Fitzgibbons Law Offices

Best Lawyers® Recognizes Five Fitzgibbons Law Attorneys for 2026

Thu, 21 Aug 2025 22:08:41 GMT

David Fitzgibbons, Denis Fitzgibbons, Tina Vannucci, Nick Cook and Ashley Fitzgibbons are Best Lawyers in America ® honorees for 2026.

David Fitzgibbons was selected in two categories: Real Estate Law and Land Use & Zoning Law.

Denis Fitzgibbons was recognized in three: Employment Law (Management), Municipal Law, and Trusts and Estates.

Tina Vannucci was selected in two categories: Real Estate Law and Employment Law (Management).
Nick Cook and Ashley Fitzgibbons are "On es to Watch" honorees, a classification for younger attorneys. Nick was selected in three categories – Business Law, Labor and Employment Law (Management), and Municipal Law – and Ashley is listed in five: Commercial Litigation, Labor and Employment Litigation, Trust and Estate Litigation, Personal Injury Litigation, and Trusts and Estates.

Best Lawyers ® selections are compiled annually through peer-review surveys in which leading attorneys confidentially evaluate their professional peers. Since it was first published in 1983, Best Lawyers has become widely regarded as a definitive resource of legal excellence.

We welcome Ashley Fitzgibbons, a third-generation member of our firm

Mon, 29 Jul 2024 17:45:36 GMT

New Labor Department Rule Draws Sharper Distinction Between Employees and Independent Contractors

Tue, 20 Feb 2024 22:27:53 GMT

Tina Vannucci

Denis Fitzgibbons

A six-factor “economic realities test” will guide government examiners in determining whether an employee has been misclassified as an independent contractor.

The U.S. Department of Labor has issued a new rule that re-defines how Wage and Hour Division auditors will determine whether a worker is an employee or an independent contractor.

The new rule is effective March 11.

The standards are generally viewed as raising the presumption that a worker is an employee entitled to overtime, minimum wage, and other Fair Labor Standards Act (FLSA) benefits.

Consequently, businesses that pay any workers as independent contractors bear a greater burden to show that the workers are not, in fact, employees covered by the FLSA.

The rule addresses six factors – some of which are, in our view, very subjective – that provide an “economic realities test” that is intended to guide the analysis of a worker’s relationship with an employer:

the worker’s opportunity for profit or loss in connection with the work performed;
the financial stake and nature of any resources a worker has invested in the work;
the degree of permanence of the work relationship;
the degree of control an employer has over the person’s work;
whether the work the person does is essential to the employer’s business; and
a factor regarding the worker’s skill and initiative.

A government examiner can consider any or all of the above factors and is free to introduce factors not listed above.

The reinstatement of these standards poses potentially serious consequences for companies, their owners, and even some non-owner administrative staff. If a business or other employer is found to have misclassified an employee as an independent contractor, the liability for unpaid overtime, minimum wages, and payroll taxes could be imposed on owners and responsible employees personally.

If you have questions about how to comply with the new Labor Department rule, contact your accounting firm, payroll service, or Fitzgibbons Law employment attorney .

From the U.S. Department of Labor:

We Congratulate Tina Vannucci on Becoming an Owner of Fitzgibbons Law

Thu, 25 Jan 2024 02:41:21 GMT

Corporate Transparency Act Places New Federal Reporting Requirements on Most Businesses

Fri, 05 Jan 2024 16:30:16 GMT

To help you better understand what is required and prepare your company to stay compliant, this article offers a general overview of the CTA.

In reviewing various sources of information about the CTA and what it requires, we have prepared general answers to what we anticipate will be frequently asked questions.

For additional information, please view two helpful FinCEN resources:

Does my business have to file a report? It probably does. Entities required to report (termed in the law as a “reporting company”) include LLCs, most corporations, most partnerships, certain types of trusts, and more.

For purposes of the CTA, a reporting company is defined as:

“a corporation, limited liability company or other similar entity that is created by the filing of a document with a secretary of state or similar office under the law of a state, or formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or similar office [e.g., the Arizona Corporation Commission] under the laws of a state.”

Under that broad description, a legal entity that (a) is created or authorized to operate by filing papers with a state agency and (b) is separate from the owner(s) must comply with the CTA’s reporting requirements.

What are the exceptions? Sole proprietorships are not required to report. Also, many types of trusts and some types of partnerships are generally excused from the reporting requirement (check with your attorney).

In addition, the CTA provides a list of 23 “exempt entities” – mostly larger companies in regulated industries, such as banks, insurance companies, SEC-registered companies, utilities, many 501(c) tax-exempt organizations, etc.

The exemptions include a “large operating company,” i.e., one that (a) employs more than 20 employees on a full-time basis in the U.S.; (b) “filed in the previous year Federal income tax returns in the United States demonstrating more than $5,000,000 in gross receipts or sales in the aggregate”; and (c) has an “operating presence at a physical office within the United States.”

Inactive entities. The list of exemptions includes, at #23, “Inactive entity.” Qualifying for inactivity requires specific criteria that you can view in the FinCEN FAQ document at https://www.fincen.gov/boi-faqs#L_2 .

If your entity does not qualify for one of the exemptions, you should plan on complying with the new law.

What has to be reported? The required information about the reporting company is relatively simple, such as:

legal name;
trade names or DBAs, if any;
physical address;
jurisdiction of formation (e.g., Arizona); and
Employer Identification Number (EIN), also known as the federal tax identification number.

Owner Information. The reporting company must also provide specific information about (a) the “company applicant” (i.e., the individual who filed the application to form the legal entity) and (b) each of the reporting company’s “beneficial owners” (described below). For each of those individuals, the report must include their:

name;
date of birth;
home or business address; and
a unique identifying number from an acceptable identification document, such as a passport or valid driver’s license along with an image of that identification document.

What is a “beneficial owner”? The government defines a “beneficial owner” as “a natural person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise”:

exercises “substantial control” over the entity;
owns 25% or more of the equity interests of a corporation or limited liability company; or
receives substantial economic benefits from the assets of a corporation or limited liability company.

An individual will be considered to have “substantial control” of a reporting company if he or she:

serves as a senior officer;
has authority over the appointment or removal of any senior officer or dominant majority of the board of directors (or similar governing body);
has direction, determination or decision of, or substantial influence over, important matters; or
has another form of involvement that could be reasonably construed as “substantial control.”

When do we have to file?

If your reporting company was in existence before January 1, 2024, you have until December 31, 2024, to file your initial report.
If your reporting company is created during 2024, it must file its initial report within 90 calendar days after (a) the date on which the entity received actual notice that its creation or registration is effective, or (b) the date after the state first provides public notice of the entity’s creation or registration.
For a reporting company created on or after January 1, 2025, the 90-calendar-day period mentioned above is reduced to 30 calendar days.

How do we file our report? Reports must be filed online, using the non-public, cloud-based portal maintained by FinCEN.

See “File the Beneficial Ownership Information Report (BOIR)” at https://boiefiling.fincen.gov/fileboir .

What if we don’t file a report? Failure to file, on time, can be costly. “Willful” violations of the Corporate Transparency Act can carry civil penalties (e.g., $500/day for each day past a deadline) and, in some cases, criminal liability (up to $10,000 in fines and up to two years in prison).

How often do we have to file? Subsequent filings may be the riskiest and most burdensome issue for many businesses.

While filing your initial report doesn’t seem too difficult, the trick is that every time something in your report changes, you have to file subsequent reports.

For all reporting companies, any change to a previously filed report must be reported to FinCEN within 30 days of the change.

Get Ready

While the December 31, 2024, reporting deadline for current businesses seems like the distant future, it’s not too soon to start gathering the required information, especially if your business has multiple owners and/or multiple entities, or if you contemplate creating a new entity this year.

At the very least, make it the job of someone in your company to look further into the Corporate Transparency Act’s requirements and prepare a timeline and procedures that will help you comply with the new law.

Also, we recommend that you review the FinCEN FAQ document that we referenced earlier. Many business owners will be particularly interested in question 16 (“How will FinCEN protect beneficial ownership information reported to it?”) and FinCEN’s plans for preserving the confidentiality of reported information.

If you would like more information or have general questions about the CTA and related matters, you might want to consult with your accountant or your financial advisory group.

If you would like our assistance in complying with the Corporate Transparency Act, please contact Kevin Fitzgibbons for more information.

"Best Law Firms" Recognizes Fitzgibbons Law in Five Categories

Fri, 03 Nov 2023 18:19:29 GMT

For 2024, Fitzgibbons Law is nationally ranked in Land Use & Zoning Law (National Tier 3) and regionally ranked (Phoenix) in Municipal Law , Real Estate Law , Land Use & Zoning Law, Personal Injury Law , and Employment Law (Management) .

The selections were announced November 2.

"Best Law Firms" is a peer recognition service of The Best Lawyers in America ®. Rankings are based on a combination of client feedback, surveys of law firms and law firm leaders, and Best Lawyers peer review.

New Federal Law Protects Pregnant Workers, Places New Requirements on Employers

Fri, 28 Jul 2023 17:07:22 GMT

One of the PWFA’s key provisions is the requirement for employers to provide “reasonable accommodations” that reflect a worker’s known limitations related to pregnancy, childbirth, and related medical conditions. Such accommodations may include more frequent restroom breaks, modified work schedules, assistance with heavy lifting, allowing temporary transfers to less physically demanding positions, and providing a private space for expressing breast milk. These adjustments aim to promote a healthy and safe working environment for expectant mothers, reducing during pregnancy the risks associated with the physical demands of certain jobs.

To determine reasonable accommodation, the employer must engage in an interactive process with pregnant employees to determine appropriate steps that allow them to continue performing their duties safely and effectively.

The reasonable accommodations requirement carries an exception in cases where providing the accommodation would impose an “undue hardship” on the employer. The burden is on the employer to establish that the accommodation would be significantly difficult or expensive.

The new law also prohibits retaliation against employees who seek accommodations or assert their rights under the PWFA. Employers are now mandated to treat pregnancy-related requests and complaints with the same level of seriousness as any other workplace matter, safeguarding pregnant employees from any form of adverse treatment based on their pregnancy status.

To comply with the PWFA, employers should review and update policies for pregnant applicants and employees, alert their supervisors to the PWFA and its requirements, maintain open communications with pregnant workers, and work with them for the best solution.

By requiring employers to provide reasonable accommodations and protecting pregnant employees from discrimination and retaliation, the PWFA empowers expectant mothers to thrive in their careers while preparing for the life-changing experience of motherhood.

See also: What You Should Know About the Pregnant Workers Fairness Act (EEOC)

More about our firm's Employment Law services for employers and workers

Protecting Your Intellectual Property

Wed, 18 Jan 2023 15:50:58 GMT

If you register the name of your business, such as, “Mel’s Arthouse” it is important to know you do not obtain the exclusive right to the name “Mel” or the exclusive rights to the word “Arthouse.” However, when you register the trade name “Mel’s Arthouse,” it is exclusive to you, and you may prevent others from using it. Similarly, should you associate a trademark with the trade name Mel’s Arthouse, and the design is an apple with a bite taken out of it, identical to Apple Computer’s mark, you would likely not be able to trademark the design, as it would infringe on Apple Computer’s rights.

Copyrighting and Protecting your Work Online. The Digital Millennium Copyright Act (DMCA) of 1998 is a federal law designed to protect copyright holders from online theft — that is, from the unlawful reproduction or distribution of their works.

The DMCA covers music, movies, text, photos, and anything that is copyrighted. More important, the law involves you. For example, if you created an original image, like taking a picture and posting it, you own it. That ownership gives you exclusive rights to display and reproduce what you create, and prevent others from reproduction or distribution unless they obtain your permission.

Today’s world of IP is boundless and at times difficult to regulate. However, by taking proper steps to ensure your work is protected the reward can be limitless. In the event you need to navigate the stream of art and commerce, we would be happy to assist you.

Kevin Fitzgibbons ' law practice encompasses intellectual property law, entertainment law, and business and real estate law.

Understanding the Development Process

Wed, 13 Jul 2022 16:11:14 GMT

Turning into reality your vision for a real estate development project requires a working knowledge of the zoning, plan review, and permit and inspection process.

If the zoning does not accommodate your use, you will need to work with the city (or, in unincorporated areas, the county) to rezone the property. The rezoning process usually includes a pre-application meeting with city staff to discuss your intended plans and any issues they anticipate. After this meeting, you will need to submit a formal application to be reviewed and approved by city staff, the planning and zoning commission, and the city council.

Plan Reviews. Once your property is properly zoned, you will need to obtain the necessary permits to begin construction. This will require submission of construction and other plans that address such issues as drainage, utilities, landscaping, ingress/egress, and traffic. Your plans may also need to be approved by utility providers and state and local government agencies. Finally, after the city has determined that your plans meet all code requirements applicable to your intended use, you will receive permits to start construction.

Permits and Inspections. After completion of each stage of your project, the city will require inspections and approvals before issuing subsequent permits. You will need to work with the city on scheduling to minimize inspection-related project delays. Utility providers and other impacted entities may have their own permit and inspection requirements. Once you receive final approval, you will be issued a Certificate of Occupancy, which gives you the right to occupy the newly constructed buildings.

Fees and Other Costs. You should also be aware of the costs required throughout this process. In addition to the costs for preparing any necessary plans, the fees will likely include application fees, review fees, permit fees, inspection fees, and development impact fees.

If you need any assistance working through the development process or have questions regarding the necessary applications, submittals or fees, please contact Tina Vannucci or David Fitzgibbons .

New to Arizona? Community Property Laws May Affect Your Estate Plan

Fri, 20 May 2022 15:25:42 GMT

A review of your will, trust and ownership documents can help ensure that your wishes are honored regarding the ownership of your pre-move assets and any assets you acquired after moving to Arizona.

In Arizona, assets acquired by a married couple – cash, investments, personal property, real estate, business interests, retirement accounts, etc. – or by either spouse during the marriage, are considered community property, with each spouse owning an undivided half interest in each asset.

There are exceptions. Examples of “sole and separate” property include assets acquired before marriage, a business started before marriage, a retirement or pension account that originated before marriage, or a gift or inheritance received at any time.

Those exceptions are not absolute. For example, if the value of one spouse’s separate asset increases during the marriage, that increase may be considered community property. Also, if separate-property cash becomes commingled by placing it in a joint bank account, it too will likely be treated as community property.

If those provisions seem confusing, the confusion can reach new heights when a married couple moves to Arizona from a non-community property state. That is why an estate plan review becomes important.

Under Arizona law, assets acquired by a married couple, or by either spouse, while they lived in a non-community property state, and that accompanied the couple to Arizona, are generally considered not as community property but as “quasi-community” property.

If, after moving to Arizona, one spouse dies or the couple divorces, how the courts treat the couple’s quasi-community property is very fact-specific and can result in unintended consequences for the couple. The spouses’ estate plans should expressly address the ownership of the assets that they brought to Arizona.

To help ensure that your wishes are honored regarding the ownership of your pre-move assets and any assets you acquired after moving here, schedule a review of your will, trust and ownership documents by an experienced Arizona estate planning attorney.

See also: Estate Planning services at Fitzgibbons Law

Tina Vannucci appointed to Commission on Appellate Court Appointments

Wed, 04 May 2022 17:15:16 GMT

Governor Ducey has appointed Fitzgibbons Law attorney Tina Vannucci to a four-year term on the State of Arizona Commission on Appellate Court Appointments.

Arizona Exemption Laws Allow Individual Debtors to Protect Some Property from Creditor Claims

Mon, 25 Apr 2022 21:04:16 GMT

Exemption laws help honest debtors retain essential assets and stay afloat through tough financial times.

The Arizona Revised Statutes provide a lengthy list of assets that are exempt from creditor claims and debt collectors; there is also a list of exempt assets under federal case law and the United States Code that can expand upon Arizona’s list. Arizona’s list of exempt assets, which is available to Arizona residents, includes:

Homestead: Debtor’s equity interest in real property (e.g., house, condominium or cooperative, mobile home) in which debtor resides, in the amount of $250,000 [A.R.S. § 33-1101].
Personal Property: Debtor’s household furnishings, appliances and consumer electronics, in the total amount of $6,000 [A.R.S. § 33-1123].
Personal Property: Debtor’s horses, milk cows and poultry, in the total amount of $1,000 [A.R.S. § 33-1125(3)].
Personal Property: Debtor’s engagement and wedding rings, in the total amount of $2,000 [A.R.S. § 33-1125(4)].
Personal Property: Debtor’s equity in one motor vehicle, in the amount of $6,000 (or $12,000 if debtor or debtor’s dependent has a physical disability) [A.R.S. § 33-1125(8)].
Personal Property: Debtor’s domestic animals or household pets, in an unlimited amount (they are, after all, often members of the family and are priceless) [A.R.S. § 33-1125(11)].
Tools and Equipment: Debtor’s tools, equipment, instruments and books used in debtor’s business or profession, in the total amount of $5,000 [A.R.S. § 33-1130(1)].

Preserving Debtor Protections. Some debtors may be “collection proof,” meaning that all of their income and property is exempt and cannot be taken by a creditor.

However, to retain the protections that Arizona’s exemption laws provide, debtors should be careful that they do not convert an exempt asset into a non-exempt asset. This is called “transmutation” and can occur, for example, when an exempt asset is sold and the proceeds of the sale, which are generally not exempt under Arizona law, are no longer protected.

Debtors should also be careful not to commingle exempt assets with nonexempt assets. Where such commingling takes place (such as where debtors deposit non-exempt monies with what would otherwise be exempt monies sitting in a bank account), creditors may have an argument that all of the monies are now non-exempt.

To best avoid these problems and retain the protections that Arizona’s exemption laws provide, debtors would be well served to keep their exempt assets exempt, and their non-exempt assets separate from their exempt assets.

Exemption Exceptions. Although Arizona exemption laws generally do a good job of providing the protections that Arizona lawmakers have put in place, these protections can be overridden on occasion.

For example, a court can find that an exemption does not apply to certain property and can thus order the debtor to turn over the property to the creditor. In addition, the federal government (e.g., the Internal Revenue Service) can take property that might otherwise be exempt to satisfy debts (such as taxes) owed to the federal government.

Further, where debtors are engaged in defrauding creditors in obtaining loans and are using their ill-gotten gains to purchase exempt property, creditors can seek to capture the exempt property and override the exemption protection. Therefore, while Arizona exemption laws help protect honest debtors who are struggling to pay creditors and debt collectors, there are exceptions, and debtors can lose exempt property in specific situations.

Conclusion. In the cat-and-mouse game between creditors and debtors, debtors may keep certain property under Arizona exemption laws. These laws generally do a good job to protect the debtors’ property (be it their homestead, their motor vehicle or their household pets) from creditors and debt collectors and help honest debtors stay afloat through tough financial times.

Involved in a Small Financial Dispute? Consider Filing a Small Claims Lawsuit

Wed, 23 Mar 2022 15:02:36 GMT

Small claims lawsuits offer an inexpensive, speedy and relatively informal option for resolving many financial disputes where the disputed amount is up to $3,500.

Both parties in a small claims case may obtain forms from the court or, in Pinal County, visit the Small Claims Cases web page to view instructions and download forms commonly used in small claims proceedings (e.g., summons, complaint, answer, counterclaim, etc.).

The procedures are simplified and streamlined so that parties can file, prosecute and defend their cases without the assistance of an attorney. Indeed, attorneys cannot appear or take part in a small claims case unless both parties agree to it in writing. (Attorneys may represent themselves, however.)

While small claims cases are relatively informal, the parties are nonetheless subject to important requirements and deadlines. Failure to comply can result in the court dismissing a party’s claim.

A Justice of the Peace or a hearing officer hears the case. There is no right to a jury trial, and there is no right to appeal. Thus, the decision of the Justice of the Peace or hearing officer is final and binding on both parties.

If the party from whom payment is sought (the “defendant”) does not want to give up the right to appeal or wants an attorney to represent them, they should file a motion to change the “venue” for the case to proceed.

Venue . The party seeking payment (the “plaintiff”) must file their lawsuit in the small claims division of the appropriate justice court precinct. That precinct is the legal “venue” and is generally the place where the defendant resides.

However, there are numerous exceptions, and a plaintiff should review A.R.S. § 22-202 to determine the proper venue. For example, if the defendant resides outside of Arizona, or if the plaintiff does not know where the defendant resides, the plaintiff may bring the lawsuit in the justice court precinct where the plaintiff resides.

Plaintiff Considerations. When compared to other forms of dispute resolution, such as a large-scale arbitration or complex litigation, a small claims lawsuit is cheap, quick and simple.

However, before heading to small claims court, the plaintiff should take into account a variety of considerations, including:

Have you reviewed the procedural rules? Are you comfortable that you can abide by those rules in presenting your case?
Are you so emotionally vested in your claim that you are unable to pursue it by yourself and may need the help of an attorney?
Can you support your claim with strong evidence, including reliable documents and/or credible witness testimony, or is your evidence too sparse or weak to win your case?
If the Justice of the Peace or hearing officer decides against you, can you live with that final result?

Under the right circumstances, small claims lawsuits allow parties to resolve issues over a variety of financial claims and can be an ideal way for parties to get relief and attain closure of their civil disputes.

"Shared Struggles": Ann Schrooten co-authors a book for families of children living with complex medical conditions

Mon, 26 Apr 2021 15:47:56 GMT

Available on Amazon.

See also: " CG Attorney Pens Book on Children with Complex Medical Conditions ," Casa Grande Dispatch, June 7, 2021

Your Business and Intellectual Property: If You Own It, Protect It

Tue, 16 Mar 2021 15:10:29 GMT

Trademarks

A trademark is a type of intellectual property recognizable in items such as a design, symbol, mark, word, slogan or phrase, and it identifies products or services associated with a company or brand. For example, Nike has three separate trademarks for its symbol (the “swoosh”), slogan (“Just Do It”), and the name Nike. As the registered owner of a trademark, the owner retains rights to use – and prevent others from using – the name or mark.

Several years before the late Steve Jobs founded and could trademark “Apple Computer,” the Beatles had formed and trademarked “Apple Corps” as their holding company. In 1978, Apple Corps sued Apple Computer for trademark infringement. The case settled, with Jobs promising that Apple would never get into the music business. In 2003, Jobs broke that promise when Apple introduced iTunes. Five years of costly litigation later, Apple Corps and Apple Computers settled, and Apple Computer took over all trademarks related to “Apple” and licensed various trademarks back to Apple Corps.

You may never start a venture of the magnitude of Apple Corps or Apple Computers, but if you have created a business or service, you can minimize risks by registering your name and other representations as trademarks.

Copyrights

Similar to trademark law, copyright law encourages creativity and innovation, allowing originators to benefit financially for a term of years.

Whether writing articles, books or plays; creating music, art, sculpture or photography; or producing computer programs or processes, originators of intellectual property can look to copyright registration for further protection of their rights.

Most originators believe a work is automatically copyrighted and protected from acts of infringement the instant the work is completed. They are technically correct; according to the U.S. Copyright Office, the copyright generally originates the moment it is created and fixed in a tangible form that it is perceptible either directly or with the aid of a machine or device.

However, it would be a mistake to believe that full protection is achieved without taking the action of registering the work.

A registered copyright creates a public record of the ownership of the work and, through registration, can prevent misuse of your work. Registering your work proves prima facie that you created the work when you say you did. Without a prior registration, the date of creation can be contested; with registration, the burden of proof is on the infringer (not you) to demonstrate they created their work before, or independent of, your creation.

Should an infringer reproduce aspects of your work without your permission, the court will look to see if the work was registered prior to the infringement. If the work was not registered, the court will limit the infringer’s profits as actual damages. Conversely, if the work was registered, the copyright holder is entitled to statutory damages of up to $150,000 per willful infringement, and the court is authorized to award statutory damages plus the copyright holder’s attorney’s fees and other incidental costs of litigation.

The benefits of federally registering trademarks and copyrights are substantial and virtually limitless. If you have created property that has potential value, don’t delay in gaining the protections to which you are legally entitled.

9 Estate Planning Mistakes and How to Avoid Them

Thu, 11 Feb 2021 17:54:14 GMT

1. Not Having an Estate Plan. We are always surprised by the number of people – especially those with substantial assets and close family relationships – who have no plan in place to control what happens to their property after their death. Dying “intestate” – i.e., without a will – can impose a real hardship on your loved ones and cause your estate to be tied up in probate court.

2. Do-It-Yourself Estate Planning. Downloadable will and trust forms are convenient and relatively inexpensive, but they do not offer the thoughtful, strategic insight that can be gained only from an experienced estate planning professional who can anticipate your needs and help you avoid mistakes. Moreover, the failure to properly execute and/or witness a do-it-yourself will or trust can render your important documents worthless.

3. Failure to Fund Your Trust. One of the most common and costly consequences of a do-it-yourself or “discount” trust is not making it the owner of your property. “Funding” your trust is a crucial step; if you die with your assets titled in your name and not the trust’s, the assets you intended to pass smoothly to your trust’s beneficiaries can be hung up in probate, with the risk that they will not be managed and distributed as you intended.

4. Not Having Advance Directives. End-of-life planning ensures that your wishes are honored. A living will allows you to express your wishes regarding life-sustaining measures, and a health care power of attorney appoints a trusted person to make decisions on your behalf if you are no longer able to communicate your wishes.

5. Not Updating Your Estate Plan. Time passes quickly, and life events can cause estate plans to become obsolete. Be alert to changes in your personal or financial situations. Retirement, divorce, marriage, deaths, births, tax law changes, business startup or sale, relocations, etc., are just a few of the many events that can trigger the need to update your will or trust.

6. Do-It-Yourself Revisions. Changes you make to your documents can create a conflict with other provisions of your plan, impose a provision that cannot be carried out, or lack clarity with respect to your intent. Once-valid documents that were inadvertently corrupted by do-it-yourself revisions can lead to family squabbles and lawsuits.

7. Choosing the Wrong Personal Representative or Trustee. When you create a will or trust, you name a trusted person to serve as your personal representative or successor trustee. Selecting that person is not a decision to be made without some thought. The person who serves in that important role should be chosen on the basis of their temperament, integrity, knowledge, and ability to properly administer your estate and/or trust.

8. Ignoring Beneficiary Designations. Retirement accounts, life insurance, and investment accounts all avoid probate by having a beneficiary designated. These designations prevail over contrary provisions in a will or trust. You should review your beneficiary designations on a regular basis to make sure you have named a beneficiary and update your designations as circumstances dictate.

9. Overlooking Your Digital Assets. People are increasingly living their lives in the virtual, digital world, with bank accounts, photographs, cloud-based storage and social media accounts being accessible only online. Your power of attorney, personal representative, and trustee need to have specific authority to access and manage your digital assets. Without providing this authority in your documents, administering your digital assets becomes impossible and can lead to financial and emotional hardships. ( See related article .)

Questions? Call or email Ann Schrooten .

Low Fixed Fee for Review and Update of Client LLC Operating Agreement

Tue, 01 Sep 2020 19:57:10 GMT

The September 1, 2020, effective date for the overhaul of Arizona's LLC laws could have serious consequences for multi-member LLCs whose owners are not prepared. Our affordable fee is designed to help.

The new Arizona Limited Liability Company Act (ALLCA) provides a set of "default" provisions - some quite harsh - that, while automatically applying to all Arizona LLCs, is most troublesome for LLCs having multiple members.

Related Article: Arizona’s New LLC Law Poses Traps for Unwary Members and Managers

The ALLCA went into full effect on September 1, 2020, and we continue to offer an alternative fee arrangement to help ensure that our clients' LLCs are in compliance. By amending your operating agreement or adopting a new one, it is within your power to mitigate most, if not all, unwanted provisions.

For a low fixed fee of $750, we will:

review your current operating agreement**

meet with you to discuss the new law's impact on your LLC

prepare a "basic" compliant operating agreement or a restatement of your existing operating agreement.

If together we decide that the "basic" operating agreement or restatement does not meet your needs, we can provide more tailored terms at our standard rates.

To complete a review and update of your LLC operating agreement, contact business attorneys Tina Vannucci or Nick Cook by phone (520-426-3824) or email.

**If we did not draft your current operating agreement, we will need to review it before quoting a fee.

Arizona’s New LLC Law Poses Traps for Unwary Members and Managers

Tue, 01 Sep 2020 18:42:13 GMT

Operating Agreement Review

Because of the wholesale repeal of the 1992 law and its replacement with the 2018 law, LLC members and managers are strongly urged to initiate a review of their LLC – specifically, its operating agreement – to verify that the LLC is ALLCA compliant and will avoid any unwanted provisions that the ALLCA automatically imposes.

The new law primarily affects LLCs with multiple members. However, in some circumstances, a single-member LLC could also be adversely impacted.

A full discussion of the significant changes is not covered here. Out of necessity, a proper analysis of your LLC will be fact-specific and focus on the particular provisions of your operating agreement, if it exists.

It is important to note that, under the new law, your operating agreement does not have to mirror the ALLCA’s provisions. Rather, your agreement should address the subjects of those provisions and define them in ways that are appropriate for your LLC.

Highlights

For general discussion purposes, it is helpful to highlight a few of the significant ALLCA changes affecting Arizona LLCs:

Contributions. Under the ALLCA, a person’s obligation to make a contribution to the LLC is not enforceable unless it is in writing, and it is not excused by death, disability or termination. See A.R.S. § 520-426-3824 .

Fiduciary Duties. Under the ALLCA, a member of a member-managed LLC owes the company and other members a duty of loyalty and should act in a manner consistent with a contractual obligation of good faith and fair dealing. Similarly, the manager of a manager-managed LLC owes the company and its members a duty of loyalty and must discharge his duties and obligations under the ALLCA with a contractual obligation of good faith and fair dealing. See A.R.S. § 520-426-3824 . (In June 2019, the Arizona Supreme Court ruled, in In re Sky Harbor Properties, LLC v. Patel Properties, LLC, that a fiduciary duty already existed in Arizona LLCs.)

Distributions Before Dissolution. The ALLCA provides a new requirement that all distributions made before an LLC can dissolve and wind up must be “equal among members,” regardless of ownership percentages. This particular provision could have significant financial and tax ramifications to members, especially majority members. See A.R.S. § 520-426-3824 .

Other ALLCA provisions that impose changes to the way Arizona LLCs transact business include:

records and records inspection,

agency liability,

personal liability,

appraisal rights, and

professional limited liability companies.

Silver Lining

The silver lining to these dark clouds is that the ALLCA allows an LLC’s operating agreement to contain provisions that allow it to avoid the ALLCA’s potentially harsh effects. As a result, a review of your LLC operating agreement warrants your prompt attention.

To schedule a review of your LLC's operating agreement and other governing documents, contact David Fitzgibbons or Tina Vannucci at 520-426-3824.

See also: Low Fixed Fee for Review and Update of Client LLCs' Operating Agreement

Not Business as Usual: Pandemic-Caused Breaches of Contract

Tue, 18 Aug 2020 18:39:06 GMT

Force majeure , “acts of God” and the “doctrine of impossibility” are among the old or seldom-used legal concepts in modern times that can provide a defense for breach of contract – but the bar for those defenses is set very high.

Prior to the COVID-19 pandemic, force majeure provisions have been generally overlooked as standard “boilerplate” contract language that, if included at all, references things such as extreme weather, terrorism, war, riots, lockouts, strikes, government action, etc.

It is important to note that force majeure is not a general concept that kicks in when overwhelming circumstances prevent a party from performing. Rather, it is a specific provision that, to be enforceable, generally must define what constitutes a “superior force,” what events would trigger the provision, the remedies available to both parties, and how a party would be excused from its obligations. Certain clauses list specific conditions that will be considered a force majeure and relieve a party of some or all of its contractual obligations. Other force majeure clauses are drafted more broadly, leaving more flexibility to include, for example, a pandemic.

Assuming that a force majeure provision exists and is applicable to COVID-19, parties will still need to determine whether their inability to perform under a contract was caused as a direct result of the pandemic and the resulting conditions (such as quarantines, stay-at-home order, and closing of “non-essential” businesses). To maximize the chance of a successful force majeure claim, parties should gather as much documentation as possible – such as CDC guidelines and federal, state and municipal government orders – demonstrating the relationship between COVID-19 and their failure to perform under the contract.

The contract might contain specific notice provisions that a party is required to honor in the event of a force majeure or other anticipated inability to comply with the contract. The contract might also require arbitration of disputes arising from the failure to perform.

Finally, a party seeking to be excused from performance under a force majeure provision generally must demonstrate that it exhausted all reasonable means of compliance with the contract. Parties should carefully document any alternative means of compliance that were considered and the reasons they were either rejected or found to be impossible or impracticable. Both parties may be challenged to show that there were no ways they could have lessened their damages. Also, specific to COVID-19, if you seek relief, you might even need to show that you properly and timely applied for a Paycheck Protection Program loan (or other government assistance) and that either your application was rejected or the assistance received was inadequate. Again, this determination will be very fact-specific and made on a case-by-case basis.

Non-Contractual Defenses

Even if your contract is silent on the parties’ rights and obligations in times of crisis, various affirmative defenses may be available to you, such as “commercial impracticability” or “frustration of purpose” due to governmental acts.

Courts have generally held that it is against public policy to require a party to continue to attempt performance when a subsequent government regulation or ordinance has made that performance illegal or practically impossible.

Your non-contractual defenses might include “act of God” protection. Legal interpretations of an “act of God” include naturally caused events or occurrences that could not have been anticipated and make performance impossible. Under Arizona law, an “act of God” defense requires complete exclusion of any human act or “human agency” from the cause of the loss.

Even if a contract does not have a force majeure clause, a party’s obligation to perform may still be discharged under the “doctrine of impossibility.” The doctrine refers to situations when it is physically impossible for a party to a contract to perform. Courts are unlikely to excuse performance that is not impossible but merely inconvenient or expensive, but a party that meets the high standard of impossibility may be excused from all or part of its performance obligations.

As noted above, whether an inability of a party to perform a contract will be legally excused depends to a great extent on the specific facts and contract. If you find yourself in this position during the pandemic, we would be happy to discuss and work through your contract with you.

Denis Fitzgibbons Elected State Bar President

Fri, 19 Jun 2020 15:43:25 GMT

Denis Fitzgibbons was elected to serve a one-year term beginning July 1, 2020. The State Bar of Arizona is the mandatory professional association for the 18,500 attorneys who are licensed to practice law in Arizona.

Casa Grande’s Best Days Are Still Ahead

Mon, 06 Apr 2020 23:07:05 GMT

A commentary on tough times, a bright future, and the fulfillment of destiny.

Betting on Pinal County

I believe these things because I choose to, and because I have history on my side. As the saying goes, “Nobody ever got rich betting against the United States of America,” and I am not going to start now.

I am also going to continue betting on Casa Grande and our surrounding communities. Like our father before us and like generations of civic leaders, my brother Denis and I look forward to, and are counting on, the ongoing fulfillment of this area’s destiny. The arrival of large companies, the small businesses that support them, and the new families who will live and work here and strengthen, lead, and enrich our community, paint a compelling picture of Casa Grande in the very near future and beyond.

Inevitably, Casa Grande will change – I believe for the better. For those of us who are already here, the pivotal choice is whether we will:

passively allow our long-awaited economic boom to take us where it will, or

proactively retool our community, in anticipation of the boom, to maximize the boom’s positive impact on current and future residents and businesses.

Making the most of our economic growth calls for a fresh look at every sector of our community and its role in our future:

Arts
Charitable and service organizations
Faith-based organizations
Financial institutions
Healthcare
K-12 education
Local government
Locally owned businesses
National companies
News media
Public safety
Recreation
Vocational education
Youth organizations and activities

How each of those sectors has interacted with the broader community has yielded the Casa Grande of today. Our shared challenge is to raise the ante, with the expectation that purposeful improvements in every sector will yield a visionary Casa Grande that meets the needs and surpasses the expectations of our future employers and, more important, our future neighbors – who may have come here to pursue a job, and decide to stay here because this is the home they want for themselves and their children.

After the last economic downturn, my brother Denis and I wrote to our law firm’s clients that the best days of Casa Grande lie ahead of us. We still believe that.

Take care of yourselves and your families, businesses, and employees. Keep washing your hands. We will see you on the bright streets of Casa Grande on the other side of this.

What Small Businesses Need to Know About the CARES Act

Sat, 04 Apr 2020 14:57:14 GMT

I. Paycheck Protection Program (PPP): Forgivable Loan

Maximum New Loan Amount. Generally, the maximum new loan amount is calculated as the lesser of 2.5x the average total monthly payment for payroll costs during a relevant period, or $10 million. (In calculating the average monthly payroll, you cannot count compensation over $100,000 per annum per employee.)

Note: Payroll includes up to $100,000 of self-employment income.

Who Qualifies. Under the CARES Act, any business, nonprofit, veterans organization or tribal business may qualify for a covered loan, if the business employs not more than the greater of (i) 500 employees or (ii) the size standard in number of employees established by the SBA for the industry in which the business operates (full-time, part-time, or other basis).

Who May Issue Loans. Any lender currently authorized to issue SBA loans is authorized to issue covered loans. Additionally, the SBA and Treasury Secretary may approve additional lenders to provide covered loans. A current Loan Application (as of the date of this email) can be found here .

Forgiven Amount. The forgivable portion of your PPP loan is the amount you spend in the eight-week period after obtaining the loan on:

Payroll (same definition of "payroll costs" in determining your loan amount - therefore, limited to pro-rated annualized salary of $100,000 per employee x 8 weeks, or $16,666 per employee).

Covered mortgage interest (debt secured by real property before 2/15/20).

Covered rent obligations (rent due on leases in force before 2/15/20).

Covered utility payments (electricity, gas, water, transportation, telephone, or internet on service that began before February 15, 2020).

Specific Information. There are certain representations and certifications that the applicant must make to qualify for this loan. For more detailed information regarding the PPP program, please click here.

Election . If you apply for the loan forgiveness program, you cannot defer your employer payroll taxes, and you may not be eligible to obtain an SBA disaster loan.

II. Employer Payroll Tax Deferral Program: No Loan Forgiveness

Under the CARES Act, businesses who qualify for PPP will likely qualify for this program. Employers are cautioned, however, that they must elect between the programs. In other words, you cannot get a loan under PPP and defer your payroll tax under this program. The Employer Payroll Tax Deferral Program allows employers to temporarily withhold and use certain funds from payroll taxes for working capital for their business with the following parameters:

Employers can defer their share of social security tax (6.2%) on wages for the remainder of 2020 without incurring any interest or penalties.

This includes self-employment taxes (but only the employer's share of the self- employment tax).

Obligated to pay half of the deferred tax by 12/31/2021.

Obligated to pay the other half of the deferred tax by 12/31/2022.

If you receive loan forgiveness under the PPP noted above, you are not eligible to defer your employer payroll taxes.

As more information regarding the Employer Payroll Tax Deferral Program becomes available, we will update our webpage accordingly.

III. SBA Disaster Loan Highlights

Who Qualifies. Under the guidance issued by the SBA, working capital loans may be issued to small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most non-profit organizations.

Use of Loan. Working capital loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid as a result of COVID-19.

Application Requirements. To qualify for a working capital loan, the SBA may require a current credit report, evidence of an ability to repay the loan, and collateral for all loans issued over $25,000. Typically, the SBA will seek real estate as a form of collateral, but other options may be available to a borrower. The application for an SBA Disaster Loan can be found here .

Loan Specifics. The SBA will determine a repayment term, up to 30 years, depending on the borrower. The interest rate for non-profits starts at 2.75%, depending on qualifications, and the interest rate for all other borrowers starts at 3.75%, depending on qualifications. Loans may not be used to refinance other long-term debts, and borrowers must maintain appropriate insurance, typically designed to protect the collateral securing the loan.

Loan Cap. The SBA is limited to issuing working capital loans at $2 million. In general, the borrower is limited to the actual amount of damages suffered as a result of COVID-19. However, the SBA may waive this provision if the business is a major source of employment.

Deadline . Application filing deadline is December 21, 2020.

For assistance with the CARES Act's provisions for small business loans, please email David Fitzgibbons or Denis Fitzgibbons or call our office at (520) 426-3824 .

Fitzgibbons Law Offices stands ready to assist with any of your legal needs during this public health crisis.

I-9: Employers Must Start Using New Form by May 1

Fri, 28 Feb 2020 17:28:43 GMT

Rev. May 1, 2020

U.S. Citizenship and Immigration Services (USCIS) has announced a new version of Form I-9, Employment Eligibility Verification. The new form must be used starting May 1, 2020.

Employers must use only the new form with the 10/21/2019 version date. The version date is located in the lower left corner of the form.

Here are links to the new form:

Form I-9 - fillable PDF

Form I-9 - paper version

The changes are relatively minor and are found mostly in the new instructions , which:

clarify who can act as an authorized representative on behalf of an employer;

update USCIS website addresses;

provide clarifications on acceptable documents for Form I-9;

update the process for requesting paper Forms I-9; and

update the DHS Privacy Notice

For more information and links to related documents, visit the USCIS website at www.uscis.gov/i-9 .

The SECURE Act: Understanding How It Will Impact Your Retirement Savings

Wed, 05 Feb 2020 17:24:15 GMT

The SECURE* Act includes provisions that:

delay the starting age for required minimum distributions;

eliminate the maximum age for making tax-deductible IRA contributions; and

expand the scope of penalty-free withdrawals and tax-free distributions from 529 plans.

The Act also eliminates the “stretch IRA” by reducing the period of tax-free distributions for many types of account beneficiaries.

Below are some of the SECURE Act’s key changes and what they mean for current retirement savers and future retirees.

Age for Required Minimum Distributions Increased to 72

The Act increases the age, from 70½ to 72, at which an individual must begin taking required minimum distributions (RMDs) from their traditional IRA or other tax-favored retirement account. This change applies beginning with traditional IRA account owners who will attain the age of 70½ on or after January 1, 2020. Persons who reached the age of 70½ in 2019 or before still need to make the required minimum distributions in 2020.

Age Restriction on Traditional IRA Contributions Eliminated

The SECURE Act eliminates the maximum age for traditional IRA contributions, which was previously capped at 70½ years. As Americans live longer, an increasing number continue employment beyond traditional retirement age. The Act allows anyone who is working and has earned income to contribute to a traditional IRA regardless of age. The maximum amounts you can contribute to a traditional IRA for 2020 are $6,000 per person under age 50 and $7,000 if you are age 50 or older.

Stretch IRA Eliminated for Certain Inherited IRAs

Previously, beneficiaries who did not inherit their accounts from a spouse were in some cases allowed to withdraw required minimum distributions for the span of their lives – thanks to an option known as a “stretch IRA.” The Act reduces the withdrawal period and requires most non-spouse beneficiaries to withdraw all assets from the inherited IRA within 10 years following the death of the original account holder. There are no required minimum distributions within those 10 years, but the entire balance must be distributed by the end of the 10th year.

Beneficiaries excepted from the 10-year distribution requirement include a surviving spouse, a minor child of the decedent, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent.

Penalty-Free Withdrawals for Childbirth and Adoption Costs

The Act allows an individual to take a “qualified birth or adoption distribution” of up to $5,000 during the first year after the birth or adoption of a child. This distribution is not subject to the 10% early withdrawal penalty.

Expansion of Section 529 Plans

A 529 plan was originally designed as a college savings plan. The Act expands a 529 education savings account to cover costs associated with registered apprenticeships, homeschooling, up to $10,000 of qualified student loan repayments, and elementary and secondary tuition costs. Distributions for student loan repayments includes distributions to pay qualified student loans for siblings.

Conclusion

If you are the owner of a tax-favored retirement account, the SECURE Act should prompt you to review your accounts and IRA beneficiary designations to ensure that you take full advantage of the new law’s provisions and avoid any potential risks.

*SECURE is an acronym for “Setting Every Community Up for Retirement Enhancement.”

See also: Fitzgibbons Law Offices' estate planning services

Restrictive Covenants in Arizona Employment Agreements

Thu, 19 Sep 2019 07:00:00 GMT

Orca v. Noder involved the departing president (Ms. Noder) of a public relations firm (Orca Communications). During her employment, Ms. Noder signed a confidentiality, non-solicitation and non-competition agreement. The agreement prohibited her from:

using Orca’s confidential information or disclosing it to third parties;

providing conflicting services;

soliciting any of Orca’s clients or potential clients; and

hiring Orca employees after she left her employment.

Before leaving Orca, Ms. Noder informed potential clients that she was planning to start her own firm. After she left, Orca sued her for, among other things, breaching their agreement. In her defense, she argued that the restrictive covenants were overly broad and should not be enforced against her.

The trial court agreed with Ms. Noder and dismissed Orca’s complaint. The Arizona Court of Appeals upheld the ruling, finding that the restrictive covenants were unenforceable because they were overly broad.

Guidelines for Employers

Orca v. Noder offers useful guidelines and limitations for employers in trying to restrict their employees’ competitive activities.

Confidentiality . With regard to the confidentiality covenant, the Court’s ruling reiterated the long-established principle that confidentiality agreements can protect information that is “truly confidential” and not generally known to the public. Orca’s agreement, however, was found to be not limited to “truly confidential” information; rather, Orca sought to limit Ms. Noder’s ability to disclose information that was available publicly but only through “substantial searching of published literature” or had to be “pieced together” from public sources.

Also, Orca had defined as “confidential” any information that Ms. Noder came across during her employment and was not generally known and was “substantially inaccessible.” The Court found that this overly broad definition made the confidentiality covenant unenforceable. Because its covenant included information that was not generally confidential, Orca could not enforce the confidentiality restriction at all.

Competition . Orca’s non-competition and client non-solicitation covenants also were found to be overly broad under Arizona law, which holds that such provisions are enforceable only when they are narrowly drawn to protect the company’s legitimate business interests.

The Court found that Orca’s non-competition covenant did not meet the statutory requirement because it prohibited Ms. Noder from pursuing any type of work in the field and did not limit its reach only to Orca’s protectable interest – i.e., confidential information and client relationships.

The client non-solicitation provision was also found unenforceable because it sought to protect not only actual client relationships but also “potential” relationships and those with Orca’s former clients.

Enforceable Provisions

It is important for employers to understand that Orca v. Noder does not prohibit them from enforcing properly drawn confidentiality, non-competition or non-solicitation provisions in employment agreements.

Rather, it reaffirms that restrictions on post-employment activities must:

be reasonable;

be narrowly tailored as to time and place; and

not bar a former employee from making a living in their chosen field.

Orca v. Noder underscores the need for Arizona companies to review their particular facts before drafting a restrictive covenant in their employment agreements, to ensure that any covenants are narrowly tailored and will survive legal challenges in protecting the company’s legitimate interests.

More about Fitzgibbons Law Offices' legal services for employers and employees

Tina Vannucci appointed to Boys & Girls Clubs board

Thu, 12 Sep 2019 18:22:01 GMT

Fitzgibbons attorney Tina Vannucci has been appointed to the board of directors of the Boys & Girls Clubs of the Sun Corridor.

Denis Fitzgibbons Re-Elected to State Bar Board of Governors

Fri, 21 Jun 2019 07:00:00 GMT

Denis Fitzgibbons has been re-elected to the Board of Governors of the State Bar of Arizona. The Bar's 30-member board includes 19 attorneys who are elected by vote of the Bar's members in their respective districts.

Is Your Customer List a Trade Secret?

Tue, 07 May 2019 07:00:00 GMT

The Court of Appeals held that only those secrets “affording a demonstrable competitive advantage” will qualify as a protected trade secret. Further, Arizona law will not protect a company‘s information if the company has not taken appropriate steps to ensure that its information qualifies as a “trade secret.”

The Court of Appeals cited several factors to determine whether a customer list qualifies as a trade secret.

First, a customer list may be entitled to trade secret protection when it represents a “selective accumulation of detailed, valuable information about customers - such as their particular needs, preferences, or characteristics - that naturally ‘would not occur to persons in the trade or business.’”

In other words, a qualifying customer list must contain information that a company compiles by virtue of its relationship with the customer, not simply by gathering required contact information or purchasing a commercial list of prospects.

Second, a customer list may be protected if the company can show that it compiled the list by “expending substantial efforts to identify and cultivate its customer base, such that it would be difficult for a competitor to acquire or duplicate the same information.”

Third, as noted above, another factor to consider is whether the information contained in the customer list “derives independent economic value from its secrecy, and gives the holder of the list a demonstrable competitive advantage over others in the industry.”

Finally, courts will examine how the company handles its customer list. Is the list marked “confidential”? Does anyone who uses the list sign an agreement to maintain its confidentiality? If the company does not treat the list as confidential, neither will the courts.

Achieving Trade Secret Protection

To strengthen your claim that your customer list is a protected trade secret, start with the following:

Include in your customer list more than mere contact information. The list should also contain types of services provided, notes from client meetings and phone calls, billing histories, reminders about client preferences, notes about plans for future products and services to be purchased, and any unique and novel information concerning the customer.

Use a process to obtain and maintain the information that goes beyond basic information gathering. Preserve any information concerning the marketing methods used to build a client list as well as the success rate of those methods.

Maintain records of the expenses incurred in creating and maintaining the customer list. By having a record of the expense and effort that go into building a client list, you will be in a better position to protect your list as a trade secret.

Communicate to all employees the secret nature of client information and grant access only to employees who require that information to perform their job functions. Your employee manual and new employee training should emphasize that this information is confidential and the company expects its employees to maintain that confidentiality.

Require non-employees to sign an acknowledgement of confidentiality before you give them access to your customer list.

These steps provide only a starting point for protecting your customer list. Creating a written plan that maximizes that protection should be the result of a well-thought-out process that reflects the nature of your industry and competition, the unique characteristics of your company, and the input of a legal advisor who is experienced in protecting trade secrets and other confidential information.

More about Fitzgibbons Law Offices' legal services for employers

Tax Victory for Arizona Agriculture: Irrigation Systems Ruled Exempt Agricultural Machinery

Tue, 17 Jul 2018 07:00:00 GMT

TPT Overview

Arizona's transaction privilege tax (TPT) taxes the privilege of conducting certain businesses in Arizona. Technically, the TPT taxes the seller, not the purchaser, although as a practical matter the purchaser ultimately pays the tax, which the seller must then pay over to the Department of Revenue and to local taxing authorities. All sales subject to the TPT are also subject to applicable county excise taxes.

Arizona's use tax is a complimentary tax to the TPT, and even if a company is not liable to collect and pay TPT, Arizona’s use tax may apply. A.R.S. § 520-426-3824(A) imposes the use tax on retail purchases of tangible personal property that is used, stored or consumed in Arizona.

Irrigation System Details

Irrigation equipment such as inline-steel filters, mainline pipes and four-inch sub-mainline pipes generally qualify for the TPT exemption, as they are all larger than the required diameter and are used to transport water as part of a commercial agricultural irrigation system. Any fittings, seals and any other parts used in operating those pipes are also exempt.

Exempt items used for commercial agricultural purposes include drip irrigation lines.

The exemption does not apply to all irrigation-related equipment, however. State law – A.R.S. §§ 520-426-3824(C)(7) and 520-426-3824(C)(7) – specifically excludes motors and pumps used in irrigation systems. Also, the pipes and other components that generally do not qualify include:

sub-mainline pipes less than four inches in diameter

lateral lines

emitters

risers less than four inches in diameter

field and flush valves less than four inches in diameter

valves not connected to four-inch or larger pipes

seals, couplings, fittings, flanges, and other adaptors not attached to four-inch or larger pipes.

Whether a grower is responsible for the TPT or use tax on the purchases of components for its irrigation system depends on whether any specific statutory exemption or deduction is applicable. To determine whether an exemption applies, you should consult a state and local tax attorney or accountant.

Preventing Sexual Harassment in the Workplace

Tue, 22 May 2018 07:00:00 GMT

It is more important than ever for employers to take the initiative to keep harassing conduct out of their workplace and out of the news.

Sexual Harassment

Sexual harassment is a form of sex discrimination and can include unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.

One type of sexual harassment is known as quid pro quo harassment, where the employer explicitly or implicitly conditions a job, a job benefit, or the absence of a job detriment upon the employee’s acceptance of sexual conduct.

Another type of sexual harassment is known as hostile environment harassment, where the employer’s harassing conduct is severe and pervasive – i.e., frequent, physically threatening or humiliating – and unreasonably interferes with an employee’s work performance.

The Harasser and the Victim

The harasser may be a man or a woman; a direct boss or a manager in another part of the company; a colleague; and even a non-employee, such as a customer or supplier.

Similarly, the victim may be a man or a woman, and can be the opposite or same gender as the harasser. The victim does not have to be the employee who is being harassed; he or she can be any co-worker who is affected by the offensive conduct.

The harasser’s conduct must be unwelcome, and it generally must rise above a level of simple teasing, offhand comments, or isolated incidents that are not truly serious.

Employer Responsibility

To help keep the workplace free of sexual harassment, and to reduce liability for any harassing behaviors that do occur, employers should have and enforce written sexual harassment policies that clearly communicate to employees that prohibited conduct will not be tolerated. Evidence of employer commitment in preventing sexual harassment might include doing the following:

Provide harassment prevention training to managers, supervisors and other employees.

Implement a complaint mechanism or grievance system that requires harassment reports to be channeled to multiple persons.

Ensure that when an employee complains of harassing behavior, a properly trained person promptly investigates the complaint.

In situations where an employer knows (or should know) of harassing conduct, take prompt and reasonable remedial action calculated to end the harassment.

Keep records of harassment reports to ascertain whether a pattern of harassment exists.

Conclusion

Employers need to take a proactive approach to keep sexual harassment out of the workplace. By having and enforcing effective policies, employers can help eliminate the offensive conduct and protect their organization from potentially devastating consequences.

More about Fitzgibbons Law Offices' employment law services for employers and employees .

Can Arizona Employers Require a Doctor’s Note from a Sick Employee?

Sat, 19 May 2018 07:00:00 GMT

Paid Sick Leave Protections

When an employee uses their paid sick leave, they are granted certain protections. Most notably, when an employee takes earned sick leave for a period of less than three consecutive days, their employer cannot require the employee to prove that the paid sick leave was used for a “covered purpose” – e.g., mental or physical illness, injury or health condition, and the need for medical diagnosis of those conditions. Further covered is the present or preventive care for any family member with a condition.

The rules change when earned sick leave is used for three or more consecutive days. In such a case, employers are allowed to require reasonable documentation establishing that the time was used properly. In no scenario, though, may an employer require documentation describing or establishing the nature of a health condition. In many situations, reasonable documentation may be established by providing a document signed by a health care professional indicating that the use of paid sick leave time was necessary.

Both employers and employees should be aware of a fine line that, when the paid sick leave covers less than three straight days, separates “requesting” documentation and “requiring” it. The law does not prohibit an employer from requesting reasonable documentation; employees are simply not required to provide it. Therefore, if an employee uses paid sick leave for only one day, they may be asked to provide documentation, but complying with that request is not a condition for having the paid sick leave approved.

Knowing your rights, as either an employee or an employer, will help provide you with the necessary legal understanding to make an informed decision in the proper use of paid sick leave.

Employer Alert: ICE Inspection Notices and Subpoenas

Thu, 17 May 2018 07:00:00 GMT

Employer Responsibility In Accepting Documents

Federal immigration law requires employers to hire only U.S. citizens or aliens who are authorized to work in the U.S. and to verify the identity and employment eligibility of all individuals hired in the U.S. after November 6, 1986. To document this verification, employers must use the Form I-9 (Employment Eligibility Verification) for all employees and retain the I-9s for inspection.

In gathering documents from persons for verifying employment authorization (e.g., birth certificates or unexpired passports) and identity (e.g., unexpired driver's licenses or voter's registration cards), employers are expected to accept documents that reasonably appear to be genuine and appear to relate to the persons presenting them. Employers are not expected to be document experts.

The Form I-9 for each employee must be retained for three years after the date of hire, or for one year after the date employment ends, whichever is later.

ICE Inspection Notices and Subpoenas

More and more, we learn of employers in central Arizona and elsewhere who are subjected to inspections by U.S. Immigration and Customs Enforcement (ICE) officials. The inspections are designed to ensure that employers are verifying the identity and employment eligibility of their employees.

To ensure compliance, an ICE agent or auditor can initiate an administrative inspection by serving on an employer a Notice of Inspection (NOI) and subpoena (DHS Form I-138) that can compel the production of the Forms I-9. The subpoena is an important piece, as employers generally do not otherwise have to allow access to employee records unless the inspector has a valid warrant signed by a judge.

By law, employers have at least three business days to produce the I-9s. ICE may also ask the employer to provide supporting documentation that commonly includes:

a copy of the employer's payroll with detailed wage information for each employee;

an employee list that shows each current employee's full name, date of birth, social security number, and hire date; and

a copy of the employer's articles of incorporation and annual report (if a corporation) or articles of organization (if an LLC) and business license(s).

Stiff Penalties for Violations

If the employer fails to produce the required records, or if the Forms I-9 contain discrepancies and are found to be not in compliance with the law, the employer has ten business days to make corrections.

An employer may be fined for substantive and uncorrected technical violations. For example, monetary penalties for substantive violations, which include failing to produce a Form I-9, range from $110 to $1,100 per violation. Penalties for knowingly hiring and continuing to employ workers, without gathering and retaining the required forms and records, range from $375 to $16,000 per violation, with repeat offenders incurring penalties at the higher end of the range.

In determining penalty amounts, ICE considers five factors: the size of the business, good-faith efforts to comply, the seriousness of the violation(s), whether the violation involved unauthorized workers, and history of previous violations.

Conclusion

To avoid serious consequences, employers must make sure that their Forms I-9 are on file and in order, from the date of hire through the required document-retention period.

If your Forms I-9 or supporting documentation are not in order, or if you are served with an ICE inspection notice and subpoena, you should contact your employment attorney or the Fitzgibbons Law Offices for assistance in complying with the federal government’s strict requirements.

More about Fitzgibbons Law Offices' legal services for employers

Employee Time Off Pursuant to the Family and Medical Leave Act (FMLA)

Wed, 18 Apr 2018 17:56:38 GMT

Eligibility

FMLA is required to be provided by all federal, state and local government agencies; all elementary and secondary schools; and any company with 50 or more employees. Such employers must provide eligible employees with up to 12 weeks of unpaid leave per year:

for the birth and care of the employee’s newborn child;

for the placement of a child with the employee for adoption or foster care;

to care for an immediate family member (spouse, child or parent) who has a serious health condition;

for medical leave when the employee is unable to work because of a serious health condition;

to handle a qualifying urgent need or demand arising out of a family member’s military service; or

for Military Caregiver Leave (to care for a covered service member with a serious injury or illness if the employee is the spouse, son, daughter, parent, or next of kin of the service member). Under certain circumstances, this FMLA leave can be extended up to 26 weeks during a year.

To be eligible for FMLA leave, employees must have worked for the employer at a location with at least 50 employees within a 75-mile radius for at least a year. The employee must also have worked at least 1,250 compensable hours over the past 12 months.

The amount of leave allowed by FMLA is generally limited to 12 weeks per year, regardless of the number of qualifying conditions an employee or their family members experience during that year. In addition, FMLA leave may be taken intermittently to allow protection for serious health conditions that may not be constant and, instead, flare up or require various doctor appointments or medical treatments.

Notice by Employee

In general, the employee must give the employer at least 30 days advance notice of the need to take FMLA leave, when he or she knows about the need for the leave in advance and it is possible and practical to do so. For planned medical treatment, the employee must consult with the employer and try to schedule the appointment at a time that minimizes the disruption to the employer.

When the need for leave is unexpected, the employee must provide notice to the employer as soon as possible and practical.

Protection of FMLA

When FMLA leave ends, the employee is usually entitled to be reinstated to the same or equivalent position. This means the employee should return to the same pay, benefits and duties as they had prior to taking FMLA leave. Additionally, employers cannot interfere with, discipline, or retaliate against an employee who takes FMLA leave. (FMLA enforcement is a function of the Wage & Hours Division of the U.S. Department of Labor.)

During leave taken pursuant to FMLA, an employee is also entitled to continued health insurance coverage at the same cost they paid while working. Depending on the employer’s policies, an employee may be allowed or required to use any accrued paid leave concurrently with FMLA leave.

Complying with FMLA requirements can be challenging for employers and employees alike and requires that both parties understand the FMLA’s major provisions and the employer’s FMLA policy.

For assistance in working through the requirements of FMLA, you are invited to contact Fitzgibbons Law Offices at 520-426-3824.

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“What Fiduciary Duties Do I Owe My Business Associate?”

Wed, 21 Mar 2018 07:00:00 GMT

To protect a business and its co-owners’ interests from such situations, the law imposes on actively involved partners, managing members, officers and directors a variety of fiduciary duties .

In simple terms, a fiduciary manages another party's assets and has a legal and ethical obligation to put the other party's interests ahead of his or her own. A fiduciary duty is the highest standard of care to which an individual can be held. In a business setting, fiduciary duties help ensure that each owner is acting in a manner that is consistent with the entity’s business objectives and the interests of investors and the other owners.

The fiduciary duties in operating a company vary among the three most common forms of legal entities: corporation, partnership, and limited liability company (LLC).

Corporations

Under Arizona law ( A.R.S. § 520-426-3824 ), corporate directors and officers must discharge their duties in good faith, with the care that an “ordinarily prudent person” would exercise under similar circumstances, in the best interests of the corporation.

Directors and officers must act loyally and with due care toward the corporation and its shareholders. Directors and officers are not permitted to use any information, acquired while acting in their official capacity, in a way that is detrimental to the corporation. Additionally, the duty of care mandates that, prior to acting on behalf of the corporation, directors and officers apprise themselves of all necessary information to make an informed decision.

Partnerships

Arizona law ( A.R.S. § 520-426-3824 ) also imposes fiduciary duties on partners within a partnership. Partners owe each other, and the partnership, the duties of loyalty and due care. In fulfilling those duties, a partner is prohibited from competing with the partnership and must account to the partnership for any profits received or earned on behalf of the partnership.

Limited Liability Companies

An LLC is a hybrid entity that offers the limited liability of a corporation and the pass-through taxation benefits of a partnership. In contrast to the fiduciary duties imposed on corporations and partnerships, the duties owed by an LLC’s “members” or “managers” are not as clearly defined in statute. However, in June 2019, the Arizona Supreme Court ruled, in In re Sky Harbor Properties, LLC v. Patel Properties, LLC, that fiduciary duties do exist in Arizona LLCs.

Also, under the 2018 Arizona Limited Liability Company Act (ALLCA), a member of a member-managed LLC owes the company and other members a duty of loyalty and should act in a manner consistent with a contractual obligation of good faith and fair dealing. Similarly, the manager of a manager-managed LLC owes the company and its members a duty of loyalty and must discharge his duties and obligations under the ALLCA with a contractual obligation of good faith and fair dealing.

Those duties are among the default provisions contained in the ALLCA. LLC members wishing to waive that default provision may do so through the wording of the LLC's operating agreement.

The ALLCA goes into effect September 1, 2020, for Arizona LLCs that were formed prior to September 1, 2019. It is already in effect for Arizona LLCs formed on or after September 1, 2019.

Conclusion

To achieve the protections and other benefits available to co-owners under their choice of legal entity, they should take at least three preparatory steps:

understand which form of legal entity will best serve their personal and business objectives;

gain a solid understanding of their fiduciary duties to each other and to the entity; and

if they choose to operate as an LLC, seek professional guidance from their business attorney and tax professional in drafting the terms of a thorough, well-conceived operating agreement.

Who Will Inherit Your Digital Assets When You Die?

Wed, 17 Jan 2018 01:04:52 GMT

If the company where the digital assets reside (Facebook, Google, etc.) allows the account holder to grant access to another person, the account holder's online instructions have first priority.

If the account holder does not name another person, the account holder may include instructions regarding digital assets in their will, trust, power of attorney, etc.

If the account holder takes neither of the two preceding steps, the company’s terms of service for the account will control.

If the terms of service do not address fiduciary access, FAADA requires the account custodian to provide only limited access – e.g., a catalogue of the communications showing the addresses of the sender and recipient, and the date and time the message was sent.

As a result of this law, you should include a provision in your will, trust, power of attorney, or other written document to designate who has access to your digital assets and what will happen to your digital assets upon your death or incapacity. If such a designation is not properly outlined in an estate plan or other written document, your personal representative or trustee may have limited access to your account and the assets it holds.

Therefore, it’s important to have your estate plan reviewed to make sure that your digital assets can be accessed and transferred according to your wishes. Please contact our office to schedule an appointment with one of our attorneys to review your estate plan.

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Residential Eviction: What Arizona Landlords and Tenants Should Know

Wed, 09 Aug 2017 07:00:00 GMT

The Eviction Process

If the tenant commits a material breach of the lease, such as not paying rent, and the landlord wants to start the eviction process, the landlord must provide the tenant with a written notice that sets forth the breach. Assuming the tenant does not cure the breach, the landlord can file an eviction action, which is a lawsuit to terminate the lease and recover the home from the tenant. It should be noted that a tenant’s inability to pay rent is not a legal defense to the lawsuit, and the judge cannot give the tenant more time to pay even though the tenant is having financial problems.

Before the Hearing Date. When the lawsuit is filed, the court will schedule a hearing date before the judge that, by statute, is not more than six nor less than three days from the filing date. If the tenant disagrees with the allegations in the lawsuit, the tenant can file a written answer. If the tenant believes that the landlord has not fulfilled the landlord’s obligations under the lease, the tenant can file a counterclaim. Both sides can hire their own attorneys to represent them, but the court will not provide an attorney to either side.

Hearing and Trial

If the tenant fails to appear at the hearing and the landlord or the landlord’s attorney is present, a default judgment will likely be entered against the tenant that will require the tenant to vacate the home in, at the most, five days or, at the least, 12 hours (i.e., based upon a finding of a material and irreparable breach of the lease).

If both sides are present when the judge calls the case, the judge will ask the tenant if the allegations in the lawsuit are true. If the tenant says “no” and/or believes that the landlord has not fulfilled the landlord’s obligations under the lease, the tenant will be permitted to give a brief explanation of the tenant’s position. If the position is a legal defense and/or claim, the judge will need to hear testimony and take evidence from both sides and make a decision after a trial.

At the Trial. To support each side’s position, each side can present any necessary witnesses and documents for the judge to consider in reaching the decision. If the judge decides in favor of the landlord, the judge will grant the landlord a judgment that can set forth damages and will require the tenant to vacate the home in, at the most, five days or, at the least, 12 hours. If the judge decides in favor of the tenant, the judge will dismiss the lawsuit and can award the tenant a judgment that also can set forth damages and will permit the tenant to continue to live in the home.

After a Judgment

Either party can appeal a judgment and has five days to do so after the judgment is entered.

If the tenant is appealing the judgment and wants to remain in the home during the appeal, the tenant must post a bond and pay the home’s rent to the court as it becomes due. If the tenant prevails, the lawsuit will be dismissed and the monies will be released.

If the tenant loses or is not appealing the judgment, the tenant must vacate the home in accordance with the judgment (unless the landlord permits the tenant to remain in the home). If the tenant fails to vacate the home in accordance with the judgment, the landlord can apply to the court for a writ of restitution to remove the tenant and all other occupants from the home. The writ of restitution is served by a constable or sheriff, who will direct the occupants to leave the home. The tenant can avoid a writ of restitution and the potential disruption of a forced removal by, before the deadline set forth in the judgment, vacating the home and returning the keys to the landlord. This would peacefully end the tenant’s possession of the home.

Conclusion

When it comes to disputes over the turnover of the home, it is advantageous for landlords and tenants to try and settle their disputes before resorting to the court system. However, if the sides are unable to settle their disputes, it is helpful to understand and properly follow the eviction process. By doing so, there can be a peaceful ending to the tenant’s possession of the home.

Tax Elections for Spouses Who Own a Single-Member LLC

Wed, 19 Apr 2017 18:29:05 GMT

Community Property LLC

One exception where a multi-member LLC can be treated as a disregarded entity and taxed as a sole proprietorship is when the LLC is wholly owned by spouses as community property. In Revenue Procedure 520-426-3824, the Treasury Department and IRS clarify that they will respect a taxpayer’s treatment of an entity as a disregarded entity or a partnership if it is owned solely by a husband and wife as community property.

In order to qualify to be treated as a disregarded entity:

The LLC must be wholly owned by a husband and wife as community property.

No person other than one or both the spouses would be considered an owner for federal tax purposes.

The business is not treated as a corporation under §520-426-3824.

In some instances, it may be to the couple’s advantage to have their LLC taxed as an S corporation. That tax treatment requires an affirmative election by the LLC and acceptance by the IRS.

Spouses who wholly own an LLC should consider the effect that their LLC’s tax designation will have on their personal tax liability and their administrative workload. That determination should be made in consultation with a tax or legal professional.

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Paid Sick Leave Requirements for Arizona Employers

Sat, 11 Feb 2017 07:00:00 GMT

All employers are subject to the law ( A.R.S. § 520-426-3824 ), which provides for a minimum accrual of one hour of leave for every 30 hours worked, up to the limits noted above. Accrual starts with the first day of employment or July 1, 2017, whichever is later. Employers can have policies restricting employees from using leave within the first 90 days of employment.

If an employer is already providing enough paid time off to cover the minimum amount of paid sick time, and if the employer allows its workers to use that time off in the same way and for the same purposes as paid sick leave, then the employer does not need to provide additional paid sick time.

Employees are allowed to use their accrued paid sick leave for their own illness and for the illnesses of family members. At the end of a year, any unused paid sick leave carries over to the next year, unless the employer chooses to pay them for their unused sick time. (Any unused leave does not need to be paid out when the employee resigns or is terminated.)

Employers that want to require employees to provide notice prior to taking foreseeable leave must have a written policy that spells out how the notice is to be given.

Employers may not retaliate against employees for using or requesting paid sick leave. The new law provides that, if any discipline occurs to an employee within 90 days of them taking sick leave, there is a presumption that the discipline is retaliatory.

Failure to Comply

The first violation carries a minimum $250 fine; for each subsequent violation, the fine is a minimum $1,000. Also, non-compliant employers must pay the employee the unpaid balance of the earned paid sick leave owed, plus interest, plus an additional amount equal to twice the unpaid sick leave.

Employers should ensure that employee handbooks and policies are consistent with the new law and that their payroll systems are able to track the accrual and payment of sick leave.

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Dying Without a Will or Trust, and the Laws of Intestate Succession

Fri, 02 Dec 2016 07:00:00 GMT

Under the laws of intestate succession, who gets your assets will generally depend on whether you are survived by a spouse, descendants (children, grandchildren or great-grandchildren), parents and/or siblings. For example:

If you are survived by a spouse and no descendants, your spouse will inherit all of your estate.

If you are survived by a spouse and descendants from the marriage, your spouse will inherit all of your estate.

If you are survived by a spouse and by descendants from you and someone other than your spouse, your spouse will inherit one-half of your separate property, and your descendants will inherit one-half of your separate property and the one-half of the community property that belonged to you.

If you are survived by descendants but no spouse, your descendants will inherit all of your estate.

If you die with no surviving spouse or descendants, your parents will inherit all of your estate.

If you die with no surviving spouse, descendants or parents, your siblings will inherit all of your estate.

If you die with no surviving spouse, descendants, parents or siblings, then your nieces and nephews will inherit all of your estate.

Only in the unlikely circumstances that you die without a Will and are not survived by any family members will your estate assets escheat to the State of Arizona.

The succession priority described above is by no means a substitute for an estate plan that is tailored to your situation and wishes. Vague instructions and off-the-shelf or incomplete Wills or Trusts are among the leading causes of messy probates, disputes and lawsuits among a decedent’s survivors, compounding their grief over the loss of a loved one and needlessly diverting estate assets to cover legal expenses.

The best way to make sure your assets will be distributed in accordance with your wishes upon your death is to have an estate plan in place, whether it be through a Will, beneficiary designation, survivorship designation, or a Trust, prepared by an experienced estate planning attorney.

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Independent Business Status: Arizona Law Helps Avoid Employee Misclassification

Wed, 05 Oct 2016 07:00:00 GMT

Under the new law (A.R.S. § 520-426-3824, a signed Declaration creates a “rebuttable presumption” of an independent contractor relationship. The law’s intent is that, if there is a dispute as to whether an independent contractor relationship exists, the burden is on the objecting party to show that it does not.

Independent Contractor Representations

A valid Declaration must be signed and dated by the independent contractor and represent that the contractor:

operates an independent business;

is not an employee and is not entitled to any rights arising from an employment relationship;

is responsible for all taxes associated with payment under the contract; and

will maintain any necessary registrations, licenses or authorizations to perform services.

Also, the Declaration must affirm at least six of the conditions described in the following two bullets:

The contractor is not insured under the contracting party’s insurance coverage; is authorized to accept work from others; has the right to accept or decline requests for services from the contracting party; is not economically dependent on the contracting party; is paid based on the work contracted for and not based on a regular salary or minimum regular payment; is responsible for maintaining all necessary tools and equipment; and is responsible for all expenses incurred in performing the services.

The contracting party expects the contractor to provide services for others; will not dictate the contractor’s performance, methods or processes; and has the right to impose quality standards and deadlines but not to control the days and time periods worked.

Declaration Not Required

It is important to note that the new law does not require employers to enter into a Declaration with their independent contractors, and the absence of a Declaration cannot be used to deny that an independent contractor relationship exists. However, if a Declaration is signed, it will be effective only if the parties’ actions toward each other are consistent with the Declaration’s provisions.

Limitations

It is also important for employers to recognize the law’s limitations. Neither the new law nor a signed Declaration is binding on federal agencies, such as the IRS or the U.S. Department of Labor. Consequently, businesses still need to rely on the guidelines provided by the IRS when facing federal requirements or claims regarding employee misclassification.

Also, a signed Declaration does not guarantee that a court will agree that the relationship is that of an independent contractor.

Finally, the new law does not apply to general contractors and subcontractors unless they are entering into a Declaration with someone whose work does not require them to be licensed by the Arizona Registrar of Contractors.

Useful Tool

While having a signed Declaration does not offer any guarantees, it can provide a substantial benefit to the employer by defining its relationship with the contractor and, in case of a legal challenge, by shifting the burden of proof to the challenging party.

For assistance in working through the classification of employees and independent contractors, contact Fitzgibbons Law Offices (520-426-3824).

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Use of Beneficiary Deeds to Avoid Probate

Wed, 11 Nov 2015 07:00:00 GMT

Benefits and Drawbacks

The benefits of a Beneficiary Deed:

It avoids the cost and delay of probate because the real property is not part of the probate estate.

It is a less expensive and simpler way of avoiding probate than creating and administering a trust.

If the owner has created a trust as part of his or her estate plan, a Beneficiary Deed can name the trust as beneficiary of the property.

A recorded Beneficiary Deed does not restrict the owner’s ability to sell, encumber or otherwise deal with his or her property.

There is no gift tax liability because it is not a present transfer of the property.

It can be revoked or changed at any time during the property owner’s lifetime.

A Beneficiary Deed does have its drawbacks:

For estate tax purposes, the full value of the property remains in the deceased owner’s estate.

A Beneficiary Deed is not able to deal with the possibility of a minor or disabled beneficiary.

If multiple beneficiaries are named as grantees, they will each own an undivided interest in the property, which can make managing and selling the property more difficult.

If the property is owned as joint tenants or community property with right of survivorship, the last survivor can revoke or modify the Beneficiary Deed, which may frustrate the intent of the owner who is deceased.

If the property is subject to a mortgage lien, the property is still subject to the mortgage lien after the owner dies. If the beneficiary or beneficiaries want to keep the property they must either assume the payments (with the lender’s permission) or qualify for a new loan.

Not all states have transfer on death laws for real property, but for owners of real property in Arizona, a Beneficiary Deed is a popular and simple way to transfer property at death without the need for probate.

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Negotiating a Commercial Lease Includes Asking the Right Questions

Tue, 13 Oct 2015 07:00:00 GMT

Good Questions

In his recent book, Good Leaders Ask Great Questions, best-selling author John Maxwell explores the risks of thinking we know the answers to questions (when we don’t) and of refraining from asking a question for fear of looking uninformed or silly.

In short, asking good questions opens doors to information that would otherwise remain closed to you. For parties negotiating a commercial lease, good questions can prevent unfair advantages, avoid legal action, and produce a lease that is fair to both sides.

Parties . In a lease, the parties are usually described as “Landlord” and “Tenant,” or “Lessor” and “Lessee.” Simple, right? Not necessarily. The significance of those terms can go far beyond simple terminology.

Consider: If a party is a corporation, should just the operating corporation be listed as the party? Or should the parent corporation be listed, also? For newly formed corporations or LLCs, when does it make sense to list their owners? If you can add individual shareholders or members, can they be required to guarantee payment and performance under the lease?

In light of these considerations, asking who should be listed as the landlord or tenant should no longer seem like an uninformed or silly question.

Property . The “property” is usually defined as the space to be leased. If an entire building is subject to the lease, the mailing address and tax parcel number should be sufficient to identify the leased property.

But if the leased space is only a portion of the building or parcel, then the parties need to describe precisely what is being leased. Interior space? Roof? Interior and exterior walls? A full suite? Specific parking spaces? Are there common areas – such as sidewalks, conference rooms, kitchen facilities, landscaped areas, parking – for which the tenant will be charged?

It is critical to ask questions, so that both parties understand and are in agreement on what “property” the lease covers, and what does and does not go with it.

Rent . In a commercial setting, “rent” may simply be a specific dollar amount per month. Or it might include a percent of the tenant’s income or revenues, or some of the landlord’s operating costs, such as landscaping, exterior maintenance and utilities. A commercial lease’s rent provisions might also include annual increases.

Are such terms part of your pending agreement? Or how about these: Can a tenant offset its rent obligation by making improvements to its space? How is the tenant’s rent affected by vacant space? These are all important issues that should be part of the negotiations.

Term . The “term” of the lease seems obvious: from the beginning to the end. But when does the lease begin? When the lease is signed? When the space is ready for occupancy? When the tenant opens its doors for business?

When does a tenant have an insurable interest in the property – when it signs the lease or when it begins to occupy it? Who has the right to extend the term of the lease, and for how long? Each of these questions should be thoroughly discussed between the parties before they agree to a final lease term.

Conclusion

It’s been said that “the future belongs to the curious.” Before signing a lease, be curious; think about your business goals and needs, ask good questions, and negotiate a lease that is fair to both parties and will help you achieve a profitable future.

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Formation of an Arizona Limited Liability Company (LLC)

Tue, 23 Jun 2015 07:00:00 GMT

Arizona LLC statutes provide only very basic rules to govern the rights and obligations of the members. Most people choose an LLC because it is simpler than a corporation to form and to maintain but provides the members and managers protection from being liable for the debts, obligations and liability of the LLC.

Formation

To form an LLC, Articles of Organization are filed with the Arizona Corporation Commission for approval, followed by publication in a newspaper approved by the Commission. The Articles of Organization set forth the name and address of the LLC, its members and statutory agent, its general purpose, the term of the LLC, and whether the LLC will be managed by its members or a designated manager.

There are no minimum limits on the number of members an LLC can have. Therefore, one person may start an LLC and serve as the sole member, manager and statutory agent, or there may be several members, a separate manager and a separate statutory agent.

Unlike the rules for corporations, there are no requirements in Arizona for an LLC to hold meetings or file annual reports. Maintaining an LLC in Arizona is relatively easy, but formalities include filing Articles of Amendment when any of the information provided in the Articles of Organization changes and securing necessary licenses from federal, state and local jurisdictions.

Management

In a member-managed LLC, all members are responsible for management of its operations, while in a manager-managed LLC, the members designate a person or persons who will control the LLC activities. A manager can also be a member of the LLC.

Although not required, members should consider entering into an Operating Agreement regarding the LLC's operation and management. An Operating Agreement is an understanding among the members regarding business matters including, but not limited to:

startup capital

allocation of profits and losses

management rights and duties

buy-out provisions

procedures for business decisions

valuations

withdrawal of members

restrictions on transfers of ownership interests

non-complete clauses

right of first refusal for existing members to acquire a selling member’s share

dissolution

dispute resolution.

An Operating Agreement is necessary if the members intend to operate the business in any manner different from the Arizona statutory default rules.

Fiduciary Duties

In June 2019, the Arizona Supreme Court ruled, in In re Sky Harbor Properties, LLC v. Patel Properties, LLC, that fiduciary duties do exist in Arizona LLCs.

Those duties are among the default provisions contained in the ALLCA. LLC members wishing to waive that default provision may do so through the wording of the LLC's operating agreement.

Planning Ahead

It is important for individuals wanting to form an LLC to decide at the outset how they would like the LLC to be managed and how the affairs of the business and the individuals involved will be addressed. Having such foresight will assist the LLC and its members when dealing with any unanticipated matters or disputes.

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Options for Bankruptcy Relief

Mon, 08 Jun 2015 07:00:00 GMT

A fundamental goal of bankruptcy laws is to give debtors a financial “fresh start” from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in its 1934 decision in Local Loan Co. v. Hunt :

[I]t gives to the honest but unfortunate debtor ... a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.

This goal is accomplished through the bankruptcy “discharge,” which releases debtors from personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts.

Bankruptcy Proceedings

Bankruptcy cases are heard in bankruptcy courts, and there is a bankruptcy court for each judicial district in the country. Each state has one or more districts. In Arizona there is one district, with bankruptcy court locations in Phoenix, Tucson, Yuma, Flagstaff and Bullhead City.

The court official with decision-making power over federal bankruptcy cases is the bankruptcy judge, a judicial officer of the U.S. district court. The bankruptcy judge may decide any matter connected with a bankruptcy case, such as eligibility to file or whether a debtor should receive a discharge of debts.

Much of the bankruptcy process is administrative, however, and is conducted away from the courthouse. In cases under Chapters 7, 12, or 13, and sometimes in Chapter 11 cases (all described below), this administrative process is carried out by a trustee who is appointed to oversee the case.

A debtor’s involvement with the bankruptcy judge is usually very limited. For example, a typical Chapter 7 debtor will not see the bankruptcy judge unless an objection is raised in the case. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors. This meeting is informally called a “341 meeting.” Section 341 of the Bankruptcy Code requires that the debtor attend this meeting so that creditors, who often do not show up at the meeting, can question the debtor about debts and property.

Types of Bankruptcy

The most common types of bankruptcy are Chapter 7 and Chapter 13 (for individuals) and Chapter 11 (primarily for businesses).

A Chapter 7 “liquidation” contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to (a) the debtor’s right to retain certain exempt property and (b) the rights of secured creditors.

Because there is usually little or no nonexempt property in most Chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” In most Chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. Also, the Bankruptcy Code requires the application of a “means test” to determine whether individual consumer debtors qualify for relief under Chapter 7. If such a debtor’s income is in excess of certain thresholds, the debtor may not be eligible for Chapter 7 relief.

A Chapter 13 bankruptcy, often called a “wage-earner reorganization,” is designed for an individual debtor who has a regular source of income. Chapter 13 allows the debtor to keep property and propose a plan to repay creditors over time (usually three to five years). Chapter 13 is also used by consumer debtors who do not qualify for Chapter 7 relief under the means test mentioned above.

The court either approves (confirms) or disapproves the debtor’s repayment plan, depending on whether the plan meets the Bankruptcy Code’s requirements for confirmation. If the plan is confirmed, the Chapter 13 debtor makes payments to creditors, through the trustee, based on the debtor’s anticipated income over the life of the plan. Unlike Chapter 7, in a Chapter 13 the debtor does not receive an immediate discharge of debts; before the discharge is received, the debtor must complete the payments required under the plan. While the plan is in effect, the debtor is protected from lawsuits, garnishments and other creditor actions.

Another type of reorganization, Chapter 11 , ordinarily is used by businesses and other commercial enterprises that wish to continue operating a business and repay creditors concurrently through a plan of reorganization. The court ultimately approves (confirms) or disapproves the plan of reorganization.

Under a confirmed plan, the debtor can reduce its debts by repaying some of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability. Under Chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.

There are less common forms of bankruptcy, including these:

Chapter 12 provides debt relief to family farmers and fishermen with regular income. The process under Chapter 12 is very similar to that of Chapter 13.

Chapter 9 provides essentially for reorganization of counties, cities, towns, villages, taxing districts, municipal utilities, and school districts. It is much like a reorganization under Chapter 11.

Chapter 15 deals with cases of cross-border insolvency and applies, for example, where a debtor or its property is subject to the laws of the United States and one or more foreign countries.

Questions?

This broad introduction to bankruptcy offers general information only. Anyone considering bankruptcy or who has questions about dealing with debt problems should seek professional assistance to gain a full understanding of their options, including alternatives to bankruptcy.

For further information, visit www.uscourts.gov, which served as the foundation for this article and is maintained by the Administrative Office of the U.S. Courts. The website provides information from and about the Judicial Branch of the U.S. Government, including the bankruptcy courts.

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Life Care Planning and Advance Directives

Fri, 17 Apr 2015 07:00:00 GMT

A Health Care Power of Attorney allows you to designate another person as your agent to make health care decisions for you if you are incapable of making your wishes known. The person you designate is empowered to sign consents, discuss health care issues with the care team, obtain second opinions, secure nursing home placement, and take similar actions. Your agent may be a family member or a close friend whom you trust to make serious decisions. The person you name should clearly understand your wishes and be willing to accept the responsibility of making medical decisions for you.

A Living Will is used in conjunction with a health care power of attorney and sets forth your wishes regarding the extent of life-sustaining treatment you desire at the end of your life. A Living Will provides guidance about your general philosophy, ranging from “I do not want any life-sustaining treatment beyond comfort care” to “I want my life to be prolonged as long as possible.”

If you do not have advance directives in place, Arizona law gives decision-making power to “surrogates,” primarily in order of kinship. The order is your spouse (unless legally separated), your adult child (if more than one, the majority available for consultation), one of your parents, your domestic partner, a brother or sister, a close friend. Without a Living Will, your surrogate will not know your wishes. A surrogate cannot disconnect a feeding tube; only a Health Care Power of Attorney or a guardian appointed by a judge can make that decision.

In a case that focused national attention on advance directives, Terri Schiavo was in her 20s when she had her catastrophic collapse. Unfortunately, she did not leave written instructions expressing how she would like to be cared for if something happened to her. Because she did not leave instructions, the courts had to intervene. Further complicating matters, her family did not agree on what her wishes would be.

By taking the proper steps now, you can ensure that your wishes are known. Life care planning is a gift you can give to yourself and your family.

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