Dissension in the Ranks: The Basics Surrounding HOA Election Challenges

By: Dan Rich, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

Few things generate more animosity and drama within a homeowners association, or HOA, than contested board of director elections. This tension may result in residents seeking legal action against the HOA in the form of an election contest. Sadly, most HOA residents have zero clue about the rules regarding an election contest; however, this article will hopefully shed some light on the basics surrounding HOA election contests in Florida.

So where do we begin? Florida law states that any election dispute or challenge in the homeowners association context must be submitted to mandatory arbitration with the Florida Department of Business and Professional Regulation, or DBPR.
The window for submitting an election contest is not open for long. Instead, Florida law provides that any person who wishes to challenge an HOA election must file their petition for arbitration with DBPR within 60 days of the election results being announced. The announcement almost always occurs at the election itself, which means that the clock starts ticking the second the meeting concludes.

Florida law goes on to provide that prior to filing an arbitration petition with DBPR, the resident must also provide his or her HOA with the following: (a) advanced written notice of the specifics regarding the dispute; (b) a written demand for relief, and a reasonable time for the HOA to provide said relief; and (c) notice of the resident’s intent to file an arbitration petition in the absence of a resolution. If the resident fails to comply with these three requirements, then DBPR will be forced to dismiss the election challenge.
Often times, the “written notice of the specifics regarding the dispute” is initially founded upon rumors, hearsay and mere hunches. To avoid basing your HOA election challenge on speculation, it is generally recommended that the disgruntled resident investigate the accuracy of the information prior to filing the arbitration petition with DBPR.

You may be asking yourself, why should I take the time to investigate? This answer is simple. Florida law provides that the prevailing party in a DBPR election contest is entitled to recover from the losing party all of his or her attorneys’ fees and costs.
To minimize this risk, Florida law provides that any resident of a HOA can inspect the official records of the association. Florida law mandates that election materials, such as ballots, proxies and the sign-in sheet be preserved for inspection by residents who request to review the documentation. Once a request is submitted the HOA must make all requested materials available within 10 days. Then, the requestor must take time to review the documents, which often times requires a time commitment based on the sheer amount of papers involved.

The importance of confirming the basis for any election challenge is imperative, but it narrows the 60-day timeframe that a resident has to file their petition. Therefore, that is why I recommend that

a resident seeking to challenge an HOA election, or an HOA facing an election challenge itself,
seek the advice of a knowledgeable attorney who can help navigate the complexities of an election
challenge under Florida law.

Dan Rich is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in
Lakeland. Questions can be submitted to thelaw@cclmlaw.com.

Code Enforcement Liens

By: Anthony A. Velardi, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

Q: A code inspector recently notified me about a code violation concerning my property. What is the process of enforcing a code violation?

A: Chapter 162 of Florida Statutes sets forth the various ways in which a local government body, such as a city, can enforce code violations, such as by imposing a fine which may continue to accrue on a daily basis. A code enforcement board is usually comprised of 7 members with 2 alternate members and should include an architect, businessperson, engineer, general contractor, subcontractor, and realtor.

The process usually starts with a disgruntled neighbor calling code enforcement, and a code inspector initiates the investigation. If a violation is found, the code inspector is required by law to notify the violator, and the code inspector is required to give the violator a reasonable time to correct the violation, unless the violation presents a serious threat to public health, safety, and welfare or if the violation is irreparable or irreversible in nature.

Typical code enforcement violations may include, but are not necessarily limited to, noxious odors or fumes emanating from your property, neglecting to mow your lawn, failing to secure buildings, parking derelict vehicles, failing to remove debris, placing improper signage, and possessing certain farm animals within city limits on your property.

If the violation continues beyond the time specified for correction, the code inspector notifies the enforcement board and requests a hearing. Notably, if a repeat violation is found, the code inspector is required to notify the violator but is not required to give the violator a reasonable time to correct the violation.

After the hearing, the code enforcement board is required to issue findings of fact based on evidence and law, and the code enforcement board issues an order. If the code enforcement board imposes a fine and the violator does not pay the fine by a certain date, the local government body may record in the public records a certified copy of an order imposing the fine.

The recorded order then becomes a lien against the land on which the violation exists and notably upon any other real or personal property owned by the violator. Therefore, if you have a code enforcement lien against Property A which you own and desire to sell Property B which is not in violation but located in the same county, technically the code enforcement lien attaches to Property B, unless Property B is your homestead. Furthermore, a code enforcement lien held by a municipal or county governmental unit survives issuance of a tax deed unless satisfied of record or otherwise barred by law.

If the code enforcement lien is not paid within 3 months after the date of recording, the local government body may foreclose on the lien or sue to recover a money judgment for the amount of the lien plus accrued interest, and a local government body, such as a city, has 20 years from the date of recording of the code enforcement lien in the public records to file its foreclosure lawsuit.

Anthony Velardi is a Martindale-Hubbell A/V Rated attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Anthony’s practice primarily focuses on commercial and residential real estate, land use, and general corporate/business law. Questions can be submitted to thelaw@cclmlaw.com.

Pets and Estate Planning

By: Clark, Campbell, Lancaster & Munson, P.A.

When we think about estate planning, we generally focus on our family and friends, but what about our pets that may outlive us? We would like to think that our family and friends will want to care for our pets upon our death, but this is not guaranteed. This article is a general overview of steps that you can take to more effectively ensure that your pets will be cared for in conformance with your wishes during your lifetime and upon your death.

Q: My friend expressed that she will care for my pets if anything were to happen to me, should I still include my pets’ care in my estate planning?

A: Yes, in your Last Will and Testament (“Will”), you should give your pets to your friend. However, keep in mind that your friend may ultimately change her mind, or alternatively, your friend may predecease you. At the very least, you should consider naming alternates to care for your pets.

Q: How does a Will effectuate my wishes concerning my pets’ care?

A: A Will reflects your intent concerning your pets’ care, but the directives are not enforceable. While we may consider our pets a companion or a member of our family, by law, our pets are considered property. Pets can be conveyed through a Will like any other type of property that you may own. However, as property, a beneficiary can also disclaim or refuse to accept ownership of your pet. For example, in your Will, you give your pets to your friend, but shortly after your death, your friend discovers that she is severely allergic to your pets, and a result, she refuses to accept ownership of your pets.

Q: Is there anything else I should be concerned about if I were to rely solely on a Will regarding my pets’ care?

A:  Yes.  A Will does not consider the care of your pets during your lifetime and may not be immediately effective upon your death. For instance, you are determined to be incapacitated and you are subsequently admitted to a nursing home. The Will does not direct your pets’ care while you are incapacitated. Further, if your estate is subject to probate, a Will does not direct your pets’ care during the probate process. For these reasons, you may want to supplement your Will with a pet trust.

Q: What is a pet trust?

A: Florida, like most states, has adopted pet trust statutes. A pet trust is a legal arrangement concerning your pets’ care during your lifetime and upon your death. The trustee of a pet trust will hold funds for the benefit of your pets and will disburse such funds to a designated caregiver of your pets. The benefit of a pet trust, in contrast to a Will, is that a pet trust is enforceable, specific, effective during your lifetime and upon your death, and allows you to have control of your pets’ care with the oversight of a trustee after your death. In Florida, a pet trust will not terminate until your pets’ death, unless you direct otherwise.

Q: Is there anything else I should consider when formulating my pets’ care in my estate planning documents?

A: Yes. Due to the reasons discussed above, consider naming a rescue organization as a last resort to care for your pet. Additionally, you may want to consider naming not only the pets that you currently have, but also reference any pets you may acquire in the future. Finally, a pet trust can be as general or specific as you desire. For example, in a pet trust, you could direct the type of food your pets will be fed or which veterinarian will be used for your pets’ health issues.

If you wish to direct your pets’ care in your estate planning documents or wish to set up a pet trust, it is advisable to seek counsel from an estate planning attorney.

Homestead: More than Just a Property Tax Exemption

BY: Kevin R. Albaum, ESQ.
Clark, Campbell, Lancaster & Munson, P.A.

Most people know that there is a tax break available to them on their home (house, condominium, co-ops apartments, and some mobile home lots also qualify).  The way it works is that a tax exemption can be applied for at the local property appraiser’s office on a person’s home if the person owns and lives in the home that they are trying to obtain the exemption on by January 1 of the year they are trying to claim the exemption.

The tax exemption provides that the first $25,000 of the assessed value is exempt from real property taxes and the third $25,000 of the assessed value is exempt as well.  The tax exemption provision is a nice perk provided by the Florida Constitution (Article VII, Section 6) to Floridians and can easily save a Polk county resident hundreds or possibly over $1,000 per year in property tax owed.  However, the property tax exemption provision is just one of the benefits of owning a homestead property in Florida.

So, what exactly is a homestead?  Article VII of the Florida Constitution further explains the property tax exemption and defines homestead as real estate held by a person who maintains title to the property and maintains permanent residence thereon. Further, you only get one (1) homestead property per individual or family unit. The Florida Constitution has another provision on homestead property (Article X, Section 4) which adds that for creditor protection, homestead property can be up to 160 contiguous acres outside of a municipality or up to (1/2) one-half acre if the residence is located within a municipality and owned by a natural person.  Article X goes on to add restrictions on the devise of a homestead property if you have a spouse or minor child.  For example, if you are married and own a house (in your name only) but your spouse lives in your house, it is likely that you cannot convey the homestead property without your spouse signing the deed as well.

Is my homestead protected from creditors?  Specifically, if your property qualifies for homestead status and fits within the definition under Article X, regardless of the home’s value, it is exempt from the forced sale by any court and protected from judgments of your creditors (except for the payment of tax liens, mechanic’s liens, HOA liens or mortgages).  For example, if you get a new roof put on your house and don’t pay the roofer, you will most likely not have homestead creditor protection against the roofer.  Additionally, if a person files for bankruptcy, a different set of rules for creditors pursuing the homestead property will also apply.

Can I transfer my homestead to my trust or my business?  Many Florida court cases have found a revocable living trust can own a natural person’s homestead property and maintain Article X creditor protections.  However, many other entities and types of trusts cannot own a homestead property and also maintain creditor protection.  For example, you can’t transfer your home to your limited liability company and expect to maintain homestead creditor protections for your home if your limited liability company is sued in the future.

Calling Florida’s homestead laws complex would be a drastic understatement and when questions arise regarding whether or not your home: 1) Qualifies for the Article VII tax exemptions; 2) Qualifies for the Article X creditor exemptions or 3) Has Article X restrictions on whether or not there are restrictions on devising the property, it is always best to speak with an attorney who has experience in this area to look at your specific situation and properly advise you on your home.

Kevin Albaum is an attorney in the Elder Law Practice at Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to thelaw@cclmlaw.com.

Tickets, Tickets, Got Tickets? A Summary of Florida’s Ticket Resale Laws

By: Dan Rich, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

Question: Is “scalping,” or reselling, tickets illegal in Florida?

Remember when your favorite band came to town but you couldn’t go because all of the tickets sold out in less than five minutes, but then were being resold for thousands? I do. The art of reselling tickets at prices much higher than the face value of the ticket is commonly referred to as “scalping,” and is a very real dynamic of the live event scene that unfortunately results in far too many people purchasing tickets at much higher prices than face value.

Before delving into how Florida law handles scalping, regardless of whether the ticket sale occurred online, over the phone or directly in person, it is beneficial to get a quick background.

How do ticket sales even work?

Plainly speaking, a “ticket” is a piece of paper, or more recently an electronic access code, that permits the holder of that paper or access code the right to enter an event such as a concert, a spring training baseball game or that new blockbuster movie. Generally, you can purchase tickets from the venue itself or, from a ticketing agent like TicketMaster or StubHub, who was hired by the venue to sell tickets at face value, plus a fee.

But sales do not stop here, instead, you may be able to get your tickets from a “ticket broker.” A ticket broker is anyone who obtains tickets for the sole purpose of buying tickets and then quickly turning around and re-selling them for a profit. Ticket brokers come in all shapes and sizes ranging from professional ticket brokers who use technology to purchase up large lots of tickets for resale to the retired baseball fan who buys up a batch of tickets and resells them all season in that parking lot across the street.

Whose job is it to regulate ticket resales?

Currently, there is no federal law in place prohibiting scalping. However, fifteen (15) states have implemented their own policies and laws in regards to banning the practice of scalping in some way. The offense of scalping is most commonly classified as a misdemeanor, with penalties ranging from fines and/or up to one (1) year in jail.

In Florida, up until a bit over a decade ago, ticket scalping was illegal. However, in 2006 the Florida Legislature changed the laws, and permitted persons, including ticket brokers, to resell tickets.

What does Florida law provide?

Currently, in Florida it is legal to scalp or resell tickets at prices higher than face value as long as the seller follows the policies and procedures outlined by the Florida Legislature. These policies can be summarized as follows:

  • Mandatory Guarantees. Resellers must post specific instructions on their ticket resale websites. The instructions are intended to provide clear guidelines for when a refund will be offered to purchasers, and the seller must also disclose that it is not the issuer, original seller or reseller of the ticket.
  • Mandatory Refunds. Resellers must provide refunds to ticket purchasers if the event is canceled, the purchaser is denied admission to the event (for a reason not attributable to their own actions) and if the tickets are not delivered in the manner requested.
  • Prohibitions on Location of Resale. Resellers cannot resell tickets for an event on the property where the event is taking place.
  • Ban on Reselling Non-Profit Tickets. The resale of tickets to a charity event is strictly prohibited.
  • Dollar Surcharge. Resellers are permitted to charge a $1 surcharge for reselling tickets, but only if the tickets being resold are for passage or accommodations on common carriers, to multi-day or multi-event tickets to a park or entertainment complex, or sold through an Internet website that fails to meet the criteria mentioned above.
  • Ban on “Bot” Software. Resellers may not use “bot,” or computer software, to buy up tickets. This provision of the Florida law is intended to limit professional scalpers from buying up blocks of tickets to events, impeding purchasers from getting direct access to these tickets.

Therefore, if a person or business violates any of the above-referenced provisions their attempt to resell those tickets will be considered a violation of Florida statutory law, and in turn would make their scalping attempt illegal. By understanding what is permissible and what is prohibited or required, event goers will be able to appear informed and knowledgeable the next time they are approached by a scalper. If you feel you have been wronged or cheated by a scalper, I would encourage you to contact an attorney that has knowledge of these laws and how they apply.

Dan Rich is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland.  Questions can be submitted to thelaw@cclmlaw.com.

Collecting Taxes on Collectibles

By:  Clark, Campbell, Lancaster & Munson, P.A.

Do you have a collection that you wish to sell? If so, the IRS may determine that your collection is composed of “collectibles” and apply a 28% capital gains tax rate to any gain you may acquire from the sale of your collection. Generally, for most taxpayers, the capital gains tax rate is 15%.

Q: What are collectibles?

A: The IRS has stated that the following are collectibles:

  1. Works of art;
  2. Rugs;
  3. Antiques;
  4. Metals;
  5. Gems;
  6. Stamps;
  7. Coins;
  8. Alcoholic beverages;
  9. Musical instruments;
  10. Historical objects; and
  11. Any other tangible personal property specified by the Secretary for purposes of this subsection.

Notably, comic books, toys, and cars are not explicitly provided in the above list. However, the IRS has the discretion to consider such items as collectibles depending on the facts and circumstances.

 

Q: What is an example of tangible personal property that the IRS may consider a collectible?

A: Taxpayer collects dolls from a popular toy company and keeps her collection in a climate controlled storage unit. Taxpayer sells five dolls from her collection for $1,000.00. Taxpayer’s dolls may be considered a collectible if taxpayer’s treatment of her collection indicates that she is attempting to preserve her collection’s value, the collection has considerable value, the dolls are sought after collectors, and the taxpayer has no personal use for the dolls.

 

Q: I have an item that is considered a collectible; will I automatically be subject to the 28% capital gains tax rate for any gain I may acquire from the sale of my collectible?

A: Not necessarily. In order for the 28% capital gains tax rate to apply, the item must be held by the taxpayer for more than a year. For example, if taxpayer bought a collectible in January 2017 and sold the same collectible in April 2017 for a profit, then the sale will not be subject to the 28% capital gains tax rate because taxpayer held the collectible for less than a year. Instead, the sale of the collectible will likely be taxed as ordinary income.

 

Q: How do I determine basis in my collectible?

A: It depends on how the collectible was acquired. For example, taxpayer’s great grandmother bought a collectible in 1960 for $3.00, and at the time of her death, the collectible was valued at $1,000.00. If taxpayer inherited the collectible from her great grandmother, then taxpayer’s basis in the collectible will be its fair market value at the time of inheritance, which is $1,000.00. If taxpayer’s great grandmother gifted the collectible during her lifetime to the taxpayer, then taxpayer’s basis in the collectible will be her great grandmother’s basis in the collectible, which is $3.00. If taxpayer bought the collectible from an auction, then taxpayer’s basis in the collectible will be the amount taxpayer paid for the collectible, plus any auction fees. Finally, a taxpayer’s basis in a collectible may increase due to maintenance and restoration costs to preserve the collectible’s value.

 

Q: Are there any other tax consequences that I should consider?

A: Yes. Generally, collectibles are sold at a loss. Whether a taxpayer will be able to claim a loss from the sale of a collectible will depend on whether the taxpayer personally used the collectible and whether the taxpayer is engaged in a hobby or a business.

If you are unsure whether you have a collectible or whether you may claim a loss from the sale of your collectible, it is advisable to seek counsel from a tax professional.

Recent Court Case Might Not Be Just for the Birds

By: Anthony A. Velardi, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

 

Q: I raise wild birds for sale as pets on my property.  Can I qualify for an agricultural tax exemption for my property?

 A:  In McLendon v. Nikolits, the 4th District Court of Appeal (DCA) recently held that a property owner who engages in aviculture – raising wild birds for sale as pets – can qualify for an agricultural tax classification for the part of their property used for aviculture.  The 4th DCA’s decision may also perhaps be applied to other types of pet breeding, such as dog breeding, and the agricultural tax exemption if they qualify.

Todd and Shire McLendon own a 5-acre parcel located in Palm Beach County, and the McLendons have used the property for aviculture since 2006.  From 2006 through 2012, the Palm Beach County Property Appraiser granted an agricultural tax classification for 4.5 of their acres because of its dual uses for aviculture and cattle grazing.

In 2012, the Property Appraiser denied the agricultural tax classification for the McLendons’ 4.5 acres and issued the tax classification for only 2.25 acres.  The McLendons appealed, and the Value Adjustment Board (VAB) held that 4.5 acres should be given the agricultural classification.

In 2013, the Property Appraiser again denied the agricultural tax classification for the part of the property devoted to aviculture.  The McLendons appealed again, and a special magistrate appointed by the VAB found in favor of the McLendons.  The Property Appraiser appealed to the circuit court, and the Property Appraiser also denied the agricultural classification for 2014.

The Property Appraiser argued that the legislature intended to limit agricultural activities to only those listed in the statute because the legislature included only “poultry” and not “aviculture” in the list of activities that constitute “agricultural purposes” in the statute.

However, the McLendons argued that the legislature did not intend for the list to be exclusive or exhaustive because the legislature used “includes, but is not limited to” in the statute.

The trial court concluded that aviculture was intentionally left out of the statute and that bird-related activities qualifying as agriculture were limited to “poultry.”  The trial court also indicated that allowing the breeding of pets, and birds in particular, to qualify for an agricultural exemption, would open the floodgates and allow many landowners to claim the agricultural exemption for various types of pet breeding thus in turn leading to abuse of the system.

On appeal, the 4th DCA found that “includes, but is not limited to” is not ambiguous, and the 4th DCA found that the term “farm product” is defined in Fla. Stat. § 823.14(3) as “any…animal…useful to humans” under the Florida Right to Farm Act.

Through the use of expert witness affidavits at trial, the McLendons were able to convince the court that aviculture is useful to humans for reasons such as companionship, concern for endangered species, entertainment, education, and scientific purposes.

Accordingly, the 4th DCA reversed the trial court’s decision and held that the McLendons’ portion of the property used for aviculture qualifies for an agricultural tax exemption.  It will be interesting to see how the Polk County Property Appraiser reacts to this recent decision, and unless the Florida legislature closes this loophole, this might be a case for the 2nd DCA and perhaps Florida Supreme Court to decide if there is a conflict between DCA’s.

 Anthony Velardi is a Martindale-Hubbell A/V Rated attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland.  Anthony graduated from the University of Notre Dame in 2006 and Stetson University College of Law in 2009.  Questions can be submitted to thelaw@cclmlaw.com.

Non-Compete

By: Clark, Campbell, Lancaster & Munson, P.A.

Q: Can an employer restrict or prohibit an employee from competing with the employer once the employee’s employment has ended?

Employees, under Florida law, are limited in their ability to compete with their employer while employed by the employer because employees owe their employer a duty of loyalty. However, this duty of loyalty generally ends when an employee’s employment ends, and, upon ending, the employee could potentially compete against their former employer. Accordingly, employers should consider whether it is in their best interest to restrict or even prohibit an employee from competing once their employment ends.

Generally, there are two main types of restrictions employers place on employees to limit their ability to compete. The first is a non-compete restriction, which limits the employee’s ability to participate and compete in the same business of the employer. The second is a non-solicit restriction, which limits the employee’s ability to solicit the employer’s customers, potential customers, employees, and other business relationships. Both restrictions are generally set forth as restrictive covenants in a written agreement between the employer and employee.

Florida’s public policy disfavors restrictive covenants that limit competition or solicitation, so employers must carefully draft such restrictive covenants in order to comply with Florida law. Florida law provides that a restrictive covenant must be in writing and signed by the employee against whom it will be enforced. Further, a restrictive covenant must protect an employer’s legitimate business interest that justifies enforcement of the restrictive covenant. For example, an employee may have access to or obtain knowledge of an employer’s trade secrets or customer lists that are not available to the public. The employer has a legitimate business interest in protecting such information, and such interest may justify the employer restricting its employees’ ability to compete with employer.

Lastly, any restrictive covenant must be reasonable in terms of geographic scope, line of business, and time. Generally, a restrictive covenant should limit the employee’s ability to compete in the geographic region that the employer operates in and where the employee is employed or works. Additionally, a restrictive covenant should limit the employee’s ability to compete in businesses actively engaged in by the employer. Finally, the length of time the employee is prevented from competing must be “reasonable.” A reasonable time period, as determined under Florida law, varies depending on the role of the employee and the legitimate business interest the employer is trying to protect.

As such, while an employer is able to restrict or even prohibit competition or solicitation from its former employees, any such restrictions must be reasonable and must comply with all of the requirements of Florida law.

 

Easier Access to Special Needs Trusts Finally Arrives for Disabled Individuals

By: Kevin R. Albaum, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

A bill known as the Special Needs Trust Fairness Act (the “Act”) has been working its way through the legislative process for a couple years now.  Finally, on December 17, 2016, President Obama signed the Act into Federal Law. The law became effective immediately.

A first party special needs trust is a special type of trust created and funded with a disabled person’s assets in order to maintain eligibility for means based government benefits such as Medicaid and Supplemental Security Income (“SSI”).  While a first party special needs trust has restrictions on how the money in the trust may be used, it can generally be used for the benefit of the disabled individual. The trust can be used to purchase most items for the beneficiary as long as the purchase of such items does not cause the person to lose eligibility for their government benefits by accumulating too many countable assets under Medicaid and SSI rules.  However, the trust’s funds cannot be used to purchase food, pay for routine shelter costs like rent, mortgage, basic utilities, or to purchase items for someone other than the trust beneficiary.

The Act was designed to revise the prior law requiring individuals with disabilities to use a parent, grandparent, guardian, or court of competent jurisdiction to create a first party special needs trust.  Under the old law, a person could be disabled and still be competent to create a trust (such as a victim of an accident or a blind individual), but this individual still would not be able to establish the trust without the assistance of a third party.  Under the new Act, individuals with disabilities, who have the requisite level of capacity, can now create a first party special needs trust for themselves rather than depending on others to do so for them.

Special needs trusts exist because the federal government decided that they do not want to penalize disabled individuals by requiring them to spend down their limited assets on health care and essential living expenses before they can become eligible to receive government benefits to help pay for the disabled individual’s health care and essential living expenses. Once the trust is implemented and funded with a disabled individual’s assets, the individual can immediately apply for or become eligible to receive governmental benefits and will be able to continue to use the trust for their personal benefit during their lifetime.  Preserving assets in a special needs trust allows a disabled individual an incredible opportunity to extend the use of the trust assets over their lifetime without preventing them from obtaining and receiving governmental benefits.

It’s important to consult a legal professional with experience in elder law when considering creating and funding a special needs trust to ensure governmental benefits are preserved.

Kevin Albaum is an Elder Law Attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland.  Questions can be submitted to thelaw@cclmlaw.com.

PLANNING AHEAD: Does my limited liability company really need an operating agreement?

An operating agreement serves as an instruction manual dictating the governance and operation of your limited liability company, or LLC. The purpose of an operating agreement is to: (i) preserve the limited liability status of your entity; (ii) specify rights and obligations between members; (iii) provide the necessary structure, accounting and tax provisions; (iv) identify policies in the event of disputes, the death or divorce of a member; and (v) set out the organizational governance for the LLC.

Currently, if there is no operating agreement, Florida law states that an LLC is subject to the default provisions provided for under Chapter 605, Florida Statutes. The risk of relying upon the default provisions in Chapter 605 is that these standard, default provisions may not align with the goals you have for your LLC or the agreement between the members.

To avoid relying upon the default provisions of Florida Statutes, I highly recommend that new business owners allocate time prior to the beginning of their LLCs existence to adequately prepare and draft an operating agreement. A clear and unambiguous agreement will help provide concise policies for distributing profits and losses, establishing a management structure, defining appropriate voting control and decision procedures, as well as resolving unforeseen disputes among members. Clear procedures will only further assist in the smooth operation and growth of an LLC. Such policies are also beneficial for planned and unexpected challenges, and typically can eliminate any confusion or ambiguity which may arise if relying upon Chapter 605.

Like its members, each LLC is unique, with each newly created LLC having its own set of specific goals and objectives that its members would like to accomplish. A good operating agreement should be structured to align with the ideals and objectives of the members of the LLC. Certain essential terms, including the following, should be included in all operating agreements:

  • Specifications regarding ownership percent or interest;
  • The rights and responsibilities of each member;
  • How to distribute profits and losses;
  • Voting rights (i.e. voting and non-voting membership interests; majority, supermajority or unanimous decisions);
  • Management hierarchy (i.e. appointment and removal of managers);
  • Termination, or dissolution, procedures;
  • Dispute resolution provisions;
  • Transfer restrictions;
  • Guidelines and parameters for borrowing money; and
  • How to remove an unruly director.

Business owners may draft and implement their own operating agreements; however, given that an operating agreement is an important legal contract that binds the members and the governance of the LLC, it is best to consult with an attorney who has experience in formation of business entities.

Dan Rich is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland.  Questions can be submitted to thelaw@cclmlaw.com.