New Jersey Law Blog

Update on NuvaRing® Litigation

Amy Beth Dambeck — Fri, 12 Mar 2010 08:09:36 -0500

The NuvaRing® Mass Tort is presided over by Judge Brian R. Martinotti, in the New Jersey Superior Court - Bergen County. Previously, counsel for both plaintiffs and defendants had chosen ten initial bellwether cases for case specific discovery and trial. On, March 3, 2010, Judge Martinotti held a Case Management Conference. During that conference, Judge Martinotti determined that the discovery deadline on the initial bellwether cases would be March 15, 2011, culminating in proposed trial dates some time in May 2011.

As we have discussed in previous posts, studies have shown that the ingredients contained in the birth control product NuvaRing® have been linked to various forms of severe side-effects including: heart attack, stroke, deep vein thrombosis (also known as DVT or blood clots), internal organ damage, myocardial infarction and pulmonary embolism.

At Stark & Stark we pursue claims throughout the nation against drug manufacturers, so they can be held accountable when the drugs they market are proven to be defective or cause catastrophic injury to the people who use them. Contact Stark & Stark to speak with one of the Mass Tort/ Pharmaceutical Litigation attorneys, free of charge, who can help assess any claims that you might have against the manufacturers of NuvaRing®.

Stark & Stark Shareholder Presents Seminar on New Jersey's Community Associations, Solar Energy and Legal Issues

Stark & Stark — Thu, 11 Mar 2010 08:00:18 -0500

David J. Byrne, Shareholder and Co-Chairperson of Stark & Stark's Community Association Group presented materials related to legal issues connected with community associations and solar energy, during a seminar entitled "Community Associations, Solar Energy & Legal Issues".

The presentation was part of Wentworth Property Management's Solar Symposium, held at the Renaissance @ Manchester Association on February 18, 2010. Mr. Byrne focused his presentation on the rights and limitations of boards in relation to solar power. He discussed the fiduciary duties of community associations, the interpretations of restrictive covenants and the enforcement of rules, all in connection with solar power.

You can download the full presentation online here. (13.4 MB)

HAFA - Will Short Sales Be the Trick to Stop the Foreclosure Flood?

Richard Linderman — Wed, 10 Mar 2010 21:08:10 -0500

Realizing that the "fixes" put in place by the federal Home Affordable Modification Program ("HAMP") have been an abysmal failure, the Obama Administration and the Treasury Department have reached for a new arrow in their quiver. Beginning April 5, 2010 the new Home Affordable Foreclosure Alternative program ("HAFA") will attempt to assist hundreds of thousands of the delinquent homeowners who could not be rescued under the HAMP program by allowing them to shed their homes through the short sale process.

Traditionally, a short sale is when the proceeds from the sale of a home are insufficient to fully pay off all outstanding debts and encumbrances recorded against the property. In these situations, the selling homeowners can either bring funds to the closing to make up the difference, or obtain approval from their mortgage lenders to accept a reduced amount to satisfy their outstanding loans.

Under HAFA, the lender must offer a short sale in writing to the homeowner within 30 days after the homeowner either is found ineligible for mortgage modification under HAMP or has been ruled unable to sustain payments under a trial plan. Under the new plan, a lender will use real estate agents to determine the value of the encumbered home and this figure will be the lender’s minimum to accept for a short sale. This figure will not be shared with the homeowner, but if an offer comes in that is equal to or greater than this amount, the lender must accept it and proceed with the short sale.

Under this new program the primary lender will receive $1000 if the short sale is completed. A lender holding a secondary lien could get up to $3000 of the short sale proceeds, or can attempt a short sale outside the program if it does not agree to share. In addition, the selling homeowner will get $1500 in "relocation assistance".

While HAFA will attempt to make short sales easier and a more likely alternative to foreclosure, short sales require significant time and patience by all parties involved. Luckily, with the seemingly continuous delay of the foreclosure process by the New Jersey courts, one thing that delinquent homeowners seem to have is time.

At the beginning of foreclosure crisis lenders shunned short sales and would regularly refuse to participate in the process. However with the failure of other federal programs to effectively turn the tide of the foreclosure flood, it may now be time for short sales to see their moment in the sun. For condominium and homeowner associations ("Associations"), HAFA may mean fewer empty foreclosed homes waiting to be sold by uninterested and unmotivated lenders. Another direct benefit of the HAFA program for Associations is that the common assessment liens recorded against the homeowners’ units must be paid in full for the short sale to be completed. This will provide Associations significant leverage to ensure that unpaid common assessments are recovered.

Live Interview from the Franchise Expo South - How to Fund Your Franchise

Adam J. Siegelheim — Tue, 09 Mar 2010 08:17:34 -0500

This installment of the New Jersey Legal Update podcast is an interview with Adam J. Siegelheim, member of Stark & Stark's Franchise group, and Larry Carnell, Vice President of Business Development for BeneTrends, Inc., at the International Franchise Association's 2010 Franchise Expo South in Miami, Florida.

Mr. Siegelheim and Mr. Carnell how to access capital in order to fund your franchise. Mr. Siegelheim and Mr. Carnell discuss the benefits of using your retirement fund as a way to fund your franchise.

You can download the full podcast here.

Courts in the United States Have Consolidated NuvaRing® Lawsuits on Both the State and Federal Levels

Craig S. Hilliard — Fri, 05 Mar 2010 12:52:11 -0500

As we have discussed in previous posts, pending lawsuits against the manufacturers of NuvaRing®, state that the birth control product has led to severe side-effects such as: heart attack, stroke, deep vein thrombosis (also known as DVT or blood clots), internal organ damage, myocardial infarction and pulmonary embolism.

Courts in the United States have consolidated the NuvaRing® lawsuits on both the State (Mass Tort) and federal (MultiDistrict Litigation or “MDL”) levels. The Mass Tort is presided over by Judge Brian R. Martinotti, in the New Jersey Superior Court - Bergen County. The MDL is presided over by Judge Rodney W. Sippel, in the United States District Court - Eastern District of Missouri. Both judges often collaborate in an effort to assimilate the cases pending in each court. In fact, during the March 3, 2010, Mass Tort case management conference, Judge Martinotti adopted an order recently entered by Judge Sippel, which will permit counsel to coordinate discovery in all cases pending in both the Mass Tort and MDL.

If you, or someone you know, has been injured as a result of taking NuvaRing® contact Stark & Stark’s Mass Tort/Pharmaceutical Litigation Team to speak with one of the Mass Tort/ Pharmaceutical Litigation attorneys, free of charge, who can help assess any claims that you might have against the manufacturers of NuvaRing®.

Helping and Protecting Condominiums Deal With the New Lending-Related Rules of the Federal Housing Administration (FHA)

David J. Byrne — Thu, 04 Mar 2010 16:24:26 -0500

The FHA insures loans made by FHA-approved lenders all across the country. In fact, 30% of all mortgages in the United States are insured by the FHA. The availability of this insurance enables lenders to make loans and extend credit to a broader class of borrower, allowing owners within a condominium to market their homes to more potential buyers. The FHA will insure only certain loans - those that meet FHA requirements. As of February 1, 2010, the FHA may insure loans made with respect to condominiums only in condominiums that have been certified by the FHA. These new rules do not relate to homeowners associations. Condominiums that are currently certified must be recertified every two (2) years. The new FHA rules apply to condominiums in New Jersey, New York, Pennsylvania together with all of the other 47 states.

FHA certification will likely make the sale and purchase of homes within a condominium easier. There are arguments available to owners by which a condominium may have a fiduciary duty to seek FHA certification. The condominium's approved status will be published, and FHA will be free to insure loans there. To the extent that management or your board would like to secure FHA certification, Stark & Stark's Community Association, and Condominium & Co-Op, Groups are ready to discuss the relevant issues, and prepare and file the applications. If you would like additional information, or to hear more about the FHA, condominiums and/or the certification process, please contact David J. Byrne or A. Christopher Florio.

Stark & Stark Shareholder Presents Seminar on condominiums and the new guidelines of the FHA, Fannie Mae and Freddie Mac

Stark & Stark — Thu, 04 Mar 2010 08:09:00 -0500

David J. Byrne, Shareholder and Co-Chairperson of Stark & Stark's Community Association Group presented materials related to lending-related guidelines and condominiums, during a seminar entitled "FHA, Fannie Mae & Freddie Mac: New Guidelines Impacting Your Association".

The presentation was made to the Pennsylvania and Delaware Valley Chapter of the Community Association Institute on February 18, 2010, in Mt. Laurel, New Jersey. Mr. Byrne focused his presentation on the new guidelines issues by the Federal Housing Administration ("FHA"), the Federal National Mortgage Agency ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") in relation to loans made in condominiums. He explained the new guidelines, outlined the eligibility rules and discussed the requirements connected with FHA, Fannie Mae and Freddi Mac lending.

You can download the full presentation online here. (26.8 MB)

Proposed Law would Force Condominium Boards to Take the Lowest Bid

Mark M. Wiechnik — Wed, 03 Mar 2010 08:02:20 -0500

A law pending in the New Jersey State Assembly would, if adopted, regulate condominium and homeowner association's hiring of vendors and would also address how to deal with potential conflicts of interest.

Assemblyman Peter Biondi introduced a bill in January 2010 in which he stated that with the quasi governmental powers provided to associations should come standards of "fairness and due process." The bill provides that associations should be held to similar standards of transparency and fairness.

As to the bidding requirements, Assemblyman Biondi is proposing to enact rules which would force associations to:

Obtain three quotes for any contract for services or materials whenever the amount payable by the association is over $10,000 in any 12 month period.
Use sealed bids with required specifications , to be opened only a publicly announced meeting for any contract that exceeds $25,000.
Award all contracts to the vendor that provided the lowest quote or bid, unless the board determines, for good cause, that accepting the bid would be detrimental to the best interests of the residents.

Interestingly, any association with fewer than 30 units can, by resolution, waive any of these provisions.

Although community associations are similar in many ways to government, the last thing any association wants to do is model itself after any level of government. Government agencies are often marred by corruption, red tape, cost overruns and unnecessary levels of bureaucracy; things that most associations in New Jersey try to avoid. On its face, obtaining three bids sounds like a reasonable and prudent business practice. However, Board members are entirely capable of determining how many bids to obtain for a particular project or service, and obtaining three is hardly a panacea for problems that result from hiring the wrong contractor. Moreover, obtaining three quotes may be impossible, for example, for an association that pursuant to the master deed must hire a property management company within 5 miles of the association, and only 2 fit that description.

However, when you get to section 3, the real problem is revealed. Forcing associations to hire the cheapest vendor guarantees problems. The old axiom, "you get what you pay for" has proven true over and over again. Think about how well this formula has worked for the government. The least expensive contractor has given us shoddily built schools, bridges and government buildings. Why should associations model this behavior? In fact, some governments have completely scrapped this program. New York City and Camden both ended their lowest bidder programs (allowing for consideration of experience, completeness of the quotation, references, etc.) with shocking results: construction quality got better.

If an individual association wants to enact such a rule, it is obviously free to do so, but the mechanism to prevent problems is already in place. First, the governing documents of many associations require the approval of 2/3 of the homeowners to approve assessments related to work in a certain dollar amount. Second, the system of goverenence itself ensures that if the Board makes a habit of hiring the first contractor to provide a bid, or is hiring friends and relatives who do shoddy work, then the unit owners have the right to vote them out of office during the next election. Like most legislation, this proposed law is likely a reaction to one or two troublesome boards who made poor decisions, prompting an Assemblyman to react in such a way that will saddle all associations with unnecessary requirements which are likely to cause more problems than they cure.

As for dealing with conflicts of interest, Assemblyman Biondi is proposing that:

No member of the board or management can have an interest in any business which is in conflict with the proper discharge of their duties, including having a direct interest in any contracts for work or materials used by the association or any fees paid to a broker, architect, etc.;
No board members or managers can use their position to obtain any unwarranted privileges for any person;
No board members or managers can act in his or her capacity in any matter in which he or she, a related person, or any other person residing in his or her household or the household of a related person, or any business organization in which any of such persons has an interest, has a direct or indirect financial or personal involvement that might reasonably be expected to impair the objectivity or independence of judgment of the board member, employee or property manager.

Like most legislation, these may be obvious and proper rules to have.... until they are applied to the real world. As with any law or rule, there are always unintended consequences. If a Board Member's brother owns a painting business and can do a quality job for 15% less than the competition, shouldn't the Association be permitted to hire that person, provided the Board Member in question discloses this fact to his fellow board members? Arguably, under section 3 of the proposed legislation, the board wouldn't even be permitted to consider hiring this contractor. But under the existing Nonprofit Corporations Act, which applies to associations, such a contract would not be void solely due to the fact that a trustee has an interest in the contract or transaction, as long as the interest is fully disclosed to the entire board before they vote on the issue. N.J.S.A. 15A:6-7. The proposed legislation would obviously conflict with the Nonprofit Corporations Act, causing further confusion for board members and homeowners.

The legislature is trying to get boards and associations to act in a proper and more efficient manner, but the real way to accomplish this is to become active in your association. Vote, attend meetings, provide feedback and be involved. If the majority of unit owners are involved in the process, then the Board will be responsible for their decisions, they will consider multiple points of view and incompetent or untrustworthy board members will be voted out of office. That way, each Association can make decisions that best fit their particular situation and are less likely to have unnecessary rules forced upon them.

A Primer on Green Leases: Special considerations that permeate the negotiation process

Stark & Stark — Tue, 02 Mar 2010 08:11:23 -0500

Vincent J. Mangini, Shareholder in Stark & Stark's Real Estate, Zoning & Land Use Group, authored the article A Primer on Green Leases: Special considerations that permeate the negotiation process for the March 1, 2010 edition of the New Jersey Law Journal.

Mr. Mangini discusses how the introduction of green building principles and the heightened interest in energy efficiency and cost savings has begun to influence the negotiation and operation of commercial leases and the build-out of tenant improvements. The article presents a summary and analysis of the issues that landlords and tenants should be aware of and what they need to build into their due diligence when dealing with a high-performance building.

You can read the full article online here. (PDF)

Stark & Stark Shareholder Comments on Protocol Overhaul

Stark & Stark — Mon, 01 Mar 2010 08:40:34 -0500

Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 26, 2010 Registered Rep article, Some Predict Broker Protocol Overhaul. The article addresses the possibility of an overhaul to the Protocol for Broker Recruiting in the wake of increased lawsuits and constant movement of advisors as they switch firms. When the protocol was first created, it was an exclusive pact between three wirehouse firms put in place to prevent expensive litigation every time an advisor switches firms. Today, there are approximately 420 signatories to the agreement, and recently, some firms are adding letters to clarify their participation in the protocol.

Mr. Lewis states that it could become very unruly if each company began including its own letters and sets its own rules as to compliance or noncompliance with the protocol. Mr. Lewis believes that the protocol will become ineffective at that point, and something has to be done as to the clarification letters because there is no telling where it may stop.

You can read the full article online here. (PDF)

New Jersey State Supreme Court Grants Mass Tort Designation to YAZ®, Yasmin® and Ocella® Cases

Kevin M. Hart — Mon, 01 Mar 2010 08:27:34 -0500

As we have discussed in previous posts, studies have shown that the ingredients contained in the birth control products YAZ®, Yasmin® and Ocella® have been linked to various forms of severe side-effects. Reportedly, these side-effects include: heart attack, stroke, deep vein thrombosis (also known as DVT or blood clots), internal organ damage (including gallbladder damage), myocardial infarction and pulmonary embolism.

On February 9, 2010, the New Jersey State Supreme Court granted Mass Tort designation to YAZ®, Yasmin® and Ocella® cases, pursuant to the application made under Rule 4:38A. Accordingly, all pending and future New Jersey state court actions arising out of the use of the oral contraceptives YAZ®, Yasmin® and Ocella® are designated as a mass tort for centralized case management purposes. Any and all such complaints that have been filed in the various counties and that are under or are awaiting case management and/or discovery shall be transferred from the county of venue to Superior Court, Law Division, Bergen County, and assigned to Judge Brian R. Martinotti, J.S.C.

If you, or someone you know, has been injured as a result of taking these medications, contact Stark & Stark’s Mass Tort/Pharmaceutical Litigation Team. At Stark & Stark we pursue claims throughout the nation against drug manufacturers, so they can be held accountable when the drugs they market are proven to be defective or cause catastrophic injury to the people who use them. Contact Stark & Stark to speak with one of the Mass Tort/ Pharmaceutical Litigation attorneys, free of charge, who can help assess any claims that you might have against the YAZ®, Yasmin® or Ocella® manufacturers.

Hot Topics in Family Law: College Expenses, Inherited Funds, Out of State Relocation & Medical Expenses

Stark & Stark — Fri, 26 Feb 2010 08:09:02 -0500

In this installment of Legal Lines, Stark & Stark Divorce attorney, Corrine Evanochko, addresses various questions that family law practitioners are most commonly asked. This discussion will surely knock a couple of questions off of your list if you are contemplating or know someone who is considering pursuing a divorce in New Jersey.

•    College Contribution – Is it really mandatory?
•    Inherited Funds – Subject to Equitable Distribution?
•    Out of State Relocation
•    Unreimbursed Medical Expenses

If you have any additional questions, feel free to contact the Stark & Stark Divorce Group at 1-877-678-Divorce.

Legal Lines - Episode 6 from Stark & Stark on Vimeo.

Live Interview from the 2010 International Franchise Association Convention

Adam J. Siegelheim — Fri, 26 Feb 2010 08:05:34 -0500

This installment of the New Jersey Legal Update podcast is an interview with Adam J. Siegelheim, member of Stark & Stark's Franchise group, and Greg Nathan, Managing Director for Franchise Relationship Institute, at the 2010 International Franchise Association Convention in San Antonio, Texas.

Mr. Siegelheim and Mr. Nathan discuss the differences between the franchise industry in the United States and Australia. Specifically, they discuss the pros and cons of focusing on unit sales versus focusing on franchisee follow-up and relationship building.

You can download the full podcast here.

Stark & Stark Shareholder Comments on Increase in Suits in Response to Protocol for Broker Recruiting

Stark & Stark — Thu, 25 Feb 2010 11:19:32 -0500

Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 24, 2010 FinancialPlanning.com article, The Recruiting Wars Turn Nasty. The article discusses the Protocol for Broker Recruiting and the recent decrease in firms suing each other over poached advisors. The article goes on to discuss some of the recent more highly publicized cases which have advisors, and their attorneys, questioning whether or not the days of increased claims and counterclaims are about to return.

Mr. Lewis discusses the fact that both Goldman Sachs and Credit Suisse have not signed on to the protocol, and Mr. Lewis states that Goldman Sachs in particular takes the attitude that the clients belong to the firm, not the advisor, and therefore should not move if an advisor defects.

You can read the full article here. (PDF)

High Demand on Water Supply May Require Plan for Reclamation and Reuse

Vincent J. Mangini — Wed, 24 Feb 2010 14:57:36 -0500

The following is a portion of an article entitled Hot and Green Legal Topics written by Vincent J. Mangini and Gary S. Forshner taken from the December 2009 edition of The Cutting Edge:

The construction of energy efficient buildings, the practice of conserving natural resources and recycling and the development and use of alternative fuels have all become prevalent concerns in our culture. Not surprisingly, these concepts have thoroughly permeated the contemporary legal landscape providing both benefits and burdens to individuals and businesses alike. The purpose of this article is to provide a summary of a few of the laws and incentives that impact the building and real estate industry.

Water Reuse Program
In light of the increasing demand placed on water supplies and the desire to reduce the impact of drought conditions, interest has grown in water reclamation and reuse, which entails the conversion of wastewater into reclaimed water through the application of specialized treatment for beneficial uses, such as landscape and agricultural irrigation, fire protection, dust control and street cleaning.

The term “reclaimed water for beneficial reuse" (RWBR) is defined in the New Jersey Administrative Code to mean “[w]ater that meets restricted access or public access reuse requirements specified in a NJPDES permit that authorizes that water to be directly reused for non-potable applications in place of potable water, diverted surface water, or diverted groundwater.” N.J.A.C. 7:14A-1.2.
Under current State policy, as manifested through the New Jersey Department of Environmental Protection’s technical manual entitled “Reclaimed Water for Beneficial Reuse," dated January 2005 (“Guidelines”), the preparation of a water reuse feasibility study may be required for New Jersey Pollutant Discharge Elimination System (NJPDES) permits involving all wastewater treatment and disposal facilities with a design flow of at least 100,000 gallons per day and for water supply allocation permits involving the use of water for non-potable and consumptive uses. See also N.J.A.C. 7:19-2.2(g) (requiring applicant for water supply allocation permit to consider lower quality water for non-potable purposes). Indeed, in issuing water allocation permits the DEP may require users to consent to the use of reclaimed water should such lower quality water become available, potentially creating a host of additional issues and challenges for builders.
Any person, who actually produces or is seeking to produce RWBR is required under current State regulations to utilize the Guidelines and to obtain a NJPDES permit. N.J.A.C. 7:14A-2.15.
A building project that makes use of recycled wastewater for landscape irrigation or sewage conveyance (i.e. toilet flushing) may earn water efficiency credits that can be applied towards certification under the Leadership in Energy and Environmental Design Green Building Rating System for New Construction (LEED-NC) formulated by the United States Green Building Council.

Repeal of the Federal Estate Tax - Here's the Bad News

Rosemary D. Durkin — Wed, 24 Feb 2010 08:41:02 -0500

Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the federal estate tax was repealed for 2010. This repeal, however, is only effective through December 31, 2010. The federal estate tax returns in 2011, at the rates and exemptions in effect in 2001 when EGTRRA was effective.

Although bills were introduced in Congress in 2009 to repeal the repeal, possibly to retain the $3.5 million estate tax exemption and 45% maximum tax rate in effect in 2009, nothing was accomplished. So we have reached 2010 with less taxes on the books – why is this a bad thing?

First of all, the federal estate tax has not been permanently repealed, but only disappears for one year. At midnight on January 1, 2011, it returns with a vengeance – with an exemption of only $1 million and a maximum tax rate of 55%. In addition, most commentators and practitioners are unsure that the estate tax has truly disappeared for 2010. The Democratic leadership of both the House and the Senate has indicated that they may attempt to pass legislation with an effective date retroactive to January 1, 2010. This retroactive imposition of a tax will undoubtedly face legal challenges, specifically that such a law is unconstitutional. The U.S. Supreme Court, however, has upheld such retroactive legislation in the past, most recently during the Clinton administration.
Review Your Estate Plan

Those clients who will be primarily affected by the 2010 estate tax repeal are those clients whose Wills or Trusts use a formula clause to divide property into shares, usually between the surviving spouse and children. One typical formula that has been used by attorneys for their clients for many years allocates as much property as possible to children or other descendants without triggering a federal estate tax, with the balance passing to the spouse. In 2009, this type of formula would have directed $3.5 million to the children, since that was the federal estate tax exemption in 2009. In 2010, this same formula will direct the entire estate to the children, since there will be no estate tax due, and nothing will pass to the surviving spouse.

Another type of formula clause that has often been used directs the exclusion amount to the children, and the balance to the spouse. This formula, however, will result in nothing passing to the children since there is no exclusion amount in 2010, and everything will pass to the surviving spouse. Although there will be no estate tax due at the first spouse’s death in 2010, this may actually be a worse scenario than the first: if the surviving spouse dies in 2011, owning all of the property previously held by both spouses, and with only a $1 million exemption available, there may be substantial estate tax paid at the second spouse’s death.
New Basis Rules

Now here’s the real bad news -- the repeal of estate tax in 2010 brings with it a change to the rules on carryover basis. Congressional officials estimated that an extension of the 2009 estate tax ($3.5 million exemption, 45% maximum rate) would have resulted in taxes on approximately 6,000 estates, but the carryover basis changes will result in taxes on over 70,000 estates.

Prior to 2010, the carryover basis rules provided for a “stepped-up” basis as of a decedent’s date of death. The beneficiaries inherited property from an estate at the property’s fair market value on the date of death, not the decedent’s basis (usually the purchase price). If an asset was sold by the estate or the beneficiary fairly close to the date of death, this often resulted in little or no capital gain, and little or no corresponding capital gains tax, since the stepped-up basis would have been close to the sales price.

The basis rules for inherited property have drastically changed for 2010. The basis of property received from a decedent will now be calculated at either the decedent’s basis or the fair market value as of the date of death, whichever is lower. For example, if the beneficiary inherits the decedent’s residence, which the decedent purchased in 1970 for $50,000, and which is now worth $400,000, the beneficiary receives the property with a basis of $50,000. When the beneficiary sells the residence at its fair market value, the beneficiary will pay capital gains tax on the difference between the basis of $50,000 and the sales price of $400,000.

The new rules include a “Special Basis Adjustment” of $1.3 million. This provides that this amount may be added to the basis of various estate assets (as allocated by the executor or administrator) to increase the basis of such assets from the decedent’s basis to the fair market value at the date of death. In addition, the surviving spouse will have an additional $3 million that may be added to the decedent’s basis for various assets passing to the spouse, to increase the basis to the fair market value at the date of death.

What To Do Now?
The changes to the estate tax, and the changes that may occur within the next year, make it an uncertain future, with no clear overall answer for everyone. These changes must be considered in light of each client’s individual circumstances, and in fact, may have to be reviewed again if Congress changes the law. Should you wish to review your Will and estate planning documents, or have any questions as to how your estate plan may be affected, please do not hesitate to contact us.

IRS Circular 230 disclosure: In order to comply with requirements imposed by the IRS, please be advised that any tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein.

Stark & Stark Shareholder Comments on Goldman Sachs Suit

Stark & Stark — Tue, 23 Feb 2010 09:10:31 -0500

Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 19, 2010 On Wall Street article, Goldman Drops Case Against Former Advisors. The article discusses Goldman Sachs' recent decision to drop their case against five former financial advisors and two support staff members (David Greene, Craig Savage, Andrew Thompson, Sharran Srivatsaa, John Pitt, Stephanie Dennard and Kim Tyson). The suit accused the advisors of breaching their non-solicitation agreements by moving to rival firm, Credit Suisse, and attempted to take their clients with them.

Mr. Lewis states that these types of cases are typically settled quickly and the firm who poached the advisors will often agree to pay a portion of the revenue generated by any of the accounts that the advisors’ transferred over for a period of 12 months to their prior firm.

You can read the full article online here.

When A Subcontractor Should File & Perfect a Lien Claim

Paul W. Norris — Fri, 19 Feb 2010 08:03:48 -0500

In today’s harsh economic climate, a general contractor or subcontractor is often faced with non-payment from a project owner. The question then becomes what is the best fashion in order to collect the unpaid balance which is due the general contractor or subcontractor. As a general contractor, you have a few options. The first option is to attempt to negotiate a resolution with the owner. Another option is to file a lawsuit. If a lawsuit is the preferred option, it is suggested that a Lien Claim be filed within ninety-days of the last date of materials or services were provided pursuant to N.J.S.A. 2A:44(A)-3. This secures the general contractor’s interest in the property and may provide it with leverage to facilitate a settlement.

For a subcontractor, the best process in which to collect an unpaid amount becomes more complex. Pursuant to the relevant Lien Statute, N.J.S.A. 2A:44-126, a “subcontractor” is any person or party who has a contract to provide labor or materials with a contractor or with a subcontractor who has a contract with the general contractor. The purpose of this definition is to limit who may file a Lien Claim against the property. Like a general contractor, a subcontractor may attempt to resolve the dispute as to the unpaid balance with the general contractor or the subcontractor who hired them. In the absence of a quick resolution, however, it is often suggested that a Lien Claim be filed by a subcontractor or sub-sub-contractor on the project. Unfortunately for a lot of subcontractors, this is when a critical error is made with regard to filing a Lien Claim.

Pursuant to N.J.S.A. 2A:44(A)-3, the Lien Claimant shall file a Lien against the owner of the property, or the tenant of the property for whom the contract to perform services exists. The critical point is that a Lien cannot be filed against the property owner if the tenant contracted to have the work done and the improvement was not authorized in writing by the owner of the property. This is critical because if a contractor files a Lien Claim against the property owner and not the tenant as well and it is later determined that the improvement was not authorized by the owner, the Lien Claim is invalid and the subcontractor may be left without a claim against the tenant. As such, the best practice is to always file a Lien Claim against the tenant who is occupying the leased property and for whom the work is being performed and against the property owner as well. At any time, the contractor can withdraw the Lien Claim against the property owner, however, continue against the tenant if it is found that the improvement was not authorized in writing. If this procedure is not followed and more than ninety days have passed since the last day materials and services were provided, the contractor may lose its right to bring a Lien Claim against the tenant.

As always, a lawsuit to foreclose upon the Lien must be commenced within thirty days upon request by the tenant or owner or within one year of the date of the Lien Claim was filed, otherwise it will expire. A subcontractor or sub-subcontractor does not lose its rights to proceed against the party whom directly contracted with it, however, an action to foreclose upon the Lien Claim as well only gives the contractor further leverage.

Child Related Tax Benefits for Divorced Parents

John S. Eory — Tue, 16 Feb 2010 09:03:00 -0500

Tax season has arrived and with it questions as to tax treatment of children of divorcing or divorced parents. For purposes of this article let's deal with the most basic, the "dependency exemption". According to the IRS, the parent who has custody of his or her child for more than one-half the year can claim the child provided that he or she has provided more than half of the child's support for the year in question.

In some cases, however, the non-custodial parent can claim the child but in order to be able to do so four requirements must be met:

First, the parents mus t be divorced or legally separated under a written agreement or lived apart continuously for the last six months of the year;
Second, the child has received more than half his or her support from the non-custodial parent for the year;
Third, the child has been in the custody of either or both parents for the greater part of the year; and
Fourth, the custodial parent releases the claim to the dependency exemption to the non-custodial parent in writing (IRS Form 8332) which must be attached to the non-custodial parent's tax return.

In many divorce cases, a non-custodial parent's right to claim the exemption is established by court order or written Marital Settlement Agreement. In divorce negotiations, this right may be a bargaining chip since the exemption is worth more to the higher income parent. Assuming the non-custodial parent receives the exemption, the next question is whether it should be annually or perennially. It is not advisable for the custodial parent to waive the exemption for more than one year at a time and agreeing to do so each year should be tied to a provision in the Agreement or Order requiring the non-custodial parent to be current in child support for the year in question.

Since no two cases are alike, a parent going through divorce should always consult with knowledgeable matrimonial counsel to determine what is in their best interests in terms of settlement or trial.

A Renewable Energy Facility May Require an Easement from your Neighbor

Vincent J. Mangini — Tue, 16 Feb 2010 08:05:14 -0500

Due to high energy costs and concern about the environment (and the availability of tax credits and grants), homeowners and businesses are giving greater consideration to renewable energy. Before undertaking the installation of a renewable energy facility, such as solar panels, it is important to conduct due diligence, which may include, among other things, the procurement of easements from neighbors to allow for unobstructed access to sunlight. Fortunately, New Jersey specifically recognizes easements for solar energy facilities and has set forth the minimum content for such easements in the Solar Easements Act. However, while providing useful guidelines, this statute does not require the owner of property adjoining a solar energy facility to grant a solar easement. Rather, the prospective solar energy customer must negotiate with surrounding property owners and pay whatever consideration the market may bear. In light of the complexities involved in negotiating the terms and conditions for such an easement agreement and in preparing the easement document, potential solar energy customers would be well advised to seek the assistance of an attorney in performing this task.