In the face of this issue, many employers are starting to take responsibility for the health of their workforce. Many have chosen to subsidize a health plan at a local facility in order to encourage their workers to begin exercising. Other employers have found that they can turn some extra space into an office gym with great results.

Either option is effective at not only increasing the health of employees, but offering the employer some benefits as well. It is no secret that people who exercise are generally sharper and have more energy than their overweight office companions. As Dr. McLaughlin discusses in greater depth in this month’s Human Resources story, providing a health benefit to employees tends to pay off with increased productivity, worker satisfaction and company loyalty. Furthermore, it cuts group health plan costs as fewer people visit the doctor with obesity related health problems. All of this translates into cost savings for the employer, and those cost saving add to the company’s bottom line.

An office gym, as opposed to a subsidized health plan, offers a few extra benefits. First, it allows the employer to limit access by the public. This cuts down on the overcrowding that is common at public exercise facilities. Employees will have a better exercise experience if they do not have to fight to use certain machines or face exercising in front of a crowd of spectators waiting to use the machine that they have chosen. Reducing these factors makes it more likely that they will actually use the facility. Furthermore, the employer can choose whether to allow employees’ families to use the facility based upon how many people it will support.

The on-site gym can also offer a tax benefit not available for employer provided off-site gym memberships. This can be important if an employer decides to invest in a gym that may cost $15,000 and up. Under the current tax code, employers can deduct the cost of subsidized exercise expenses, whether those expenses occur on- or off-site, as an ordinary business expense. However, employment taxes may have to be paid on off-site exercise membership fees because they are considered a fringe or supplemental wage benefit. This means that the employer must include the value of those benefits as income on each employee’s W-2. This is not case for on-site exercise facilities. The Internal Revenue Code of 1986 states that employers can take a tax deduction for exercise facilities if they offer them on-site, and the cost of membership at the facilities does not have to be included as income to the employee.

In order to encourage employers to provide a place for employees to exercise, the Senate introduced the Workforce Health Improvement Program Act to Congress in 2007. This bill would allow employers to deduct the cost of both on-site and off-site gym memberships without including them as income to the employee. The bill has been reintroduced each year since then, but it has died in committee each time.

An on-site exercise facility is not without risk. If an employer chooses to set up an office gym, they should do so with caution. If not done properly, the employer risks injury to the employee, which may increase legal liability. In order to avoid injury, the employer should consider the following questions:

1)      Should the employer provide training to employees on how to use the provided equipment?

2)      Should the employer provide fitness instructors to be sure employees are using equipment properly and exercising in a way that reduces the risk of injury?

3)      Are the machines set-up properly and maintained?

4)      Does the facility have proper lighting, temperature and space?

5)      Is the facility cleaned and maintained regularly, with malfunctioning machines immediately removed and replaced?

6)      Is there access to a water supply so that employees stay properly hydrated and are able to shower after exercising?

7)      Does the noise level interfere with the working environment?

8)      Is there an emergency plan in place in case an employee becomes sick or injured?

With proper planning, setting up an on-site exercise facility is not difficult and can really make a difference in the quality of your office. While some businesses may not have the space to set-up such a facility, it is a good idea to consider it if you have the extra space. If done properly, the benefits far outweigh the cost and result in increased employee satisfaction.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

One place I often see merchants liberally construe the law is with a “You Break It, You Buy It” sign. You may find yourself in a store checking out the merchandise when you happen upon one of these signs. If you are like most people, you proceed with caution. Should the worst happen, you immediately (and sheepishly) present yourself at the checkout counter to dutifully pay full price for the damaged item. The retailer gladly accepts your contribution, and you head about your business. However, what if the item was balanced precariously, waiting for the unsuspecting victim? What if you were bumped into the display by another careless shopper? What if you simply choose not to pay for the item?

You are in luck, because retailers generally may not enforce this rule upon the customer. The customer is an invitee into the shop, therefore the merchant accepts the risk that the customer may accidentally damage an item, regardless of the posted warning. The merchant may argue that the risk transfers to the customer when the customer reads the sign and chooses to continue shopping, but the law will not enforce such a unilateral contract. The merchant cannot transfer the risk of breakage to the customer with notice alone.

Does this allow the customer to act with reckless abandon? Are the rules of an orderly society cast aside so the consumer can ride roughshod over the merchant’s wares? Certainly not. The customer must not act recklessly. In fact, the customer must take reasonable precautions to protect the merchant’s property, but as long as the customer has acted reasonably, the merchant bears the cost of the damage.

So why do merchants post these signs if they have limited recourse? Two reasons: First, the merchant is attempting to exploit the natural fear of reprisal in order to warn people to be careful with their wares, and it is very effective. Second, people often voluntarily pay for damaged items, and this allows the merchant to recoup damage costs that normally would affect their bottom line. Either way, the merchant wins.

Another popular place where merchants overstep their authority is at exit checkpoints. It is becoming more common for merchants to employ a team of overzealous senior citizens to patrol the exit like underpaid detectives. They stop customers at the door to check their receipt and sift through their purchases, stopping just short of a pat down. When asked, they claim this is inventory control or a way to be sure that they are protecting you from overpaying for an item. Everything works smoothly unless you, like I always do, refuse to allow them to search you for contraband.

In fact, a merchant may not search or detain a customer unless the customer consents or the merchant suspects the customer has stolen something. Think of it this way: The items you purchased become yours at the moment you pay for them. The merchant may not stop you to inspect your purchases in their store any more than they may stop you on the street to dig through your purse or wallet. You have a right to deny access to your person and personal property.

Merchants may search if they have probable cause to suspect theft. They may also request to search a consumer, and may do so only if the consumer consents. Unfortunately, employees are often poorly trained regarding the rights of the consumer, and this can create a tense situation if a consumer refuses to be searched. Usually, a calm explanation or request for a manager will solve any issue you may have with the exit guard.

Why is it a good idea to refuse these merchant searches? Because, even if you have not stolen anything, the person checking your goods may have inadvertently failed to charge you for an item at the checkout counter. This will result in a claim of theft, where no suspicion of theft was originally found. You are simply giving the merchant an opportunity to accuse you of something, and the burden of proof shifts to you. You will likely have to explain the situation to the police, and you may even need to seek the services of an attorney to sort everything out. It is far safer (and cheaper) to check your items in your home and then return anything that may have been skipped in the checkout process. The merchant will likely thank you for your honesty rather than accosting you.

I advise consumers to watch for these two merchant traps, and to insist that their rights are respected. I also advise merchants to do away with them or, at the very least, train their employees about consumer rights so that they will effectively handle situations related to these policies. In any case, if either the merchant or the consumer has questions about such policies, it is best to consult a competent attorney.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

In my February article entitled At-will Employment? Right-to-Work? What does it all mean?, I discussed the rights of employers related to terminating an employee. While it is important to understand these rights to be sure that the termination is legally allowed, it is also important to proceed with the termination in a way that reduces risk for your business. Even if the termination is legitimate, defending a lawsuit to prove that legitimacy is time-consuming, expensive and can be very detrimental to your business. It should be avoided, and here are some ways in which to do so:

1) Look for cause. Once you have decided to terminate an employee, it is a good idea to prepare your case before you perform the termination. This is your tactical advantage as an employer, and it is foolish to miss this opportunity. I am not, by any means, suggesting that you manufacture a reason for the discharge. On the contrary, I am advising you to base the termination upon a solid reason, because a termination for cause is always cleaner than a termination without cause.

For instance, one of the first things you should do is inspect the employee’s resume and other employment documentation. If the employee has provided anything that is untrue on any of that documentation, then you have found good cause for termination. If the employee is simply underperforming, then you should begin to issue written warnings so that you have a trail of documentation leading to the termination. Whatever the case may be, you are much better off to have written evidence of misconduct rather than vague examples of minor infractions.

2) Do not provide too much information. Even with good cause, there is no legal requirement that you provide the reason for the termination to the employee at the time of termination. Regardless, many employers feel the need to explain every reason for which they are terminating the employee. I generally see this at either end of the spectrum. If the employee is underperforming severely or acting inappropriately, employers provide a laundry list of reasons for the termination in order to drive the point home or even humiliate the employee. It is intended as retribution for the employee’s prior behavior. If the employee is good at their job, but no longer necessary, then the employer spends time extolling the employee’s virtues before eventually letting the employee know that he or she will no longer have a job with them.

In either of these situations, it is highly unlikely that the employee will feel that the employer was being fair, and unfairness is often met with litigation. If you feel the need to give a reason at all (which may be necessary to avoid unemployment compensation), then stick to the primary reason. No good comes from a laundry list of reasons for the termination. Likewise, telling an employee how much you value him or her before termination generally just sounds like hollow sentiment. It strikes of unfairness if it is too prolonged, and it may push the employee to pursue legal action.

3) Allow the employee to leave with dignity. A termination is usually a highly charged, emotional event for both employer and employee. These emotions often cause an employer to go overboard with criticism when explaining the terms of the discharge to the employee. Worse, the employer may choose to discharge the employee in front of his or her peers or make them do the “walk of shame” out of the place of employment while everyone watches.

While it is tempting to lash out against an employee who has created problems for your business, such behavior invites a lot of anger and resentment, which usually leads to a legal battle. Offering an employee an opportunity to leave quietly with his or her dignity intact costs nothing and may prevent some headaches in the future.

Whether you have a problem employee, you have seen better days financially or you have some other reason to consider termination, consider embracing my tips for avoiding an employment lawsuit. You should also consider consulting an attorney before taking any adverse action against an employee. Your attorney can help you develop a plan of action, and it will cost you far less in legal fees than if the attorney takes over after you have made a mistake.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

Under the Americans with Disabilities Act (ADA), the U.S. Department of Justice defines a service animal as “animals that are individually trained to perform tasks for people with disabilities, such as guiding people who are blind, alerting people who are deaf, pulling wheelchairs, alerting and protecting a person who is having a seizure or performing other special tasks.” These animals are not pets—they are important tools for people with disabilities just like a wheelchair, hearing aid or artificial limb.

The ADA requires businesses that serve the public to allow people with disabilities to bring their service animal with them to all places where a customer or client would normally be allowed to go. There is no limitation on what type of animal can be used as a service animal, but the most common service animals are dogs. There is also no limitation on the type of disability a person must have in order to use a service animal, but the ADA does require that the service animal’s training be related to and assist with the disability.

These requirements are complicated by the fact that the ADA does not require that service animals be identifiable by certification papers, a special collar or harness, or any other special marking or identification. In fact, the animal only needs to be minimally trained and work for the benefit of the disabled person to qualify as a service animal. Furthermore, the business is not allowed to ask about a person’s disability, and the disability may not always be easily ascertainable. This presents a practical problem for the business: How will the business distinguish between a person with a disability with a legitimate service animal and a person who is simply flouting the business’ no pets policy?

If the business is not sure whether an animal is a legitimate service animal, the ADA allows the business to ask only two questions: (1) Is the animal required because of a disability; and (2) What work or task has the animal been trained to perform? While there is case law that suggests that a business may exclude a person for refusing to answer those questions, there are really no teeth in the law if a person answers dishonestly. Since follow-up questions are not allowed under the ADA, a business owner has almost no recourse if a person concocts an untrue story about the need for a service animal and the service animal’s training.

The only defenses that have been somewhat successful in the courts for businesses that have excluded service animals are the “Fundamental Alteration Defense” and the “Health and Safety Defense.” The “Fundamental Alteration Defense” has been successful when a business can show that the presence of a service animal fundamentally alters that business’ goods, services, facilities, privileges, advan­tages or accommodations. It is a very difficult defense because it is extremely fact specific. The “Health and Safety Defense” is a little easier to win. Under the “Health and Safety Defense,” the ADA allows a business to ask a person to remove a service animal from the business premises if “(1) the animal is out of control and the animal’s owner does not take effective action to control it (for example, a dog that barks repeatedly during a movie) or (2) the animal poses a direct threat to the health or safety of others.” However, the business must still try to allow the disabled patron to receive goods or services without having the service animal on the business premises.

If an animal truly is a service animal as defined under the ADA, then “people with disabilities who use service animals cannot be charged extra fees, isolated from other patrons or treated less favorably than other patrons.” However, the U.S. Department of Justice does allow a business that normally charges guests for damage that they cause, to also charge a disabled customer for damages caused by his or her service animal.

Businesses should familiarize themselves with the laws related to people with disabilities and the use of service animals to assist with those disabilities. It is also a good idea to establish a policy, in accordance with the ADA, for how to handle a situation where a customer or client brings an animal onto the business premises. The business should take care to thoroughly train employees on how to handle the situation in accordance with the established policy. If you have not done this for your business, then you should immediately seek the help of a competent attorney in drafting your own policy.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

Most people think that only a distrustful mate would consider a prenuptial agreement, and they view a prenuptial agreement as a written affirmation of that person’s distrust. The mere suggestion of such an agreement is generally met with harsh criticism and sometimes even causes a break in the relationship. However, a prenuptial agreement is rarely intended to be a personal statement about a potential spouse. Rather, a prenuptial agreement is a recognition that marriages can and do fail, and it is an attempt to address the situation long before everything falls apart. It provides full disclosure to a potential spouse before he or she enters the marriage instead of under a judge’s watchful eye as the life they built disintegrates around them.

In fact, most people do not even realize that they already have a prenuptial agreement, whether they want one or not. The state divorce code already decides what happens in the event of marital dissolution if no other prenuptial agreement is in place. A prenuptial agreement simply puts the parties’ intentions on paper so that a division of assets, according to the divorce code, is unnecessary.

Romantic or not, there are some very good reasons you may want to consider a prenuptial agreement. The situation that most often leads to a couple considering a prenuptial agreement is when there is a significant inequity in financial positions between the couple. This certainly doesn’t apply to everyone. I, like many others, was a poor college student when I proposed to my wife, and she also had few assets. A prenuptial agreement was unnecessary. However, some couples have very different financial positions. This difference alone can lead to problems in the marriage if left unaddressed.

In fact, in our society it is not uncommon for financial condition to be the dominant driving factor for marriage. Furthermore, potential spouses have been known to even game the system in order to land a financially secure mate. For example, I think we all can agree that 26-year-old Anna Nicole Smith did not marry 89-year-old multimillionaire J. Howard Marshall for his dashing good looks. In fact, the fallout from that marriage has created years of litigation. While I hesitate to impute ill intentions to any happy couple, a prenuptial agreement ensures that the marriage is no sham, developed at the hands of a devious mate.

Even if there is no inequity in financial condition at the outset of the marriage, a prenuptial agreement may also be ideal if one party intends to pursue greater earning potential with the support of the other during the marriage. For example, one spouse works a regular nine to five while the other pursues an advanced degree. The working spouse may even expect to stay home with the kids once the other spouse is finished with his or her education. However, without a prenuptial agreement that discusses future earnings, the educated spouse could decide to leave the marriage as soon as he or she finally lands that high-paying dream job. The remaining spouse may be left with only a portion of what was earned during the marriage and no opportunity to raise a family. This hardly seems fair, but the court will certainly not require the couple to stay married until the spouse with less earning potential also realizes his or her dreams.

Even if both potential spouses intend to stay financially equal, a prenuptial agreement may be beneficial if one potential spouse owns a portion of a business. In fact, it may even be required by the terms of the business operating agreement. This arrangement protects the other business partners from having a court award a portion of the business to an estranged spouse who has no business experience or doesn’t care whether the business succeeds or fails. If this happens, then it is usually the beginning of failure for a previously successful business as teamwork gives way to lawsuits and accusations.

A prenuptial agreement may not be the best thing for every happy couple, but it should be considered if one of the situations I described sounds familiar. Remember, the best prenuptial agreements are the ones that are never used. They sit in a box or file somewhere collecting dust until the next of kin finds it right next to the person’s last will and testament. However, if things don’t work out, it offers a way to ensure that assets are divided fairly and that nobody leaves the marriage with an unintentional windfall.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

It’s certainly no secret that the phrase, “You’re going to need to get yourself a lawyer” is typically a pricey one. Americans all over the country who are feeling the heat from the economic downturn know that finding affordable legal assistance isn’t easy. For those within a low-income household, this type of situation could be the difference between “making it” or “breaking it.”

Luckily, there is help.

Since 1977, the Virginia Legal Aid Society (VLAS) has specialized in helping this particular demographic get up (and stay up) on their feet throughout just about any of life’s tribulations. Whether you are being evicted from your home or are trying to get the healthcare you deserve, this nonprofit is there to lend a helping hand.

David Neumeyer, Executive Director for the VLAS, listed the numerous situations in which the organization has helped families within Central, Southside and Western Tidewater Virginia.

“The core of VLAS work is a wide range of legal services in the areas of health care, public benefits, housing, family relations, advance directives, consumer problems, education and economic self-sufficiency,” Neumeyer said.

He went on to explain that their services more specifically “include advice, counsel, brief service, drafting of instruments, contracts and applications, incorporation, negotiation, representation before administrative forums, litigation before state and federal trial and appellate courts and community legal and financial education.”

For someone down on his or her luck, this list of legal jargon may sound like another language. But, that is precisely where the VLAS staff and volunteer attorneys come in to take over, acting as “translators” for those who are in way over their heads.

VLAS offers many target programs to better help those with specialized needs. From the LawLine, which is an information hotline that gives locals legal advice and referrals, to the Medicaid Access Project (MAP), which helps disabled adults speed up the process of qualifying for Medicaid benefits, VLAS simplifies what otherwise might be a daunting task.

Another valuable project within VLAS is the HEAL (Health, Education, Advocacy, Law) Project, which is a collaboration between legal and medical professionals that ensures basic needs for low-income families. With the mindset that everyone deserves such things as good nutrition, income and a roof over their heads, the HEAL Project is making this process more affordable and effective, even making it possible to get insurance to support it.

“The project trains healthcare providers to identify poverty-based barriers to maintaining a patient’s health, connects medical and legal professionals in jointly solving obstacles to improved health outcomes, and provides direct, proactive legal assistance to patients experiencing problems,” Neumeyer explained.

Of course, the number one question for those considering this service is the cost. Incredibly, while clients are asked to help with medical record copying expenses, the VLAS charges no fee for legal assistance provided. But like all companies and organizations across America, VLAS is constantly working to find the funds it needs to provide the wide range of services offered.

“We have the resources to provide advice to most people that contact us, but lack the resources to provide extended services, like court representation, to more than half of the people who need it,” Neumeyer said. “We are always working to increase funding in order to increase the number we can serve, and to provide more education that will help people avoid problems in the first place.”

In order to be eligible for VLAS assistance, clients must have a household income that is 125 percent below the guidelines of federal poverty, or less than 200 percent if their expenses are work- or health-related.

Low-income families within our nation are facing exceptionally dire times and all too often lack the necessary funds to protect themselves and find the representation and resources they need. For those in the kind of situation that requires turning to a legal professional for assistance, a positive outcome may seem bleak. That’s where nonprofits like VLAS step in, making success a reality—a reality where justice is served.

Fundamentally, an operating agreement is nothing more than a contract between the owners of a business that clearly defines how they intend to conduct that business. Among other things, it usually includes terms relating to organization, management, meetings, votes, profit and loss and sale or transfer of membership interests. It is a written document that memorializes the rules that the owners have committed to follow. If any of the owners decide to do something that violates those rules or provisions, then the other owners can ask a court to enforce them.

Furthermore, an operating agreement allows business owners to create custom terms that vary from the standard set out by the Code of Virginia. For instance, according to § 13.1-1022 of the Code of Virginia, management of a business defaults to the owners. However, the owners may decide that it makes more sense to appoint a specific manager to make day-to-day decisions rather than to try to handle those decisions themselves. In order to implement this variance from the statutory default, the owners will have to determine the terms of the arrangement in writing. The operating agreement is the appropriate place to set forth those terms, and it may include things such as how the owners will choose a manager, what authority will be delegated to the manager and how the owners can remove or replace the manager.

Avoiding statutory defaults is not the only reason for an operating agreement. In practice, I have found that business owners who fail to execute a well-written operating agreement are almost certainly headed toward failure. Often, that failure is a result of a breakdown in trust between owners.

If the terms of the business arrangement are not memorialized, then owners often feel as if they can continue to change the arrangement to meet their own individual needs and desires. These changes are easy to justify based on work performance, perceived importance, ability to produce new sources of revenue or any other convenient factor. A decision by one owner to change the deal based on some subjective factor often leaves the other owner or owners feeling as if they have been cheated. Even if an owner does not have sinister motives, details of the business relationship are often misinterpreted or remembered differently. No matter the reason, a change in operating procedure often creates distrust between owners, and failure is inevitable.

Single owner businesses are no exception. They may not need to wrestle with trust and interpretation issues, but they should still invest in a good operating agreement in order to avoid liability. The primary incentive to incorporate is to prevent a creditor from satisfying a business debt with the business owner’s personal assets. Unincorporated sole proprietorships do not have any protection from a creditor’s attempt to seize personal assets. In order to shield those assets, the business assets must be held separate and apart from personal assets. If the assets are commingled, then a judge will pierce the corporate veil and allow a creditor to raid personal assets.

Single owner businesses have a much harder time convincing the court that personal assets have remained separate. Single owner businesses, by nature, begin to look a lot like unincorporated sole proprietorships, and a good creditor’s attorney will do his or her best to be sure the judge finds that there is no separation of assets. An operating agreement is the first line of defense in fighting that claim. It allows the business owner to show the judge that the business is legitimate, even though only one entrepreneur owns it. The more legitimate the business looks, the less likely it is that a judge will pierce the corporate veil.

Finally, the only thing worse than not having a well-written operating agreement is having an operating agreement that you do not understand. Every business owner should be intimately familiar with the terms of the agreement, and should abide by those terms. It is a significant mistake to execute an operating agreement, or any other type of agreement, without knowing the terms. It is important to hire a competent attorney to draft, or at least review, the terms of your business operating agreement. Spending a few dollars ahead of time will go a long way toward reducing future problems.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

Check Your Account. One of the best ways to discover and prevent fraud is to reconcile your bank account. If you are checking the transactions that have cleared your account against the transactions that you know you have made, then you will catch any illicit or unauthorized transactions. The sooner you find an unauthorized transaction, the easier it is to recover funds and prevent additional unauthorized transactions. If you catch the transaction quickly enough, then the problem can usually be resolved with a phone call to your bank and to the merchant involved in the transaction.

It has been the standard to reconcile your account monthly, but the longer it takes you to discover the fraud, the harder it is to recover. Therefore, for the best protection, you should look at your bank accounts every day. This is easy to do if you have a bank that provides a robust online banking platform, so it is a good idea to find a bank that provides excellent online service.

Choose Strong Passwords. All online transactions require a password, so it is tempting to use one simple, easy to remember password for everything. However, your simple, easy to remember password is not much better than having no password at all. If it is easy for you to remember, then it is probably easy for someone else to guess.

You should use different passwords for different activities. For instance, your bank password should not be the same as your Amazon.com or email password. That way if one company’s database is compromised and your password is stolen, then you have not also compromised your entire transaction system. You will minimize damage if you are able to compartmentalize it. It is not easy to keep up with a variety of complex passwords, but it offers a lot of protection against criminal activity.

The best passwords are eight to 14 characters in length and use a combination of numbers, special characters and upper and lowercase letters. They should not spell anything (forward or backward), and should not contain important dates or numbers, such as your anniversary, telephone number or address. They should not repeat any number or letter more than twice, and you should change your passwords at least once a month.

You should also avoid writing your passwords anywhere. This is hard to do if you are using a variety of passwords for different activities, and are changing them often. If you must write them down, then be sure to keep the written passwords in a safe place such as a locked filing cabinet or safe. Do not keep them on or anywhere near your computer.

Check Your Credit Report. You should check your credit report at least once a year to be sure no accounts or lines of credit have been opened in your name without your authorization. You should also check to be sure that nobody has reported overdue charges or late payments for suspicious or unknown transactions. You can obtain a free copy of your credit report once a year from each of the three major credit bureaus at www.annualcreditreport.com.

Protect Private Information. Mail and garbage theft is a popular way for thieves to gain access to personal information. Be sure to shred documents that contain private information before discarding it. You should also drop outgoing mail into a secure mailbox, and consider using a post office box for incoming mail rather than a traditional mailbox. Do not use your social security number unless absolutely necessary, and keep any documents that contain private information secured inside your home or in a safety deposit box.

Internet scams are a major source of fraud, and it always surprises me how many people are willing to provide very sensitive information to a strange website in order to have a chance to win a small prize. Before providing any private information, it is imperative that you know how the information will be used and whether the person or company will keep that information private.

Most internet scams play on our natural greed by promising something wonderful in exchange for little work. Due to increased exposure, people have begun to recognize these offers as scams. Recently, however, the FBI reports that in the wake of several large natural disasters, fraudulent charitable contribution schemes are on the rise. These schemes request donations to assist victims of a natural disaster, but the money is never delivered to the victims. In order to avoid this and other types of internet fraud, you should avoid clicking on suspicious links and verify the legitimacy of any company or Web site asking for donations or private information. When in doubt, keep your information, and your money, to yourself.

Incidents of fraud are on the rise, but you have tools that will significantly reduce your risk of becoming a victim. I hope you can use some of these suggestions to prevent fraud and protect your assets so that you don’t have to schedule an expensive visit with your favorite attorney.

The preceding is for informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

Like any business, family businesses must be protected in order to ensure continued operation and success. There are a variety of ways to protect a business, and many of them use the same tools that any other business would use. For instance, the business should carry adequate insurance to protect against worst-case scenarios, invest in quality equipment to ensure a consistent product or service and spend time vetting potential employees to be sure that the new employee will fit the business culture and embrace the business goals.

In addition to these things, a family business should develop a proper succession plan. Succession problems are more likely in a family business than any other type of business because much of the family net worth may be attached to the business. This becomes problematic since the person in charge of the business must control the purse strings in order to operate the business. This control is hard to maintain in the face of family pressures.

A succession plan is especially important for a family business because there are generally more expectations and issues between family members than between unrelated individuals. It is very common for some family members to be more involved in the business than others are, and this creates the possibility of disagreements about business valuation and fairness. In fact, a succession plan may take years to create as family members discuss issues, negotiate and adjust the plan.

A succession plan starts by identifying and developing the leaders who will carry the business into the next generation. If the plan is developed and implemented properly, then each family member who is involved in the business will know his or her role as well as understanding the other family members’ roles. One of the worst things a family business can do is fail to plan for successive leadership before the current leader is unable to continue in that role. Such failure is usually the first step down a long road that ends in family bickering and, ultimately, the demise of the business.

The family business model becomes even more complicated when the business owners intend to divide their assets fairly between their beneficiaries at their death but also want the business to continue operations. The 2010 Family Business Survey by PricewaterhouseCoopers found that, “many family firms would face considerable difficulties if any sudden change of ownership occurred, regardless of the cause. Fifty-six percent haven’t established any procedures for purchasing the shares of incapacitated or deceased shareholders. And 50 percent either lack the liquidity to buy out family members who want to dispose of their stakes in the business or haven’t considered the possibility.” This means that without proper planning, the only fair way to divide assets will be to liquidate the entire business.

The succession plan must include a way to solve issues with valuation and fair distribution before it is too late to do so. These issues are not difficult to solve if the business plans properly, but become almost impossible to solve upon the death or incapacity of one of the business owners. Businesses can use a combination of things like buy-sell agreements, independent valuation specialists, promissory notes, limited ownership shares and key man life insurance policies to settle some of the differences. Some of these tools can also be used to minimize or avoid taxes and provide for the retiring generation.

With all of the issues surrounding family businesses, it is necessary for family businesses to find a trusted attorney. A good business attorney can help families navigate complicated issues with civility and care. Business with family can be very rewarding if done properly, and handling small issues before they become large is the key to success.

The preceding is for informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.

1) Define your goals.

When someone asks me to organize a nonprofit organization, I begin by asking the client about his or her goals for the organization. The client is generally there for one of two reasons: Either they want to make money or they want to give it away. In other words, they have either a motivation for profit or a charitable intent.

Doesn’t a motivation for profit cut against the very essence of a nonprofit organization? Not necessarily; it is a common misconception that nonprofit organizations cannot make money. Sometimes, they make truckloads of it. The American Spectator reports, “Planned Parenthood … took home $85 million in ‘excess of revenue over expenses’ (a nifty way of saying profits) and had an operating budget of over $1 billion for the 2007-2008 fiscal year.”

While nonprofits are prohibited from paying dividends on that excess revenue, there is little regulation as to how much they may pay out as part of compensation packages. As an example, CharityNavigator.org reported that the Museum of Modern Art paid director Glenn Lowry nearly $2.5 million in 2008. Make no mistake—nonprofit organizations are big business.

If a client’s intention is to make money on a fantastic idea that is somehow related to charitable activity, then a nonprofit may not be the best option. A standard business could get the same tax-exempt benefits by simply working through an existing nonprofit, but it would retain the ability to declare dividends to owners or investors. Unless the plan will not work without the ability to offer tax-exempt giving, then another type of entity may be a much better option.

2) Make a plan.

After I have determined that a client truly has a heart for charitable activity and ultimate profit is not the motivating factor, then I begin to ask how the client intends to support the non-profit. Unfortunately, those questions are often answered with blank stares. I find that many clients have magnificent charitable intent and a sincere heart for his or her mission but no business plan whatsoever.

If the client has no plan, then it is my unpleasant duty to inform the client of the impending disaster. A nonprofit must have a plan for success just like any other business, and that plan for success involves things like short- and long-term goals, cash flow expectations, marketing ideas, policies and procedures. It is not enough to simply think of a great idea.

Furthermore, any good plan determines a source of funding, and nonprofit funding can have a significant effect on the tax-exempt status of the organization. For instance, if a nonprofit organization receives most of its funding from one source, then the IRS may classify the organization as a private foundation rather than a public charity. This could be significant in that donors to a private foundation can only donate up to 30 percent of their adjusted gross income, while donors to a public charity may donate up to 50 percent.

3) Choose wisely.

After I am satisfied that the nonprofit can be successful, I encourage the client to begin choosing a board of directors who will manage the corporation. Many clients ask if the board of directors can be comprised of their own family members and whether the board can simply sit idly aside while one person manages the nonprofit organization. These are two very bad ideas.

If the board consists primarily of closely related individuals, then the IRS may find that the nonprofit has participated in private inurement. This means that the IRS has determined that the nonprofit has been operated in order to provide profit to an individual or group of individuals not contemplated by its stated charitable purpose. This is bad news for the nonprofit as any private inurement will result in a complete loss of the organization’s tax exempt status.

Avoiding private inurement is one of the duties of the board of directors. They must also determine the organization’s mission and purpose so that they can operate to achieve that mission and purpose. They do this by managing resources effectively, developing policies and objectives, assessing their own performance and providing for their own replacements. It is a big job, and they cannot do it effectively unless they are active in the organization.

When I am through assessing the feasibility of nonprofit organization and answering questions about the direction of the entity, then I can begin to actually organize the corporation. Thus begins the long, and sometime arduous, task of filing articles of incorporation, developing bylaws, creating policies and procedures, filing for an employer identification number and filing for tax-exempt status. It is not an easy process. However, it can be very rewarding for a group of people with a desire to give back to the community, and I am often honored to play some small part in the creation of that organizational endeavor.

The preceding is for general informational purposes only and not intended to constitute specific legal advice or form an attorney/client relationship. Please seek the services of a licensed attorney for specific legal advice.