1964 Civil Rights Act Applies to Gays

A U.S. appeals court has ruled that federal civil rights law protects lesbian, gay, bisexual and transgender employees from discrimination in the workplace.

The ruling from the 7th U.S. Circuit Court of Appeals in Chicago, Illinois represents a major legal victory for the gay rights movement. The name of the case is Hively v. Ivy Tech Community College.

In its 8-3 decision, the court reversed decades of rulings that gay people are not protected by the milestone civil rights law because they are not specifically mentioned in it.

“For many years, the courts of appeals of this country understood the prohibition against sex discrimination to exclude discrimination on the basis of a person’s sexual orientation,” Chief Judge Diane Wood wrote for the majority. “We conclude today that discrimination on the basis of sexual orientation is a form of sex discrimination.”

The ruling also allows a lawsuit to go forward in Indiana where plaintiff Kimberly Hively alleges she lost her community college teaching job because she is a lesbian.

“I have been saying all this time that what happened to me wasn’t right and was illegal,” Hively said in a statement released by the gay rights legal organization, Lambda Legal, which represents her. In so doing, the full appeals court overruled a decision by a smaller panel of its judges to uphold the district court’s decision in the college’s favor. 

To reach its conclusion, the court examined 20 years of rulings by the U.S. Supreme Court on issues related to gay rights, including the high court’s 2015 ruling that same-sex couples have a right to marry, Wood wrote. 






IRS Tax Rates – 2017

The IRS has announced the inflation adjustments for 2017 for important estate planning and income tax thresholds. Here are some of the key adjustments that affect estate plans:

The estate and gift tax exclusion amount will increase to $5,490,000.
The generation skipping tax exemption also increases to $5,490,000.
The gift tax annual exclusion amount stays at $14,000.
The annual exclusion for gifts to a non-citizen spouse increases to $149,000.
Special use valuation under Section 2023A: decrease cannot exceed $1,120,000.

Marginal tax rates for taxable income of estates and trusts:
Not over $2,550 15% of taxable income
$2,550-$6,000 $382.50 plus 25% of excess over $2,550
$6,000-$9,150 $1,245 plus 28% of excess over $6,000
$9,150-$12,500 $2,127 plus 33% of excess over $9,150
Over $12,500 $3,232.50 plus 39.6% of excess over $12,500

As you can see, some rates are indexed to inflation and others are not.  For more detailed information, visit the IRS website, IRS.gov.  The effect of enacted tax reform legislation will undoubtedly change some or perhaps all of these figures.  Stay tuned.  

States With Estate Taxes

Nine states are making estate tax changes for 2017.  Altogether, eighteen states plus the District of Columbia impose either estate or inheritance taxes or both. They are Oregon, Washington state, Minnesota, Illinois, New Jersey, New York, Vermont, Hawaii, Kentucky, Nebraska, Iowa, Maryland, Pennsylvania, Connecticut, Massachusetts, Maine, Rhode Island, and Delaware.

As an example, New Jersey has had a long time $675,000 exemption from the state estate tax but now it will be $2 million dollars.  Similar changes are in effect for the other states.  Because the federal estate tax exemption amount is indexed to inflation, it rose from $5.45 million dollars for 2016 to $5.49 million dollars in 2017.  So, for a married couple the exemption amount is a little shy of $11 million dollars.

How much money you can leave to your heirs free of state tax levies depends on where you live and own property, whom you’re leaving your money to, and whether your estate planning is up to date.  Any doubt about this, please see an estate planning attorney for assistance.



Arizona v Theranos

Arizona Attorney General Mark Brnovich is seeking bids to retain outside legal expert to pursue a consumer-fraud lawsuit against troubled blood-testing company Theranos.

Brnovich’s office is seeking “legal action against Theranos” and its closely related subsidiaries for violations of the Arizona Consumer Fraud Act, according to a request for proposals posted this month on the state procurement website.

Theranos came to Arizona in 2013 when it rolled out its unproven technology at Walgreens stores across metro Phoenix. The Silicon Valley start-up opened 40 Theranos Wellness Centers at Walgreens locations across metro Phoenix, operated a laboratory at Arizona State University office complex in Scottsdale, and successfully lobbied for a bill that allowed consumers to order any test without a doctor’s orders.

Then, media reports and government regulators raised questions about the company’s testing procedures. Federal regulators moved to revoke the company’s laboratory certificate after finding multiple deficiencies at its California lab and moved to bar founder Elizabeth Holmes from the lab business.

Later, Theranos announced it would shut down its Scottsdale lab and its stand-alone retail locations. Walgreens had earlier shut down its Theranos locations.  Theranos, a privately-held company, was once valued at $9 billion based on investor hopes that the company’s proprietary finger-prick technology would revolutionize the lab-testing business.

The bid listed on Arizona’s procurement website states that Arizona will pursue litigation “for violations of the Arizona Consumer Fraud Act arising out of Theranos Inc.’s long-running scheme of deceptive acts and misrepresentations related to Arizona consumers.”


What is “per stirpes” & “per capita” and What do They Mean?

Per Stirpes

“Per stirpes” means taking “by representation.” In the estate planning world, this means that if the beneficiaries are to share in a distribution “per stirpes,” then the living member in the class of beneficiaries who is closest in relationship to the person making the distribution will receive an equal share.

However, if a member in the class of beneficiaries who is closest in relationship to the person making the distribution is deceased and survived by any descendants, then that deceased beneficiary’s descendants will take “by representation” what their deceased parent would have taken.

The easiest way to explain the concept is by a few examples. Let’s assume the following:

  1. You have two children, Mark and Eve
  2. Eve has two children, Yvonne and Julie
  3. Mark has no descendants

If your Last Will and Testament or Revocable Living Trust states that your property is to be distributed to your then living descendants, “per stirpes,” here’s what happens in different scenarios:

  1. Assume that Mark and Eve have survived you:
  2. Mark and Eve each receive half
  3. Yvonne and Julie receive nothing
  • Assume that Eve has predeceased you and Mark has survived you:
  1. Mark has half the estate
  2. Yvonne and Julie share the other half of the estate, each get ¼, because they take the share that Eve would have taken had she lived – one half

“Per stirpes” is used in estate planning so that a child of a beneficiary receives that beneficiary’s share in the event the beneficiary predeceases you.  You can also put in your estate planning documents whether “descendants” includes individuals added to the family by adoption.

Per Capita

In the estate planning world, “per capita” means that if the beneficiaries are to share in a distribution, then all of the living members of the identified group will receive an equal share.  However, if a member of the group is deceased, then a share won’t be created for the deceased member and all of the shares of the other members will be increased.  So, if your estate is to be distributed to your then living descendants, “per capita,” here’s what happens in the same scenarios described above:

  • Assume that Mark and Eve survived you – each gets half
  • Assume that Eve predeceased you and Mark survived you.  Mark gets the entire estate and Yvonne and Julie receive nothing.

“Per stirpes” is used more commonly in estate planning than “per capita” because it covers the typical family situation.  If you prefer to use a “per capita” distribution, then you’ll need to see that your estate plan addresses any generation-skipping shares that may be created by this type of distribution. Leaving direct shares to grandchildren and great grandchildren through a per capita or other type of direct distribution while your children have also survived you will trigger the generation skipping transfer tax on the grandchildren’s and great grandchildren’s shares. So, work with a tax attorney to avoid this.



What is a Trust Protector?

A trust protector is a party designated in a trust agreement with certain limited powers intended to protect the trust.  A trust protector is not needed while you are alive, if you are the trustee and beneficiary of your own living or revocable trust.  However, eventually you will die and the successor trustee will step in to administer the trust. 

This new trustee may not have your best interests at heart when administering the trust.  For instance, the trustee may start to milk the trust for fees and reimbursement of expenses for whatever reason, draining the trust assets.  Another bad scenario involves the trustee with a grudge against one or more beneficiaries, where the trustee has no intention of treating the beneficiary properly.  A trustee has a duty to treat all beneficiaries in a fair and impartial manner, but you will not be around to see that they do.  The only recourse is expensive litigation. 

How does a trust protector help in these situations? By using his or her powers to change trustees.  A trust protector provision should have three sections:

(1) Empowering the protector to terminate the trustee and appoint a new trustee;

(2) Empowering the protector to appoint successor protectors; and

(3) Stating that the protector is not a trustee and owes no fiduciary duties to anyone and has no duty to act.

Needless to say, you need to nominate a person to be a trust protector only whom you greatly trust.  Any trust agreement may benefit from a trust protector provision including irrevocable trusts.


New Rules For Debt Collectors?

In an effort to curb the practices of the debt collection industry, the Consumer Finance Protection Bureau (“CFPB”) has proposed rules for third-party debt collectors.  The agency will address first-party debt collectors, banks and credit card issuers, in the future.  Here are five items the new rules address: 

Collecting on a debt that doesn’t exist. Some people are hounded by debt collectors for obligations they don’t owe. This can be due to mistakes in a debt collector’s records or fraud.  Under the proposed rules, collectors would have to confirm that a debt exists and that they have sufficient information to begin a collection. 

File a lawsuit to collect a debt after the statute of limitations has expired. Robo-signed court documents are a problem, but the CFPB said it wants to address the issue earlier in the process. It said debt collectors should have higher hurdles to pursue a lawsuit, including that they can’t file a lawsuit on a debt if the statute of limitations has expired.

Demand repayment without informing a consumer of his or her rights. While debt collectors provide notices about the debts, those statements include limited information and are written in legalese, the CFPB said.  Under the proposals, debt collectors would have to provide more information written in clear English about the debt and the consumer’s rights.

Incessantly call, leave voicemails or email consumers. Under the proposed rules, debt collectors wouldn’t be able to email, phone or send mail to a consumer more than six times per week, which would include unanswered calls and voicemails, the CFPB said. After reaching the consumer, the debt collector would be limited to either one actual contact or three attempted contacts per week.

Bury a complaint by selling the debt to another collector. Under the CFPB’s rules, a new collector would have to investigate and resolve the dispute before trying to collect payment on a purchased debt.

Supreme Court Curbs Abortion Restrictions

In light of the recent U.S. Supreme Court ruling in the case of Whole Woman’s Health v. Hellerstedt, a handful of states will face challenges from Planned Parenthood questioning the validity of restrictions these states have placed on  health clinics that offer abortions.

The ruling found that two types of abortion clinic restrictions in Texas—a law requiring abortion providers to have local hospital admitting privileges and a rule requiring clinics to meet the strict infrastructure standards of outpatient surgery centers—were unconstitutional because they caused an undue burden on abortion access.

Planned Parenthood has announced it is planning to seek repeals of restrictions in seven other states: Missouri, Virginia, Florida, Arizona, Michigan, Pennsylvania, and Tennessee.  It will also seek repeal of abortion restrictions in Texas that go beyond those struck down by the Supreme Court.

Arizona has a law requiring abortion providers to have local hospital admitting privileges.  Missouri and Tennessee each have both of the Texas-style restrictions on the books: an admitting-privileges law and facility infrastructure requirements. In Missouri, the admitting-privileges law led to the closure of an abortion clinic in Columbia, leaving the state with just one clinic. In Tennessee, both laws are being challenged in the courts.   


AZ Adopts Fiduciary Access to Digital Assets Act

Many people believe their heirs will inherit their digital photos, business documents, social media accounts, websites, texts, or other digital property through their Will or by law. No.

Prior to the governor signing the Fiduciary Access to Digital Assets Act (FADAA) in May, companies that store those assets such as Facebook, Google or Yahoo, determined who could receive the items if a person became deceased or incapacitated. The website’s terms-of-service agreements superseded Wills and trusts preventing heirs from gaining access to the digital property. Under the new law, a fiduciary or other person with legal authority to manage another person’s property will have the ability to access and distribute the deceased or incapacitated person’s digital assets. It appears the legislation is effective August 6, 2016.

FADAA provides a three-tiered system for distributing digital assets. First, if the company holding the digital assets, like Facebook, provides an online tool that allows the user to name another person to have access to the user’s digital assets, FADAA makes the user’s online instructions legally enforceable.

Second, if the company does not provide an online planning tool, or if the user does not use it, the user may give legally enforceable directions for the disposition of digital assets in a Will, trust, power of attorney or other written record.

Third, if the user has not provided any direction, either online or in an estate plan, the terms-of-service for the user’s account will determine whether a fiduciary may access the user’s digital assets.

If the terms-of-service do not address fiduciary access, the default rule will be to require that the company holding the digital assets to provide a catalogue of the communications showing the addresses of the sender and recipient, and the date and time the message was sent.  However, if the decedent has an estate plan, power of attorney or notarized written statement, they can direct the company to give the fiduciary full access to the content to distribute to named heirs.

To obtain the digital assets, the fiduciary must send a request to the company with a certified copy of the document granting the fiduciary authority, such as a letter of appointment, court order, or certification of trust. Thus, individuals should make a provision in their Will, trust, power of attorney or other written document to distribute digital assets.  They should also be aware that any directions made through an on-line tool will supersede their trust or Will.


Cell Phone Records Do Not Need A Warrant

Police don’t have to get a search warrant to obtain records about cellphone locations in criminal investigations, a federal appeals court ruled Tuesday in a case closely watched by privacy rights advocates.


The 12-3 decision by the full 4th U.S. Circuit Court of Appeals reversed a three-judge panel’s ruling last year that the constitutional protection against unreasonable search and seizure requires police to get a warrant for information obtained from cell towers.


The Richmond-based appeals court now agrees with the only other three federal appeals courts that have taken up the issue, making it less likely that the U.S. Supreme Court will consider the matter. Meghan Skelton, attorney for the two Maryland men who challenged the use of cell tower data, said she will ask for Supreme Court review anyway because there is disagreement among the circuits on some of the underlying issues.


The ACLU was one of several organizations that filed friend-of-the court briefs in the case involving two men convicted of a series of armed robberies in the Baltimore area. Police used cellphone tower records tracking the suspects’ movements to tie them to the crimes.


Judge Diana Gribbon Motz wrote in Tuesday’s majority opinion that the Supreme Court has long held that the Fourth Amendment does not protect information that a person voluntarily turns over to a third party — in this case, the defendants’ cellphone service providers.


“The government did not surreptitiously listen to, record, or in any other way engage in direct surveillance of defendants to obtain this information,” she wrote.