that regard. We spent most of the day bargaining the terms of a vessel charter agreement I had read for the first time only the day before. Lucky for me, the other lawyer, while an experienced transactional attorney, knew about as much about boats as I did about negotiating. At the end of the day, we had a deal.

I have long since learned from experience that preparation is an essential element of any successful negotiation. Preparation begins with setting goals for the negotiation; that is, determining what you want to achieve in the impending negotiation. Closely related to goal setting is identifying the particular interests at stake in the negotiation; i.e., the reasons why the deal is important to you. As your preparation intensifies, you should begin anticipating the issues you expect to arise in the course of the negotiation and how each issue relates to the interests you have identified. An often neglected component of negotiation preparation is establishing what you and/or your client will do if you cannot reach an agreement with the other side. Of course, this degree of preparation requires time, which may sometimes be in short supply, as it was for me that day long ago.

If pressed for time, however, you should focus what little preparation time you’ve been given by examining the following two questions:

1. If we could have everything we want in this negotiation, what would we desire in the final agreement?

2. If everything goes against us in this negotiation, what would be the very least we would accept to conclude an agreement?

I suggest that thoughtful consideration of those questions will help you focus your goal-setting, and assist you in establishing in your own mind their relative priorities, perhaps in the following categories:

Deal Points: These are the essential elements you must achieve from the negotiation, or there is no reason to proceed with the negotiation. They are likely to be few in number, but they are the highest priority.

Secondary points: While important, these are not necessarily vital, and can be compromised if necessary to obtain a deal point.

Trade Points: Everything else; these are low priority and will not play a substantive role, at least not from your client’s perspective. What makes them important is that they may be of value to other side and can serve as concessions.

Preparation in advance of your negotiation process will increase the likelihood of achieving your goals and will help you to begin thinking strategically about the negotiation process. If you are negotiating on behalf of a client, this preparation will also help to ensure that you and your client are on the same page as to the specific interests it seeks to advance by an agreement with the other party.

© 3/15/2016 Charles A. Ford of Hunt & Associates, P.C.  All rights reserved.

Agencies such as the EEOC and the NLRB often issue interpretive guidelines. Those guidelines are supposed to explain what the specific laws the agency enforces mean and how those laws will be enforced. It is believed that because the administrative agency responsible for enforcing any particular law is expert in both that specific law, that agency’s interpretation of what the law means and how it should be enforced are entitled to deference by the courts, the legislatures and the public. Thus, for instance, courts often rely on an administrative agency’s interpretation of a statute rather than on the court’s own independent reading of the statute’s meaning.

Yet the almost universal deference to administrative agencies seems misplaced as this recent decision concerning the NLRB’s own violation of federal labor laws in dealing with its own union employees illustrates. It is also noted at Overlawyered and courtesy of Jon Nadler here.

A recent 43 page publication by the U.S. Chamber of Commerce entitled Theater of the Absurd briefly sketches the NLRB’s efforts to invalidate customary and generally accepted workplace policy statements in employee handbooks and manuals. As the study available here notes, the NLRB found that even employee handbooks it had essentially coauthored still failed to comply with federal labor laws while some of its directives to employers contradict those of other administrative agencies such as the EEOC.

It is difficult to obey and respect laws that even those who enact, interpret and enforce them can’t obey or explain. What a country!

© 3/1/2016 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

We owe a giant thank you to Hybrid Moon Video Productions for their creativity and talent in helping us realize our vision for the above videos! If you’re in the Portland, Oregon area and looking for a videographer, definitely check them out!

That said, some people are clearly better at negotiating than others. Some people just seem to have a special talent for knowing just what to say at just the right moment in order to resolve a conflict or close a deal. Such negotiators become the stuff of legends, or at least, Hollywood movies. Steven Spielberg’s recent movie, Bridge of Spies, immortalizes a gifted negotiator by the name of James Donovan, portrayed in the movie by Tom Hanks.

The rest of us, however, are compelled to resort to our own more modest talents when we engage in bargaining endeavors. The good news, however, is that all of us can adopt some relatively simple techniques employed by successful negotiators, and enhance the odds of success in our face-to-face encounters. Here are a few simple techniques you can try in your next adventure in bargaining:

1. Avoid using ‘irritators’ in your conversation. By ‘irritators’, I mean those innocuous words and phrases (example: “this is a generous offer”) that have zero persuasive value and are more apt to irritate the party with whom you are negotiating. When you tell your counterpart that your own proposal is ‘fair’ or ‘reasonable’ you imply that she would be unfair or unreasonable to reject it. So, refrain from attempts to attach positive value judgments to your own proposals, particularly when those judgments will communicate negative implications about the other side.

2. Limit your counterproposals. If the other party presents you with a proposal, avoid the temptation to immediately respond with a counterproposal of your own. When you routinely respond to the other side’s proposals with counterproposals, your responses are apt to be interpreted as blocking mechanisms rather than as proposals in their own right. In addition, counterproposals have a way of muddying the waters as they tend to add issues to the discussion rather than promoting clarity and bringing focus to the issue in question. While counterproposals do have their place in negotiation behavior, use them sparingly. Judicious use will increase their effectiveness and reduce the chance of your antagonizing the other side.

3. Give the other side a “heads up” on what you are about to say. This particular technique, referred to as ‘behavior labeling,’ is quite simple to use, but can be very effective. Suppose, for example, you are negotiating to sell your car, and the other party’s purchase offer is below Kelley Blue Book. Instead of asking, “Why are you offering me less than Kelley Blue Book?”, consider asking, “Can I ask you a question: Why is your offer less than Kelley Blue Book?” Similarly, if you intend to offer a proposal of your own, begin by saying, “If I can make a suggestion, what if we ….” This behavior labeling draws the attention of the other party to what you are about to say and tends to draw them in to making a direct response to what you have just posed to them. This technique also serves to reduce the back and forth volleys between the parties and may enhance a more deliberative approach to the negotiation.

4. Test your understanding of the other party’s position by reflecting back what they just told you. This is another simple concept to implement. For example, returning to the car selling scenario, consider saying, “So if I understand what you are telling me, you don’t think my car is worth the Kelley Blue Book price because ….” This can be an easy way to prompt the other side to reveal more of its own thinking on the subject, without you having given away any more of yours. And, by summarizing aloud what the other party is telling you, you clarify what might otherwise have been uncertain. Your summary also communicates to the other party that you are listening to what she tells you, thereby eliciting further disclosure from her. This can help develop an attitude of mutual respect between the parties.

5. Ask questions to obtain more information as to the other party’s thinking, its goals and interests. Questions are usually more acceptable to the other party than direct disagreement and are more likely to communicate respect for the other side. Consider using what is referred to as the ‘funnel approach’ to questioning. Begin with broad, open ended questions (example: “So why is it that you are looking to purchase a car at this time?”) and proceed to narrow the questions’ scope (“What is it that you like about my car?”) until you reach the key issue (“What do you think is a fair price for this car?”).

6. Limit the reasons you cite in support of your bargaining position. Most of us tend to assume that the quality of our argument in support of a position is enhanced by the quantity of reasons we offer in support of it. In fact, successful negotiators typically offer fewer points to support their position in order to avoid diluting their impact. The downside to tossing out multiple arguments is that, invariably, one or more of the arguments will be significantly weaker than the others. The other side is then in a position to focus its rejoinder on refuting the weaker arguments and then reject your position altogether. So, when advancing a proposal or a particular position, limit yourself to just a select few points in support of it. In this instance at least, less is definitely more.

These simple techniques can be employed in almost any bargaining situation you may encounter. Make them a routine part of your negotiating repertoire, and see if you too can improve your negotiating effectiveness.

© 2/16/2016 Charles A. Ford of Hunt & Associates, P.C.  All rights reserved.

In Hughes the plaintiff obtained a judgment against its debtor and had judicially foreclosed its lien against the residential real property its debtor owned by sheriff’s sale. The creditor then sought to evict its debtor’s mother who resided in that home. The debtor’s parents had transferred title to the debtor’s home through a quit claim deed without any apparent reservation of rights. In other words, the debtor’s parents didn’t explicitly reserve a life estate or any other interest in that property when they transferred it to their daughter, the judgment debtor.

Yet neither the trial court nor the Court of Appeals held that the creditor could evict the debtor’s mother who occupied the home. Instead, the Court of Appeals said that there was still a factual issue of whether the debtor’s mother had intended to reserve a right to continue living in the home when she quit claimed title to her daughter.

Both the debtor and her mother were Romani. Both the trial court and Court of Appeals found their ethnicity significant for some unexplained reason. In fact, the trial court had actually received testimony from an anthropologist about Romani culture before concluding that the mother was not subject to eviction. There’s no indication that the quit claim deed was written in any language other than English or that there was any ambiguity in the words of the quit claim deed itself.

Ultimately, the Court of Appeals sent the case back to the trial court to determine whether the debtor’s parents had really intended to retain an undisclosed life estate in the property or whether, perhaps, the property had been transferred to the debtor in order to avoid several tax liens and other debts the mother owed.

Neither the trial court nor the Court of Appeals showed any respect for the virtues of certainty, predictability and judicial efficiency in reaching their outcomes in this case. Instead, the Court of Appeals in Hughes fumbled about to convert what should have been an objectively obvious outcome into a judicial guess about the grantors’ past state of mind. A quick reading of the quit claim deed alone should have been sufficient to resolve the case. But in the hands of these courts, the case became a psychological mystery. Meanwhile, both courts ignored the steadily increasing costs imposed on the innocent creditor who simply sought payment for its debt from assets which the public records showed the debtor owned.

© 2/1/2016 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

© 1/28/2016 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

Broadway Cab argued that its drivers performed services only for the passengers who paid the drivers and not the cab company to which the drivers actually only paid for its dispatch and other services. Disregarding reality, the Supreme Court held that the drivers drove for remuneration from the company and not from their fares. That, of course, is untrue. It is the customers who pay the driver and it is the driver who decides how and when to work.

Of course this twisted reasoning has broad implications for the larger and developing “sharing economy” where Uber, Lyft and other entities challenge the straightjacket of longstanding legal rules. It is, no doubt, with an eye on such largely unstructured and loosely organized cooperative economic models that Oregon regulatory agencies and courts will next attempt to impose their heavy hand of tax and regulation to the detriment of both the service providers and the public at large.

© 1/27/2016 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.