Is Obamacare constitutional? Will the Supreme Court uphold the individual mandate?

Is Obamacare constitutional? Will the Supreme Court uphold the individual mandate?

Three of the 13 federal appellate courts have now ruled on Obamacare.  The 4th and the 6th Circuits upheld the individual mandate, whereas the 11th Circuit deemed it unconstitutional.  (The 6th Circuit is where I clerked.  It covers Tennessee, Kentucky, Ohio and Michigan).

In order to resolve the split amongst the circuits, the U.S. Supreme Court will likely hear and decide the dispute during the next Term of court that starts this month.  The Term runs for approximately 9 months, which means that a decision on the issue — assuming the Court ultimately agrees to hear the cases during this next Term — would be handed down no later than the end of June 2012.

The timing of the decision would be key.  Indeed, Obamacare will no doubt be a central issue for both sides as they head down the final stretch of the presidential campaign, and a timely decision by the Court would provide needed certainty on the issue, which would in turn allow the candidates to engage in more informed debate about how to move forward.

Below is an interesting excerpt from an article by Professor Erwin Chemerinsky in this month’s edition of the ABA Journal:

The most eagerly anticipated cases, though, are those involving the constitutionality of the individual mandate in the Affordable Care Act. Three circuits have decided the issue, and they have come out three different ways. In June, the 6th U.S. Circuit Court of Appeals, in a 2-1 decision, upheld the individual mandate as constitutional. Thomas More Society v. Obama. By contrast, in August, the 11th U.S. Circuit Court of Appeals, in a 2-1 decision, declared this unconstitutional. Florida ex rel. Attorney General v. U.S. Department of Health and Human Services.

And in September, the 4th U.S. Circuit Court of Appeals, in a 2-1 ruling, found that the individual mandate is actually a tax and thus cannot be enjoined under a federal law, the Anti-Injunction Act, which prohibits federal courts from enjoining the collection of taxes. Liberty University v. Geithner. The issue was argued Sept. 22 before a panel of the U.S. Court of Appeals for the D.C. Circuit. A fourth decision is likely to be forthcoming soon.

In light of the importance of the issue and the split among the circuits, it seems certain that the court will hear the issue this term. Already petitions for certiorari have been filed from the 6th and 11th Circuit cases.

It is interesting that, with one exception, every federal judge appointed by a Democratic president has voted to uphold the individual mandate, and, with one exception, every federal judge appointed by a Republican president has voted to declare it unconstitutional. If the Supreme Court were to follow this pattern, the law would be struck down 5-4. But that may be far too simplistic because the court is likely to consider this the most important challenge to the scope of congressional power since the mid-1930s.

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Law FAQ: I’ve been named as Trustee of a trust….what do I do now?

Law FAQ: I’ve been named as Trustee of a trust….what do I do now?

The most important thing to remember when you step in as trustee is that these are not your assets.  You are safeguarding them for others:  for the grantor (if living) and for the beneficiaries, who will receive them after the grantor dies.  As a trustee, you have certain responsibilities.  For example:

-You must follow the instructions in the trust document.

-You cannot mix trust assets with your own.  You must keep separate checking accounts and investments.

-You cannot use trust assets for your own benefit (unless the trust authorizes it).

-You must treat trust beneficiaries the same; you cannot favor one over another (unless the trust says you can).

-Trust assets must be invested in a prudent (conservative) manner, in a way that will result in reasonable growth with minimum risk.

-You are responsible for keeping accurate records, filing tax returns and reporting to the beneficiaries as the trust requires.

But you can have professionals help you, especially with the accounting and investing.  You will also probably need to consult with an attorney from time to time.  However, as trustee, you are ultimately responsible to the beneficiaries for prudent management of the trust assets.

Please contact us if you need assistance in serving in the role of a trustee or if you have any related question.

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Law FAQ: Why can’t I name my minor kids or grandkids as beneficiaries?

Law FAQ: Why can’t I name my minor kids or grandkids as beneficiaries?

You can certainly leave assets to your children and grandchildren if you do so correctly, and there are a number of options to choose from when planning for minor beneficiaries. The problem comes in when minor beneficiaries are not properly planned for, which usually occurs when a minor is named as a beneficiary on a beneficiary designation form (e.g. life insurance beneficiary or retirement account beneficiary) or outright in a will or trust (e.g. $15,000 to each of my grandchildren).

Why? Minors cannot legally hold property in their own name. An adult (custodian, trustee or guardian) must hold the assets for the minor’s benefit until the child reaches a certain age. In Tennessee, the legal age at which they can receive or own property directly is eighteen (18). In your estate plan, you can change the age at which you want them to receive the funds, but the minimum is eighteen. When a minor is named as a beneficiary or left an outright distribution in a will or trust, someone has to petition the court to be appointed guardian of the child’s property. Even if a natural parent and legal guardian is involved, the parent would have to seek to be appointed and subject to the court’s supervision in the management and expenditure of any funds. Custody and legal guardianship of the person of the child are not alone sufficient to handle the child’s funds absent a guardianship. I have been involved in many cases where a child’s natural parent has to be appointed as guardian and subject to the court’s ongoing supervision regarding their child’s funds because the other parent is deceased and the child was the beneficiary on the life insurance.

In some cases, the funds can be deposited with the court clerk, and the child can petition the court to release the funds when he or she reaches the age of 18. In other cases, an ongoing guardianship is required, which involves court approval for expenditures, annual accountings and sometimes a great deal of time and expense.

What should you do? I will talk more about some of the options for leaving funds to your beneficiaries in the coming weeks.  But for now, make sure you do not have your minor beneficiaries named on any beneficiary designation form.  If you would like to learn more about the options for your beneficiaries, please contact our office.

Are Oral Contracts Enforceable?

oral contracts

Elements of a Contract in Tennessee

With a few limited exceptions oral contracts are enforceable in Tennessee just like a written contract.  Of course, a written contract is much easier to prove because there is hard evidence of the agreement.  However, an oral contract IS enforceable in most cases.  The parties and/or their witnesses can testify about the terms of the agreement, and things such as partial performance or “normal course of dealing” can serve as powerful circumstantial evidence of the terms of the deal.

A contract is a contract – oral or written – so long as it has the following elements:

  1. A legal purpose (e.g. Tennessee courts will not enforce a contract between neighbors to illegally use one cable box);
  2. A mutual agreement that is free from fraud or undue influence;
  3. Terms that are definite enough to be enforced (e.g. a promise to work for a person’s lifetime would be too vague because a lifetime is not a definite duration); and,
  4. Adequate value exchanged by both parties (referred to as “consideration” in legal terms).

Contracts Required to be in Writing

There are certain contracts that are required to be in writing under a legal doctrine called the “Statute of Frauds.”  In Tennessee, the six types of contracts that must be in writing include contracts for the following:

  1. Marriage;
  2. Contracts with a term greater than 1 year (i.e. a 2 year lease must be in writing);
  3. Sale of land/property;
  4. Executor’s/Administrator’s promise to pay debts of the estate;
  5. Sale of Goods/Personal Property that costs $500 or more; and
  6. Suretyship agreements (i.e. a promise to guarantee payment of the debts of another person).

Even after you have successfully navigated all of the above requirements, you should still be careful to file a lawsuit for a violation of an oral contract within 6 years in Tennessee – the same statute of limitation as a written contract.  Additionally,  oral contracts often require the testimony of a witness to verify the terms of the agreement.

We advise avoiding oral contracts.

While oral contracts are enforceable, you should avoid them, if at all possible, simply because written contracts are so much easier to prove and enforce.  Contracts can be difficult to navigate, and if you have any doubts when drafting or entering into a contract, it is best to consult an experienced contract attorney.  If you need help in negotiations, contract drafting, or even contract disputes, please give us a call at 901-372-5003.

 

Patterson Bray

8001 Centerview Parkway, Suite 103

Memphis, Tennessee 38018

(901) 372-5003 Office

www.pattersonbray.com

Law FAQ: What should I do if I’m seriously injured in a car wreck?

Law FAQ: What should I do if I’m seriously injured in a car wreck?

We have a helpful list of DOs & DON’Ts in the Auto Accident FAQ section of our website.  Here are a few examples:

DO — call the police and be courteous to the other driver and any emergency personnel who come to the accident scene. If the other driver is confrontational or angry, then stay in your vehicle and wait for the police to arrive.

DON’T — move your vehicle until instructed by emergency personnel.

DO — report the accident to your own auto insurance carrier immediately. Our lawyers can handle this for you after we have been retained. (Click here to read more info about your own UM coverage, and click here for more info about not having to worry about your rates going up simply by submitting a UM claim to your own insurance carrier.)

DON’T — make comments at the accident scene or to insurance adjusters like “I’m okay” or “I’m not hurt.” A few days may pass before the full extent of your injuries are known or even felt, particularly with neck and back injuries, and your attempt to be helpful may be taken out of context.  Indeed, a common tactic for insurance company adjusters is to try to contact you shortly after the accident to record a statement before you fully appreciate the extent of your injuries.  Let your medical reports do the talking for you.

DO — hire an experienced, knowledgeable lawyer to assist you early on. While it is certainly possible to handle your own claim, the question is whether you are truly competent to do so.  Remember that insurance adjusters handle personal injury claims for a living.  They are trained and have considerable resources at their disposable to use against you, and their job function is to limit any payouts made by their company.  You may not even know when the deck is stacked against you, and you deserve a level playing field to make sure that you are treated fairly.

#BeyondaReasonableDoubt

Beyond a Reasonable Doubt

If you are like me, your Twitter Feed and Facebook page have been littered lately with well intentioned people reciting snippets of news stories decrying the Troy Davis execution based on the idea of #Toomuchdoubt.  I would encourage you to read the Court’s Order for yourself.  You may still oppose the death penalty, but you will likely be less worried that Georgia executed an innocent man.

 

Law FAQ: What is living probate?

Law FAQ: What is living probate?

If you can’t conduct business due to mental or physical incapacity (dementia, stroke, heart attack, etc.), only a court appointee can sign for you – even if you have a will.  Remember, a will only goes into effect after you die.  Once the court gets involved, it usually stays involved until you recover or die and it, not your family, will control how your assets are used to care for you.  This public, probate process can be expensive, embarrassing, time consuming and difficult to end.  It does not replace probate at death, so your family may have to go through probate court twice!

In some cases, a durable power of attorney may prevent the lifetime probate process.  A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so.  However, many financial institutions will not honor one unless it is on their form.  If accepted, it may work too well, giving someone a “blank check” to do whatever the agent wants with your assets.  It can be very effective when used with a living trust, but risky when used alone.

Please contact our office if you have questions about the living probate process or if you wnat more information on strategies to avoid the process.

Law FAQ: What is an estimated tax payment, and who is required to make them?

Law FAQ: What is an estimated tax payment, and who is required to make them?

What is an estimated tax payment?

Estimated tax payment is the method used to pay tax on income that is not subject to withholding.  Functionally-speaking, you can view estimated tax payments as a substitute for employer withholding for any income you might receive for which there is no “employer” who is withholding taxes out of your paycheck.  For example, if you are self-employed, or if you earn meaningful income from side jobs for which there is no employer who is withholding taxes, then you would generally be required to make quarterly estimated tax payments as to that income.

Who is required to make an estimated tax payment?

From the IRS website: “If you [file your tax return] as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.”

If you are a salaried employee who has filled out your W-4 form correctly, and you are having the appropriate amount withheld from your check each pay period, then you are generally not required to make estimated tax payments.  However, if you have a side job where you are essentially self-employed (for example: doing odd jobs, cutting grass on weekends, etc.) and you receive a meaningful amount of income for which there is no employer withholding, then you may be required to make quarterly estimated payments, or to adjust your employer withholding to make up the extra difference.  You can use the worksheet on IRS Form 1040ES to determine whether you might owe estimated tax payments.

When are estimated tax payments due?

There are four payment periods, and each period has a different due date depending on the year.  The remaining due dates for 2011 taxes are Thursday, September 15, 2011, and Tuesday, January 17, 2012.  If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.  In other words, you can’t skip or underpay on one of the payment dates.

What happens if you are required to pay estimated taxes but fail to do so?

From the IRS website: “If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.”

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Law FAQ: Questions About Revocable Living Trusts

Law FAQ: Questions About Revocable Living Trusts

What is a revocable living trust?  A revocable living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die.  But, unlike a will, a living trust can avoid probate at death, control all of your assets and prevent the court from controlling your assets if you become incapacitated.

How does a revocable living trust avoid probate and prevent court control of assets at incapacity?  When you create a revocable living trust, you transfer assets from your name to the name of your trust, which you control.  Legally, you no longer own anything; everything now belongs to your trust.  So there is nothing for the courts to control when you die or become incapacitated.  The concept is simple, but this is what keeps you and your family out of the courts.

Do I lose control of the assets in my revocable living trust?  Absolutely not.  You keep full control.  As trustee of your trust, you can do anything you could do before – buy and sell assets, change or even cancel (or revoke) your trust.  That’s why it’s called a revocable living trust.  You even file the same tax returns.  Nothing changes but the names on the titles.

Is it hard to transfer assets into my trust?  No.  Your attorney, financial advisor, insurance agent and other professionals can help.  Typically, you will change titles on real estate, stocks, bonds, CDs, bank accounts, investments, insurance and other assets with titles.  Revocable living trusts also own tangible personal property and other assets that do not have titles.  Some beneficiary designations should also be changed to your trust so the court can’t control them if a beneficiary is incapacitated or no longer living when you die.

Doesn’t this take a lot of time?  It will take some time – but you can do it now, or you can pay the courts and attorneys to do it for you later.  One of the benefits of a revocable living trust is that all of your assets are brought together under one plan.  Don’t delay “funding” your trust; it can only protect assets that have been transferred into it.

Feel free to contact us for more information about how a revcoable living trust would work in your estate plan.

Smoke Detectors in Apartments

Smoke Detectors in Apartments

 

smoke detectors victim injury attorneyLet’s talk about the law on smoke detectors in apartments and rental homes in Tennessee. What should a landlord do? What about a tenant? Do you have a case? Below are questions some of you might have:

Q:  I own and lease a rental house in in Memphis, Tennessee.  Am I required to provide smoke detectors for the tenants who live in the house?

Q:  I rent a house in Germantown, Tennessee, and there was a fire at night.  There were no smoke detectors in the house, and by the time I woke up and called 911 the fire had spread so far that the firemen weren’t able to save anything.  What are my legal rights?

Law on Smoke Detectors in Tennessee

Under Tennessee law, a landlord must install and maintain smoke detectors in any residential unit offered for lease or rent.  Specifically, Tennessee Code Annotated 68-102-151 provides that it is:

unlawful to…[o]wn or operate a one-family or two-family rental unit without installing an approved smoke detector in each living unit; when activated, the detector shall initiate an alarm that is audible in the sleeping rooms of the living unit….

Law on Smoke Detectors in Memphis

The Memphis City Code of Ordinances  Sec. 14-4-88 further provides that

A. No person shall occupy as owner-occupant, or shall let another for occupancy, any dwelling, multifamily dwelling, dwelling unit, rooming house unit, lodging house or lodging unit which does not comply with the applicable provisions of the fire prevention code or the building code and other ordinances of the city and the additional requirements set out in this article for safety from fire.

B. Smoke detectors shall be installed in all residential properties in accordance with National Fire Protection Association Standard No. 74, 1989 Edition, and shall be maintained in an operable condition.

Memphis City Code of Ordinances  Sec. 9-44-6 also states that:

. . .  Smoke detectors are required…[i]n every existing dwelling unit within an apartment house, condominium complex, dormitory, townhouse or duplex….; and [e]very existing guest room in a motel and hotel. . .

*Other municipalities may have similar local ordinances.  The Memphis ordinances referenced here are merely offered as an example of additional law that may or may not apply to a particular situation.

smoke detectors memphis injury lawyer

What happens if a landlord does NOT provide smoke detectors?

First — a quick distinction.  There may be legal claims arising out of  how the fire originated.  For example,  there may be an underlying claim against a manufacturer for a defective product (i.e. appliance) that caught fire, or against a contractor for improper construction or wiring, or against the landlord or management company for negligent maintenance of the house itself.

By comparison, a claim for lack of a working smoke detector would be a claim independent of other claims.  It could potentially constitute an additional claim on top of a fire-origination claim, or it could constitute a stand-alone claim — for example, where the underlying fire was not necessarily due to the fault of any third-party, but where the lack of a smoke detector led to enhanced damages or injuries.

Do I have a case against my landlord?

Under the law, a failure to follow a statutory requirement would likely constitute negligence per se.  Of course, a finding of negligence would not in and of itself result in liability for damages.  There would also need to be proof that the lack of a smoke detector actually resulted in a delay in the detection of the fire, and which caused damages attributable to that delay, and not just due to the underlying fire itself.

Example Our firm filed a $10 million lawsuit arising out of the wrongful death of a 2 year old little girl in a house fire.  The fire allegedly occurred because a child innocently knocked over a space heater.  The lack of a smoke detector, however, allowed the fire to spread for several minutes and ultimately rage out of control before an adult in the back of the house discovered the blaze.  Unfortunately, it was too late for the little girl.  Had there been a smoke detector, that little girl would be alive today.  So, the lawsuit claim in that instance is not about the origination of the fire, or for recovering damage that would have occurred from a “regular” fire.   The lawsuit claim is only about the enhanced damage and loss of life that occurred only as a result of the lack of a smoke detector.

Tips for Landlords

INSTALL. Make sure that smoke detectors are installed in EVERY single rental unit you lease out.  Ideally, you should have smoke detectors that are hard-wired into the electrical system of the rental unit, and that use batteries simply for backup.  Landlords arguably also have the duty to maintain smoke detectors, so hard-wired detectors reduce the need for constant landlord inspection and replacement of batteries.

TEST. If you do not have hard-wired smoke detectors, periodically inspect and push the “test button” on the detectors, and also replace batteries as needed.

LEASE PROVISION. Include a provision in your Lease (and require your tenant to specifically initial it) stating and acknowledging that there are working smoke detectors in the rental unit at the time of move-in,  that the tenant has personally had the opportunity to inspect and test the smoke detectors, and that the tenant acknowledges and agrees that her or she is responsible for replacing the batteries and periodically testing the smoke detectors.

Tips for Tenants 

Never, ever live in a dwelling unit that does not have working smoke detectors, even if you have a difficult landlord and unfairly end up having to purchase and maintain the smoke detectors yourself.  The danger to life and property is simply too great.  Indeed, I can tell you from experience in dealing with clients — a great lawsuit is little comfort for the loss occasioned by a devastating fire.  No amount of money can replace the irreplaceable.

Need a lawyer in Memphis on a Smoke Detector Case?

We’d be honored to help you. Call us at 901-372-5003 or email us here.  We represent clients in Bartlett, Cordova, Germantown, Lakeland, Millington, Atoka, Memphis, Nashville, and the surrounding areas.

Patterson Bray. Small Firm. Better Focus. Big Results.  To meet our team, click here.  To learn what we do, click here.

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